Banco de Oro (BDO) has revised slightly downward its economic growth forecast for this year amid the risk of rising coronavirus disease 2019 (Covid-19) cases.
BDO Unibank Inc. first vice president and chief strategist Jonathan Ravelas said Tuesday it is looking at a gross domestic product (GDP) growth of at least 6 percent for the Philippines at end-2021 from an initial forecast of 6.6 percent.
“Prior to the start of 2021, we were looking at 6.6-percent growth in the economy primarily driven (by the fact) that we could have reopened early, as early as around this time, at the end of 2020. However, it seems that it (reopening) will most likely be pushed so basically we will probably see at least 6 percent growth,” Ravelas said in a virtual forum organized by the Italian Chamber of Commerce in the Philippines.
He said a contraction in GDP is still expected in the first quarter of the year.
The country has been logging 3,000 to more than 5,000 Covid-19 cases in the past few days.
Ravelas added the challenge in flattening the curve would cause uneven economic recovery.
On the other hand, the vaccination program and the impact of the stimulus program of the Biden administration in the United States would appear to be the “green shoots” in the economy, Ravelas said.
“We will probably gain more traction towards the second half of this year,” he said, adding that inoculating more Filipinos will drive better confidence in the market.
Ravelas said a “timed fiscal response” will also help in restarting economic activities.
“Once we’re out of a lockdown, that’s the time probably (the) government should initiate a small amount of money to restart the economy. Doing it now will be useless because we are still in a lockdown,” he said.
Moreover, Ravelas said the local currency will remain depreciated due to imports recovery.
He added the central bank is also expected to maintain its rates amid difficult inflation this year. SOVEREIGNPH