MANILA (UPDATE) - Philippine economic managers again lowered their forecast for the economy this year following the release of official unemployment figures, and after the country's gross domestic product shrank at a worse than expected pace in the third quarter.

The cabinet-level Development Budget Coordination Committee said it now expects GDP to contract 8.5 to 9.5 percent this year, which is deeper than the 5.5 percent contraction it forecast earlier.

This means that the DBCC expects the October to December period to also post negative growth between 4.5 percent to 8.2 percent.

The projected full year contraction of at least 8.5 percent is worse than the 7 percent contraction seen in 1984.

The DBCC said this was due to the prolonged imposition of community quarantines in various regions in the country.

"Despite a lower projection than what was initially adopted back in July 2020, further relaxation of restrictions, as we have improved our healthcare system capacity, will keep our economy on the right track towards full recovery," the DBCC said.

"Thus, GDP growth is projected to bounce back to reach 6.5 to 7.5 percent in 2021 and 8 to 10 percent in 2022," it added.

• PH economy likely to see 'deeper decline' in 2020 before recovery next year: ADB

The Philippine economy shrank 11.5 percent in the third quarter, marking the first time in 35 years that GDP contracted for three straight quarters.

GDP shrank 16.9 percent in the second quarter, and 0.7 percent in the first quarter.

"The Philippines has endured the worst economic impacts of the COVID-19 pandemic through prudent fiscal management and evidence-based and decisive actions to address the global health emergency," the DBCC said.

It added that as the economy gradually moves towards full reopening, it expects "significantly better economic outcomes next year."

The economy shrank as the Philippines imposed one of the longest and strictest lockdowns in the world to check the spread of COVID-19.

The Philippines performed worse than Singapore, Indonesia and Vietnam in the third quarter.

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-With reports from Warren de Guzman and Edson Guido, ABS-CBN News