UPDATE 1-Philippine 2020 GDP decline to be deeper than forecast

* Philippines GDP to decline 2%-3.4% in 2020
* Growth to bounce back between 7.1%-8.1% in 2020
* Budget shortfall to reach 8.1% of GDP in 2020

(Adds more details)
MANILA, May 13 (Reuters) - The Philippine economy's
contraction this year could be greater than earlier predicted as
measures to contain the coronavirus outbreak weigh on domestic
demand and investments, and the budget deficit is expected to
rise sharply in 2020.
Gross domestic product was expected to decline 2% to 3.4%
this year, the first contraction in more than two decades, and
worse than the government's forecast of -1.0% to 0.0% growth in
March, said an inter-agency body in charge of setting the
government's macroeconomic goals and policies.
This year's budget deficit is estimated to reach 1.56
trillion pesos ($31.04 billion) or 8.1% of GDP, a far bigger
shortfall than the government's 5.3% forecast in March, and more
than double its original estimate of 3.2%
"These revised assumptions will also allow the government to
operate with a more realistic and prudent fiscal stance as it
flags the downside risks to the economy and the fiscal programme
for the rest of the year," the Development Budget Coordination
Committee (DBCC) said in a statement on Wednesday.
The Southeast Asian country, which had been one of Asia's
fastest-growing economies before the pandemic, is on the edge of
a recession after growth unexpectedly shrank 0.2% in the first
quarter, dashing forecasts for 3.1% growth. Economists believe GDP will see a steeper drop ahead as an
extended lockdown in the capital takes a heavier toll on
domestic demand, building the case for more monetary policy
easing in the coming months.
The Philippines on Tuesday announced that its capital,
Manila will remain under lockdown up to the end of May,
extending one of the world's strictest and longest community
quarantines to try to contain the outbreak. The government has begun to ease restrictions slowly in what
it considers "low-risk areas" to try to restart the economy, and
allow people to go back to work.
It is implementing a 1.4 trillion peso relief programme to
mitigate the economic impact of the COVID-19 outbreak, that has
infected more than 11,000 people in the country and killed more
than 700.
The Philippine government said it expects a rebound in 2021,
with the economy growing between 7.1% and 8.1%, supported by an
economic recovery programme to cushion the impact of the
pandemic.
($1 = 50.2500 Philippine pesos)