DBCC to discuss possible growth target revisions

MANILA, Philippines — Economic managers may adjust the government’s growth targets during a Cabinet-level meeting today as they take into account the risks posed by the spread of the Delta variant that pushed Metro Manila back into lockdown.

The Development Budget Coordination Committee (DBCC) is scheduled to convene today to discuss possible changes in the macroeconomic assumptions in light of the revert to enhanced community quarantine (ECQ) in select areas.

Finance Secretary Carlos Dominguez III said there is a need to review the economic targets to determine whether these can be attained as the Philippines faces a resurgence in COVID-19 infections brought about by the spread of new variants.

“We are having another meeting with the DBCC to determine what the future seems to look like given this lockdown episode we have. We will announce (the growth projections) after the meeting with the DBCC,” Dominguez told reporters.

The DBCC in May downgraded its economic growth forecast to six to seven percent this year, from 6.5 to 7.5 percent. The economic team had realized that it could be difficult to hit the initial estimates after Metro Manila, the financial center, was tightened to ECQ from March 29 to April 11 and modified ECQ from April 12 to May 14.

Although the economy improved by 11.8 percent in the second quarter, Finance Undersecretary and chief economist Gil Beltran said the growth only materialized due to a low base a year ago.

“The double-digit growth in the second quarter is mainly a result of the base effects a year ago when the whole country was placed under strict quarantine measures,” Beltran said last week.

He warned that the enforcement of ECQ regulations, such as curfew hours that require stores to close early and border restrictions that hamper the flow of trade, would affect any momentum that the economy gained toward recovery.

According to the National Economic and Development Authority, the economy is bound to lose at least P150 billion a week with the lockdowns. Also, more than 600,000 workers have to either give up their jobs or clock in reduced hours during ECQ, pushing about 250,000 people below the poverty line on lack of income.

Despite the impact, Dominguez vowed that authorities would speed up the vaccination pace in a rush to achieve herd immunity by the end of the year. He said the Philippines has so far received 42.6 million doses and administered 27.8 million.

“I cannot predict what new form (of COVID-19 strains) will come up, but rest assured that we are ready to meet it with our first line of defense,” Dominguez said.

Aside from GDP growth, the DBCC will discuss whether to sustain the target range for inflation of two to four percent, as the Bangko Sentral ng Pilipinas last week raised its forecast to 4.1 percent in anticipation of crude price hikes with the rebound of travel.

The DBCC may also look into the deficit target of 7.6 percent of GDP this year. With the return to lockdown in multiple areas, the government distributed another round of social amelioration to mitigate the ECQ’s impact on the poorest families.