The interagency Development Budget Coordinating Committee on Thursday revised its gross domestic product contraction target this year to a range of -8.5 to -9.5 percent, deeper from the previous estimate of -5.5 percent, taking into account the prolonged impact of the COVID-19 pandemic.
The council is composed of the secretaries of the Department of Finance, Department of Budget and Management, National Economic and Development Authority and the Bangko Sentral ng Pilipinas.
But DBCC expects GDP to bounce back by 6.5 to 7.5 percent growth next year and 8 to 10 percent expansion in 2022.
In a joint statement issued to the media early evening of Thursday, DBCC said the deeper contraction target for this year was triggered by the “prolonged imposition of community quarantines in various regions of the country.”
“We have revised macroeconomic assumptions and targets to take into account recent positive developments that will help propel the economy to a strong recovery starting 2021. These developments include the better-than-expected performance of the main revenue collections agencies, improvements in the employment situation, and the likely passage of key economic recovery bills,” DBCC said.
It said as the economy gradually moved toward full reopening, “we expect significantly better economic outcomes next year.”
It said the country has improved its health care system capacity, making it on track towards full recovery.
“As shown by the third quarter GDP, our economy gradually bounced back and experienced a smaller contraction of 11.5 percent in the third quarter from 16.9 percent in the second quarter. We are also expecting further improvement in the fourth quarter GDP numbers,” DBCC said.
The DBCC likewise projected inflation rate average this year at a range of 2.4 to 2.6 percent, while the inflation assumptions for 2021 and 2022 was retained at 2 to 4 percent.
The peso-dollar exchange rate assumption was revised to 48 to 50 per greenback for 2020 and 48 to 53 from 2021 to 2022.
Following the above-target performance of the Bureau of Internal Revenue and Customs since July 2020, estimated revenue collections this year has been increased from P2.52 trillion to P2.85 trillion, equivalent to 15.7 percent of GDP.
Revenue projections for 2021 and 2022 have also inched up to P2.88 trillion and P3.31 trillion, respectively.
On the other hand, estimated disbursements for 2020 are expected to show a catchup to P4.23 trillion, equivalent to 23.3 percent of GDP.
The total disbursement program is pegged at P4.66 trillion for 2021 and P4.95 trillion for 2022.
The economy went into a technical recession in the first half after GDP in the second quarter contracted by a deeper 16.9 percent, bringing the first semester average to 9 percent.
The economy, however, showed signs of improvement in the third quarter after GDP contracted by a lesser 11.5 percent to an average of 10 percent in the first three quarters.