The Development Budget Coordination Committee (DBCC) downgraded its projection for the Philippine economy in 2020, expecting a contraction of 2% to 3.4% due to the coronavirus disease (COVID-19).
The forecast is a downgrade from the -1.0 percent to zero growth made by DBCC in March at the onset of the enhanced community quarantine (ECQ) imposed on Luzon and other parts of the country to halt the spread of the coronavirus.
The National Economic and Development Authority (NEDA) estimated the potential impact of the pandemic on the economy could reach P2 trillion or about 9.4% of GDP this year.
For the first quarter of 2020, GDP contracted by 0.2%, its first decline since the last quarter of 1998, as travel restrictions and community quarantines to prevent the spread of COVID-19 affected businesses and household consumption.
DBCC expects the country to recover by 2021 with GDP growth of 7.1% to 8.1%, NEDA said in a statement.
“Timely implementation of a well-targeted recovery program, alongside efforts of the private sector, will mitigate the impact of the COVID-19 pandemic. Such a program will help the country regain confidence, attain higher economic growth, and restore employment rates to pre-crisis levels,” NEDA said.
DBCC’s projection was part of its adjusted macroeconomic indicators and fiscal program for fiscal years 2020 to 2022 in response to the impact of the COVID-19 pandemic on the Philippine economy.
DBCC primarily reviews and approves the macroeconomic targets, revenue projections, borrowing level, aggregate budget level and expenditure priorities and recommend to the Cabinet and the President of the consolidated public sector financial position and the national government fiscal program.
NEDA said the adjustments reflect the administration’s priorities of “saving lives and protecting communities, while providing support to vulnerable groups and stimulating the economy to create jobs and support growth.”
The revised assumptions are also to allow the government to operate with a more realistic and prudent fiscal stance as it flags the downside risks to the economy and the fiscal program for the rest of the year.
The Bangko Sentral ng Pilipinas (BSP) recommended a downward adjustment of 2020 growth assumptions for goods exports and imports to -4% percent and -5.5%, respectively.
This is in anticipation of the global economy’s sharp contraction as a result of the COVID-19 pandemic. For 2021 to 2022, growth in goods exports is expected to recover to 5% while growth in goods imports is projected to bounce back to 8%.
Expected revenue collection for this year has been revised to P2.61 trillion or 13.6% of GDP from 16.8% approved by the DBCC on March 26, 2020.
