Philippines Cuts 2021 GDP Outlook, Signals Concern About Budget Deficit

Spot USD/PHP re-opened lower, printing worst levels since mid-Feb this morning, but has recovered since and last trades virtually unch. at PHP47.820. A breach of May 11 high of PHP47.921 would clear the way to May 5 high of PHP48.133. Conversely, bears look to force a break of Feb 16 low of PHP47.721.

• USD/PHP 1-month NDF last -0.010 at PHP47.940, with downside focus fixed on May 14 &17 cycle lows of PHP47.820. Bulls need a rebound above May 17 high of PHP48.060 before taking aim at May 13 high of PHP48.130.
• Philippine Development Budget Coordination Committee lowered the 2021 growth outlook to +6.0%-7.0% Y/Y from +6.5%-7.5% Tuesday, while also cutting the 2022 GDP forecast to +7.0%-9.0% from +8.0-10.0%. Budget Sec Avisado sought to downplay the significance of the revisions, noting that the impact of the pandemic "may remain in the short-term, but we are optimistic that the economy will return to its upward growth trajectory" as soon as this year.
• In addition to cutting GDP outlook, the gov't also forecast a wider budget deficit this year. Finance Sec Dominguez called wider deficit "concerning," adding that funding for the Covid-19 inoculation programme & worse than expected Q1 economic contraction pushed debt-to-GDP ratio higher.
• Meanwhile, the Phiippine Star reported that Pres Duterte considers sales of gov't properties to fund expenses related to managing Covid-19 outbreak.
• The Philippines protested China's moratorium on fishing in the South China Sea and called upon Beijing to respect its territorial integrity, as tensions over the disputed waters simmer.
• Philippine overall BoP balance is expected to hit the wires by the end of this week.