Debt-watcher Moody’s Investors Service has lowered its forecast on the Philippine economy for the year as coronavirus battle enters another phase of uncertainty.
In a research note released Wednesday, July 21, Moody’s said it is now projecting that the country’s economy, as measured by gross domestic product (GDP), would grow 5.8 percent in 2021, slower than the 7.0 percent forecast in January.
Moody’s noted that while recovery is expected following the historically large economic contraction last year, its “degree and pace” have remained uncertain.
“The degree and pace of recovery are subject to uncertainties related to the coronavirus pandemic, as well as the progress on vaccination,” Moody’s said.
“Recent containment measures imposed since March 2021, although more lenient than the severe lockdowns imposed in 2020, will threaten our expectation of a sharp rebound in real GDP growth in 2021,” it added.
Moody’s latest growth forecast is lower than the government’s target of 6.0 percent to 7.0 percent.
According to Moody’s, the country’s rebound will be supported by an improvement in consumer spending and investment underlined by fiscal support from the government.
“The pandemic poses an acute cyclical challenge to economic strength. Restrictions on movement and social distancing measures, especially in Metro Manila and the surrounding areas, imposed in 2020 caused a sharp contraction of 9.6 percent in real GDP terms,” Moody’s said.
For 2022, Moody’s expects the local economy to grow 6.5 percent, still below the government’s goal of 7.0 percent to 9.0 percent.
Last July 17, the Department of Health confirmed the first local transmissions of the quick-spreading Delta variant in the Philippines.
To date, the country has administered at least 15 million COVID-19 vaccine doses with more than 4.7 million persons already fully vaccinated against the disease. The government is targeting to inoculate around 76 million people by end of 2021.
Last Monday, the Development Budget Coordination Committee (DBCC), an inter-agency today tasked to set the macroeconomic targets of the country, maintained its GDP goal of 6.0 percent to 7.0 percent for this year.
According the DBCC, the 2021 growth target range is attainable due to declining number of COVID-19 cases in the country since the peak in April and the gradual reopening of the economy with more targeted granular lockdowns.
The economy managers also kept the 7.0 percent to 9.0 percent GDP target for next year as well as 6.0 percent to 7.0 percent assumption for 2023 and 2024.