No need to change growth forecast amid COVID variants – NEDA

There is still no need to revise economic growth projections for this year amid threats of new COVID-19 variants as risks continue to be managed, the National Economic and Development Authority (NEDA) said.

Acting Socioeconomic Planning Secretary Karl Chua said the government is already considering easing quarantine restrictions further by next month – particularly in the National Capital Region (NCR) – in line with the programmed calibrated reopening of more sections of the economy.

“In October, November and December, when we reopened the economy, there was no spike in cases. So I think after this month, we should be in a better position to relax further,” he said in a briefing yesterday.

“With the data we are seeing, we can probably relax after this month,” he added.

With the spread of more infectious strains of COVID-19 and eventual detection in the country, President Duterte decided to postpone the reintroduction of face-to-face learning in low-transmission areas as well as the easing of age bracket for those allowed to go out of their homes.

Easing of quarantine restrictions was also delayed at the start of the year as a preemptive measure against the possible spike in cases coming from holiday season revelries.

With the eventual easing of quarantine restrictions and expected arrival of vaccines by the second quarter of the year, Chua said the economy may still have enough steam to power through recovery onward to the fourth quarter of the year.

“We have not seen any reasons to change the projections. We already knew when we proposed the projections that we will have a slow start,” he said.

“But by the second quarter with the arrival of the vaccine and the reopening of the economy and our recovery program kicks in fully, we will make a strong comeback. By the middle of the year, we can be full speed ahead to attain 6.5 percent (growth).”

In December, the Development Budget Coordination Committee (DBCC) revised downward the gross domestic product (GDP) growth projections for this year to a range of 6.5 to 7.5 percent.

Last year, the economy contracted by a record 9.5 percent, buckling under the stress of a prolonged pandemic lockdown a series of natural disasters that battered the country throughout the year.

It settled within the lower end of DBCC’s estimate of a contraction of between 8.5 to 9.5 percent. This, in turn, compared with the pre-pandemic growth level of six percent in 2019.

With the country’s projected population of 109.1 million, per capita GDP contracted by 10.7 percent in 2020.

In the fourth quarter of the year alone, the economy contracted at an even slower pace of 8.3 percent coming from the revised 11.4 percent decline in the third quarter as restrictions were gradually eased and seasonal demand kicked in. This compared with the annual growth of 6.7 percent in the fourth quarter of 2019.

On a quarter-on-quarter basis, however, the economy grew by 5.6 percent in the fourth quarter of 2020.

Chua said the government remains committed to the gradual easing of restrictions as NCR and adjacent regions loses around P700 million in income daily under current restrictions.

“So far, so long as we manage the risk, we do not see a significant change in our economic growth trajectory,” he said.