Sun Life Asset Management Co., Inc. said the Philippine economy may need two years before returning to its pre-pandemic levels owing to uncontrolled coronavirus infections and anemic household consumption.

Michael Gerard D. Enriquez, Sun Life Asset Management chief investment officer said the first-quarter gross domestic product (GDP) performance was “disappointing” as it contracted way below consensus.

The local economy sunk deeper into recession in January to March at minus 4.2 percent, worse than the consensus -3.2 percent and Sun Life Asset Management’s estimate -2.0 percent.

Enriquez said the worse than expected GDP was due to continued contraction in household spending at -4.8 percent as well as the private investments, falling -18 percent.

“This only suggests that the confidence in the economy on personal spending, mobility and forward capital deployment is still at the clutches of fear towards the pandemic,” Enriquez said in a virtual briefing.

Sun Life Asset Management slashed its 2020 GDP forecast from 8.6 percent to 5.5 percent.

“We now think 2021 is a recovery year but not as strong as earlier predicted due to uncertainty of the fiscal stimulus and prolonged delays in vaccine supply rollout,” Enriquez said.

"There has really been no response on the fiscal side by the government what we only saw was the aggressive monetary policy that really helped in curbing the impact to our economy," he added.

With the revised GDP projection, the Sun Life officer said the economy would take two-years to return to trend line growth.

“Hence, we now expect an extended U-shaped type of recovery for GDP,” he said.

For April to June period, Sun Life Asset Management estimated that the economy will return to its positive growth due to low base effects at 12.5 percent.

In the third-, and four-quarters, Sun Life Asset Management projected that GDP will rise by 8.3 percent and 5.0 percent, respectively.

Last week, the inter-agency Development Budget Coordination Committee, a body that sets the macroeconomic targets of the country, lowered its growth assumption this year to 6.0 percent to 7.0 percent from an earlier range of 6.5 percent to 7.5 percent.

Moreover, the economic managers estimated that GDP will return to a pre-pandemic level next year, growing at 7.0 percent to 9.0 percent. The range, however, is slower compared with the previous 8.0 percent to 10.0 percent projection.