Gov’t further cuts 2021 GDP growth goal to 4-5%

Prolonged restrictions slow reopening of economy, make previous target unrealistic

With the health challenges posed by the more contagious COVID-19 strains further slowing down the reopening of the economy, the government has slashed anew its gross domestic product (GDP) growth goal for the year to 4-5 percent from 6-7 percent.

Following the average GDP expansion of 3.95 percent in the first six months, the economy needed to grow by between 4.05 percent and 6.05 percent in the second half to hit the revised full-year target, even as the Delta and Lambda variants may keep parts of the country under strict quarantine restrictions.

Government economic managers earlier set the growth target for 2021 at 6.5-7.5 percent as the GDP shrank by a record 9.6 percent in 2020. This, however, was slashed to 6-7 percent in May this year, as the country remained in recession in the first quarter.

“In the first half of 2021, our careful balancing of COVID-19 and non-COVID-19 risks allowed us to improve GDP growth to 11.8 percent in the second quarter. Without the recent spike [in COVID-19 cases], the growth target of 6-7 percent would have been achievable,” the Cabinet-level Development Budget Coordination Committee (DBCC) said in a statement after their special meeting on Wednesday.

“However, with the global emergence of the Delta variant, the second-half growth outlook was revised downward to recontinue flect the additional restrictions imposed by the government, which are necessary to curb its spread,” the DBCC said.

Granular lockdowns

This month, Metro Manila as well as the provinces of Bataan and Laguna reverted to two weeks of the most stringent enhanced community quarantine.

“Our strategy is to continue managing the risks carefully by imposing granular quarantine, while allowing a vast number of people to earn a living. We will to use this period to accelerate the rollout of the vaccination program,” the DBCC said.

The economic team said that as of mid-August, 27.8 million vaccine doses had been used, with 12.6 million Filipinos fully vaccinated. It added that daily vaccinations averaged more than 475,000 last week following a single-day high of 710,482 on Aug. 5.

“At this rate, and with recent vaccine deliveries arriving as scheduled, we are confident that we can inoculate the required number of individuals, particularly in the densely populated areas, by the end of 2021,” the DBCC said. The government wanted to vaccinate all adult Filipinos this year.

For the DBCC, ramping up mass vaccination “will significantly reduce the need for widescale quarantine, especially in key economic centers where the majority of Filipinos work.”

As such, the DBCC kept the GDP growth targets for 2022 and 2023 at 7-9 percent and 6-7 percent, respectively.