The Duterte administration’s economic team has lowered its growth assumption for this year due to the emergence of new coronavirus variants and the reimposition of strict lockdowns in Metro Manila and nearby provinces.
The inter-agency Development Budget Coordination Committee (DBCC) slightly revised its gross domestic product (GDP) projection for 2021 to around 6.0 percent to 7.0 percent from an earlier range of 6.5 percent to 7.5 percent.
Moreover, the economic managers estimated that GDP will return to a pre-pandemic level next year, growing at 7.0 percent to 9.0 percent. The range, however, is slower compared with the previous 8.0 percent to 10.0 percent projection.
Between 2023 and 2024, the inter-agency a body that sets the macroeconomic targets of the country is forecasting that the local economy will grow by 6.0 percent to 7.0 percent.
“Our growth prospects and economic recovery will be underpinned by three interventions to arrest the spread of the virus and help the poor cope with the impact of the quarantines,” Budget Secretary and DBCC Chair Wendel E. Avisado said.
One of the main interventions cited by the Avisado was the intensified implementation of the prevent, detect, isolate, treat, and recover strategy and the full vaccination of the residents in areas with the highest risk, such as the National Capital Region (NCR) Plus.
“By targeting these areas, COVID-19 transmission can be dramatically reduced throughout the country,” Avisado said.
Meanwhile, the DBCC maintained its average inflation target between 2021 and 2024 at 2.0 percent to 4.0 percent, while the price of Dubai crude oil per barrel is estimated to increase to $50 to $70 per barrel following the rise in global demand coupled with production cuts.
The peso-US dollar exchange rate assumption was adjusted to P48 to 53 against the USD for 2021 to 2024.
Moreover, the 364-day Treasury bill rate assumption was recalibrated to 2.0 percent to 3.0 percent for 2021 and 2.0 percent to 3.5 percent for 2022, and was set at 2.5 percent to 4.0 percent for 2023 to 2024.
This is primarily due to the Bangko Sentral ng Pilipinas’ (BSP) liquidity-enhancing measures and the expected uptrend in global interest rates over the medium-term as the global economy recovers.
Meanwhile, the six-month LIBOR assumption was maintained at 0.2 percent to 1.2 percent for 2021, 0.3 percent to 1.3 percent for 2022, 0.5 percent to 1.5 percent for 2023, and 1.0 percent to 2.0 percent for 2024.
In line with recent positive trends in global trade, Avisado said that goods exports are projected to expand to 8.0 percent percent by 2021 and 6.0 percent by 2022.
Goods imports are also expected to grow by 12.0 percent this year and 10.0 percent in 2022 as domestic demand bounces back.
For 2023 to 2024, goods exports and imports are projected to grow by 6.0 percent and 8.0 percent, respectively.
Furthermore, the growth forecast for services exports is maintained at 6.0 percent for 2021 to 2024. On the other hand, services imports is projected to grow by 7.0 percent in 2021 and to 8.0 percent for 2022 to 2024.