Philippines Cuts GDP Growth Outlook as Curbs Stunt Recovery

(Bloomberg) -- The Philippine government cut its economic growth outlook for this year as lockdowns to counter high numbers of coronavirus infections weigh on the recovery. 

Gross domestic product is now tipped to grow 4%-5% this year, compared with a previous estimate of 6%-7%, according to the Development Budget Coordination Committee, which sets the government’s economic assumptions for budget purposes. The outlook for next year was kept at 7%-9%, the committee said Wednesday.

The downgrade “brings official forecasts more in line with market consensus, and clearly reflects the impact of the persistent spread of the Delta variant and subsequent mobility curbs,” said Mitul Kotecha, chief emerging markets Asia & Europe strategist at TD Securities in Singapore. “Risks to growth remain on the downside until such curbs are lifted, amid greater vaccinations and/or reduced Covid cases.”

Lingering lockdowns to quell persistently high infections pushed the economy back into contraction in the second quarter from the previous three months. With the delta variant spreading across Southeast Asia, governments from Malaysia to Thailand are slashing their economic growth estimates. 

“Our strategy is to continue managing the risks carefully by imposing granular quarantines, while allowing a vast number of people to earn a living,” the committee said in a statement. 

Analysts predict the Philippine economy will grow 4.9% this year, and 6.5% in both 2022 and 2023, according to a Bloomberg survey released Tuesday. That places the nation among the region’s laggards. 

Enough people in densely populated areas can be vaccinated by the end of the year to reduce the need for wide-scale quarantines, the committee said. The Philippines earlier set a goal of inoculating all adults, or 70% of the population, this year.

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