FINANCE Secretary Carlos G. Dominguez III said he expects the country’s economic growth this year to be lower than expected as the government had to reimpose lockdowns in Metro Manila and surrounding areas due to the recent surge in Covid-19 infections.
Dominguez said in an interview with Bloomberg on Tuesday that the lockdown would dent the Philippines’s GDP growth by “one-half of 1 percent.”
“Well, I think it’s going to be lower than what we expected. This surge in the contagion which is incidentally happening in Brazil, Canada, France, and Turkey and other places, is certainly not good for the economy,” Dominguez said.
“However, we just want to emphasize that our death rate is much, much lower than other Western countries. We only have I think 12 deaths per 100,000, and other countries have over 150 deaths per 100,000. We are coping with this surge. And the best way we thought to do it was to have a curtailment of activities, especially in Metro Manila Area for at least two weeks,” he added.
The National Economic and Development Authority (Neda) on Monday said it estimated the two-week enhanced community quarantine (ECQ) in the National Capital Region Plus would shave off 0.8 percentage points from economic growth this year. Apart from this, Neda said the most stringent quarantine status would result in the loss of 252,000 jobs, income loss of P30 billion, and send 102,000 more Filipinos into poverty.
The Cabinet-level Development Budget Coordination Committee (DBCC) has yet to meet to review the country’s macroeconomic assumptions. In its December meeting, the DBCC projected the Philippine economy to grow by 6.5 to 7.5 percent this year and 8 to 10 percent in 2022.
Several think tanks have already downgraded their 2021 GDP growth forecasts for the Philippine economy.
Because the country resorted to strict lockdowns last year to curb the rise of Covid-19 cases, the Philippine economy plunged by 9.5 percent, its worst performance on record since 1946.
Dollar bonds
Meanwhile, Dominguez also said the government is planning to sell dollar bonds “before rates skyrocket.”
Last week, the Philippine government raised 55 billion yen ($500 million or P24 billion) from its sale of three-year zero-coupon Samurai bonds.
The government aims to borrow P3 trillion this year.
In the same interview, Dominguez also said they have no plans to increase the national government’s borrowing from Bangko Sentral ng Pilipinas.
The finance chief said his department is already working on how to wind down the country’s debt, but reiterated they currently have no plans to introduce new tax measures.
“Although I must confess that yesterday I talked to our staff and I said, you know, we have to start thinking of winding down this debt, and by sometime next year, and we have to look at potential revenue sources. So…they’re working on it right now,” he said.
Dominguez earlier said they expect the national government’s debt this year to reach 57 percent of GDP.
As of end-2020, the country’s debt to GDP ratio surged to 54.5 percent—a 14-year-high—coming from a record-low 39.6 percent.
For this year, the government projects the budget deficit to rise to P1.78 trillion or 8.9 percent of GDP as expenditures are still expected to outpace revenues. Last year, full-year budget deficit soared to a new record-high at P1.37 trillion, marking the first time since 1986 that it breached a trillion mark.
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