Renewed lockdowns prompt DBCC to revisit economic growth targets

Metro Manila is under the strictest form of lockdown until Aug. 20, amid a Delta-driven surge in coronavirus disease 2019 (COVID-19) infections. — PHILIPPINE STAR/ MICHAEL VARCAS

THE INTERAGENCY Development Budget Coordination Committee (DBCC) is set to review its growth targets and macroeconomic assumptions in a meeting on Wednesday (Aug. 18), in light of the renewed lockdown restrictions in some parts of the country, including Metro Manila.

“We will review all our macroeconomic assumptions and projections depending on the GDP (gross domestic product) numbers and now, on this lockdown that happened,” Finance Secretary Carlos G. Dominguez III told reporters on Tuesday. He declined to give further details.

Metro Manila is under the strictest form of lockdown until Aug. 20, amid a Delta-driven surge in coronavirus disease 2019 (COVID-19) infections.

Estimates from the National Economic and Development Authority (NEDA) showed the economy loses around P151 billion in potential output each week the government places Metro Manila under the enhanced community quarantine (ECQ). The stringent lockdown also pushes 177,000 more Filipinos into poverty and could render 444,000 jobless.

To mitigate the impact, the government released P11.26 billion worth of cash aid to help Metro Manila residents cope with the ECQ, P2.715 billion to households in Laguna and P700 million to Bataan.

In a special meeting on July 19, the DBCC retained its 6-7% growth target for the year after the easing of lockdown measures and a pickup in the vaccination rollout. It also kept the 7-9% growth target for 2022 and a 6-7% expansion each year for 2023-2024.

Economic managers also raised the growth target for goods exports to 10% this year from 8% previously, while the services exports are also expected to grow faster by 7% next year than the previous estimate of 6%, reflecting optimism on global economic recovery.

While the economy grew by an annual 11.8% in the second quarter, GDP data also indicated a slowdown in recovery momentum. On a quarter-on-quarter basis, GDP declined by 1.3% in the April to June period – when Metro Manila was also placed under an ECQ until mid-April.

The economy needs to grow by 8.2% in the second half to meet the lower end of the government’s target this year.

The Health department reported 10,035 new COVID-19 infections on Tuesday, bringing the active caseload to 105,787.

As cases continued to increase, Mr. Dominguez said the country’s mass vaccination program would provide a first line of defense for the economy.

As of Aug. 15, there are 12.56 million Filipinos fully vaccinated against COVID-19, representing 11.47% of the population, according to Our World in Data.

“Unfortunately, our COVID virus is not standing still… they’re evolving, mutating. So I cannot predict what new form will come up but rest assured that we are ready to meet it with our first line of defense. We have also been investing heavily in our healthcare. So that seems to be the only logical way we can approach this now,” he added.

The Finance chief added that the tax reforms passed before the pandemic hit also provided financial buffer for the government to respond to the pandemic.

In a report released on Monday, NEDA warned that job creation will remain muted if stringent lockdown measures will be enforced continuously, stating that the government has to focus on rolling out more proactive measures to curb the spread of the virus.

The unemployment rate hit 7.7% in June, similar to its level in May, while the underemployment rate — or the portion of the labor force that is currently employed but wanting more jobs — rose to 14.2% from 12.3%.

The country’s jobless rate was also among the highest among seven selected Asian economies in the report, second highest next to India’s 9.7% unemployment level for April-June, with Thailand recording the lowest rate at 1.9% for October-December 2020.

NEDA said the government should take advantage of the ECQ period to hasten the inoculation program so the economy can be safely reopened and jobs will be restored. — B.M. Laforga

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