MANILA -- Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Monday the economy could contract deeper than expected due to the 2-week lockdown extension.

Gross domestic product could shrink by 0.8 from 0.2 percent, which was premised on the lockdown ending on April 30, Diokno said. There will be a strong rebound in 2021, with growth as high as 7.8 percent, he said.

"It's basically the lockdown, the reduced economic activity as a result of the lockdown," he said. "I expected the lockdown to be eased by 15 May."

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January to March gross domestic product growth likely grew "below 6 to 6.5 percent" due to the COVID-19 pandemic and the Taal Volcano eruption, he said.

Official GDP data for the first quarter will be released on Thursday, two days after the release of April inflation figures. With "benign" inflation, Diokno said the BSP had "more room for monetary easing down the road."

"We will use all our tools to help our people pass this coronavirus crisis," he said.

Since the Philippines locked down the capital and other high risk areas in mid-March, Diokno cut the benchmark interest rate by 100 basis points, slashed 200 basis points off the reserve requirement ratio for banks and authorized the purchase of P300 billion in government securities.

The country is poised for a recession this year with the lockdown or enhanced community quarantine in the capital and other urban centers set to last until May 15, after 2 extensions. The rest of the country was placed under general community quarantine with fewer restrictions from May 1.