The Philippine economy, which before the pandemic was one of Asia's fastest growing, is likely to be far worse off this year than the previous forecast of a 5.5% decline, although a strong rebound for the next two years is expected, Budget Secretary Wendel Avisado said in a media briefing.
The gradual lifting of coronavirus curbs that dramatically slowed domestic spending and saw record job losses in April should help restore positive growth of 6.5%-7.5% and 8%-10% in 2021 and 2022 respectively.
"Further relaxation of restrictions, as we have improved our healthcare system capacity, will keep our economy on the right track towards full recovery," Avisado said.
This year's budget deficit is estimated to reach 7.6% of gross domestic product, narrower than its 9.6% forecast previously, Avisado said, courtesy of the government's prudent fiscal policy.
The government, which concluded a $2.75 billion global bond sale on Thursday, its third bond offering this year, expects a budget shortfall equal to 8.9% of GDP in 2021 and 7.3% of GDP in 2022.
Finance Secretary Carlos Dominguez said in the same briefing the government has the necessary resources "to endure this challenge but we must conserve resources for succeeding rounds".
Both chambers of congress have approved a record 4.5 trillion pesos ($94 billion) budget for 2021, part of which will be used to buy COVID-19 vaccines as the government aims to immunize a third of its 108 million population and bring back some semblance of normality.
The $370 billion economy fell deeper into recession in the third quarter as coronavirus curbs continue to limit economic activity.
(Reporting by Karen Lema and Neil Jerome Morales; Editing by Martin Petty)
By Karen Lema and Neil Jerome Morales