UPDATE 1-Philippines sees deeper-than-expected economic contraction in 2020

* GDP to shrink 8.5-9.5% in 2020
* Economy to bounce back strongly, growing 6.5-7.5% in 2021
* Govt expects narrower budget deficit in 2020

(Recasts, adds more details, quotes from officials)
By Karen Lema and Neil Jerome Morales
MANILA, Dec 3 (Reuters) - The economic damage brought by the
coronavirus pandemic on the Philippines is more severe than
previously thought, officials said on Thursday, forcing the
government to forecast a deeper contraction of 8.5%-9.5% for the
year.
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.