Prolonged quarantine to remain in 2021 – NEDA

The Philippines is expected to remain under a prolonged quarantine next year, with restrictions seen to be removed only in 2022, according to the National Economic and Development Authority (NEDA).

At a briefing of the Development Budget Coordination Committee ( DBCC) late yesterday, acting Socioeconomic Planning Secretary Karl Chua said the revised economic performance projections for next year take into consideration the likelihood of a less strict modified general community quarantine (MGCQ) by next year as the rollout of a vaccine for COVID-19 looms.

With an extended quarantine, economic managers now see an

even deeper economic contraction for 2020.

The DBCC said it now expects the economy to contract by 8.5 percent to 9.5 percent this 2020, worse than the previous estimate in July ranging from 4.5 percent to 6.6 percent.

This would also be the sharpest decline in the gross domestic product since 1984, when the economy contracted by seven percent.

Despite the lower projection, the DBCC said further relaxation of restrictions, made possible by improvements in the health care system, will keep the economy on track towards recovery.

“Thus, GDP growth is projected to bounce back to reach 6.5 to 7.5 percent in 2021 and 8 to 10 percent in 2022,” the DBCC said.

The Philippine economy remained in recession in the third quarter of the year with a GDP contraction of 11.5 percent. This was, however, an improvement from the 16.9 percent decline in the previous quarter.

Economic managers said they expect further improvements in the fourth quarter as the government proactively manages health risks posed by the COVID-19 pandemic.

The DBCC has also revised its inflation forecast this year, which is now ranging from 2.4 to 2.6 percent. Assumptions for the price of Dubai crude oil were also revised to $40 to $42 per barrel from the previous estimate of $35 to $45 per barrel.

Foreign exchange rate assumption for 2020 was also adjusted to a lower range of P48 to 50 against $1 from the previous estimate of P50 to P52.

In line with recent trends in global trade, the growth assumption for goods exports is maintained at -16 percent for 2020, while growth of goods imports for 2020 was further adjusted to -20 percent from -18 percent.

Thankful

With over P83 billion allotted for the purchase of vaccines and test kits for COVID-19, the country is on track to address the raging health crisis, vaccine czar Carlito Galvez Jr. said on Wednesday as he thanked the Senate and the House of Representatives for legislating appropriate measures.

“We are very thankful that the Senate and Congress are very supportive of the vaccines purchasing program of the President by giving more or less P50 billion funds in the GAA (General Appropriations Act). I believed that there is also P33 billion. Over and above, (Finance) Secretary (Carlos) Dominguez has allotted through the ADB (Asian Development Bank) and the World Bank more or less P83 billion,” Galvez said at the weekly Kapihan sa Manila Bay virtual forum. He said P33 billion of the amount would be for vaccines and testing kits.