This is deeper than the government’s -5.5 percent gross domestic product (GDP) projection as of July.
In his speech during the Manila Times online business forum, Dominguez said movement restrictions implemented to address the spike in coronavirus disease 2019 (Covid-19) infections “have been very costly to the economy.”
“For the entire year, we project our economy to contract by about 6 percent. We have seen unemployment spike when the domestic economy was hindered by the lockdown. Our enterprises have borne the brunt of the economic downturn,” he said.
The -6 percent projected GDP figure for 2020 is “under discussion” among the members of the inter-agency Development Budget Coordination Committee (DBCC).
The government reimplemented the modified enhanced community quarantine (MECQ) for the National Capital Region (NCR) as well as Bulacan, Laguna, Rizal and Cavite from August 4 to 18 in response to medical practitioners’ call for help to address the rising Covid-19 cases.
To date, NCR and the four nearby provinces are under a less strict general community quarantine (GCQ).
Amid the expected contraction of the domestic economy this year, Dominguez is confident about a strong rebound next year, with economic
managers targeting a range of between 6.5 to 7.5 percent.
He said government’s recovery efforts “will face strong headwinds” since the pandemic is hurting the global economy.
Dominguez said “challenges are large but we are determined to build back a better economy that the Filipino people deserve.”
“By exercising prudence in managing our fiscal affairs, we are confident that we will outlast this emergency,” he added.
Dominguez traces his optimism to moves towards revising consumer confidence, continued reopening of the economy, approval of legislative measures that will address the pandemic, and the approval of the P4.5-trillion national budget for next year.
“The Duterte administration’s aim is to pursue a safe new normal while we strive for a better normal. We cannot completely lock ourselves up to avoid Covid-19 at the expense of other vital dimensions of our lives. We should take less costly but effective measures,” he said.
During the same event, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco Dakila Jr. said signs of economic recovery continue to show partly with the help of the various monetary and fiscal measures implemented since the first quarter.
Among the BSP measures targeted to help buoy the economy include the 175 basis points reduction in the central bank’s key policy rates, cut in banks’ reserve requirement ratio (RRR) by as much as 200 basis points, the repurchase deal with the national government (NG) amounting to PHP300 billion, and the P540-billion provisional advance to the national government.
He said monetary authorities acted aggressively to help lessen the economic impact of the pandemic.
Dakila, however, said that while the economy slowly recovers from the crisis, uncertainty remains partly due to the latest development on the virus.
“Therefore, the BSP is prepared to use the full range of its monetary instruments to deploy monetary policy and regulatory relief measures as needed in fulfillment of its price and financial stability objectives,” he added. (PNA)