The Philippines has lowered its economic growth targets for this year and next after a deeper-than-expected contraction in gross domestic product (GDP) in the first quarter, its budget minister said on Tuesday.
This year’s GDP is expected to expand by 6.0%-7.0%, weaker than its previous target of 6.5% to 7.5%, but up from a record contraction of 9.6% in 2020, Budget Secretary Wendel Avisado told a news conference.
“The effects of the COVID-19 pandemic may remain in the short-term, but we are optimistic that the economy will return to its upward growth trajectory starting this year,” Avisado said.
Growth next year is projected at 7.0% to 9.0%, Avisado said, also scaled back from a previous target of 8.0-10%, before it is seen slowing to 6.0% to 7.0% in 2023 and 2024.
Strict and lengthy lockdowns aimed at containing the spread of the coronavirus have ravaged the Southeast Asian economy, which before the pandemic was among Asia’s fastest growing.
The Philippines has gradually eased COVID-19 curbs to encourage business activity and allow greater mobility, but the speed at which it can fully reopen will depend on how fast it can immunise a third of its estimated 110 million people against coronavirus to achieve herd immunity.
Officials said on Tuesday the government’s immunization drive, which began on March 1, is gaining momentum after a slow start, with daily inoculations now reaching more than 120,000 from around 43,000 in mid-April.
The Philippines is battling one of the worst COVID-19 outbreaks in Southeast Asia, with over 1.1 million confirmed cases and more than 19,000 deaths.
For this year and next, the government expects a budget deficit equal to 9.4% of GDP and 7.7% of GDP, wider than its previous targets of 8.9% and 7.3%, respectively, due to lower corporate tax collections.
The government passed a law in March lowering corporate tax rates to attract much-needed investment and create jobs.
