The Delta variant-driven lockdowns imposed to curb the spread of the virus triggered the Development Budget Coordination Committee (DBCC) to significantly slash its economic growth outlook for the year.
The DBCC, an inter-agency body tasked to set the country’s macroeconomic targets, further shaved off on Wednesday, August 18, its gross domestic product (GDP) goal band for 2021 to between 4.0 percent and 5.0 percent from 6-7 percent growth target.
The fresh revision, the second time this year, highlighted a marked pessimism among President Duterte’s economic managers about the pace of the country’s recovery. The DBCC had penciled in on August 6 a GDP forecast range 6.0 percent to 7.0 percent.
In a statement released by the DBCC, the economic team attributed the slow pace growth on “the reimposition of stricter mobility restrictions in various areas of the country.”
President Duterte imposed a fresh round of lockdowns this month placing Metro Manila and other areas across the country under varying levels of strict quarantine controls for two-weeks. This move has effectively put the breaks on further economic reopening plans.
The National Economic and Development Authority estimated that the ongoing lockdown would cost the economy P300 billion.
Moreover, the Philippines experiences yet another surge in coronavirus infections due to the highly transmissible Delta variant. On Wednesday, the Department of Health reported 11,085 new COVID-19 cases in the past 24-hours.
“With the global emergence of the Delta variant, the second half growth outlook was revised downwards to reflect the additional restrictions imposed by the government, which are necessary to curb its spread,” DBCC said.
In the second-quarter, GDP growth accelerated 11.8 percent, a reversal of the pandemic-driven 17 percent contraction seen in the same period last year.
The record performance for the quarter ending June, the highest since the fourth-quarter of 1988, brought the first-semester GDP at 3.95 percent.
However, the local economy is losing some momentum as the latest GDP showed a contraction of 1.3 percent compared with the January to March output.
“Our strategy is to continue managing the risks carefully by imposing granular quarantines, while allowing a vast number of people to earn a living,” the economic managers said.
Ahead of the DBCC meeting, Finance Secretary Carlos G. Dominguez III admitted on Tuesday that the country is facing a future that is still uncertain.
“We are facing a crisis unlike any other we have faced before,” Dominguez told reporters. “We have a virus that is mutating, and the mutations are quite severe so far in their new variants. So I cannot predict what will happen in the future.”
As highly contagious strain of the virus poses unclear future, Dominguez, however, assured that the government is facing the Delta variant head on.
“I cannot predict what what new form will come up but rest assured that we are ready to meet it with our first line of defense,” Dominguez said, referring to the COVID-19 vaccines.
The DBCC said the government will continue to use the two-week lockdown to accelerate the roll-out of the country’s vaccination program.
As of August 15, a total of 27.8 million doses have been administered, consisting of 15.2 million and 12.6 million for the first and second dose, respectively.
“Rest assured that we will continue to work closely with the local government units and the private sector to accelerate the country’s vaccination rates,” DBCC said.
Meanwhile, DBCC retained its growth targets for 2022 at 7.0 to 9.0 percent, and for 2023 and 2024 at 6.0 to 7.0 percent.