Presumptive President Ferdinand R. Marcos Jr. will inherit a narrower economic growth target following a downgrading of growth forecast this year to 7.0 percent and 8.0 percent from the original assumption of 7.0 percent to 9.0 percent by the outgoing Duterte administration.
The inter-agency Development Budget Coordination Committee (DBCC) on Tuesday, May 24, announced a slight revision of its gross domestic product (GDP) target range for the year due to unfavorable external environment.
Socioeconomic Planning Secretary Karl Kendrick T. Chua said the revision was primary driven by external risks, such as the Russian-Ukraine war, China’s slowdown, and monetary normalization in the United States.
“The Philippine economy’s strong recovery in the first quarter of 2022 has moved us closer to our goal of achieving at least 7.0 percent growth this year. However, in light of heightened external risks… the full-year growth target was slightly revised,” the DBCC said.
Meanwhile, real GDP growth forecast was retained at 6.0 percent to 7.0 percent for 2023 to 2025 as the economy is expected to sustain its strong recovery in the medium term, the economic team said.
“Shifting the entire country to alert level 1, increasing the vaccination rate, especially for seniors and children, and reopening all face-to-face classes are crucial to further strengthen domestic demand, cushion the impact of external events, and achieve our growth targets,” it said.
Moreover, the average inflation rate assumption for this year was also adjusted upwards and is projected to range from 3.7 percent to 4.7 percent. This is higher than the government’s target of 2.0 percent to 4.0 percent.
The adjustment was due to following the uptick in the price of food and energy as a result of ongoing geopolitical tensions from the Russia-Ukraine conflict and disrupted supply chains.
Nevertheless, the DBCC maintained the inflation rate assumption at 2.0 percent to 4.0 percent for 2023 to 2025, consistent with the latest forecasts of other agencies and its deceleration over the medium-term.
Likewise, the assumption for the price of Dubai crude oil per barrel for this year was increased to $90 to $110 per barrel considering potential supply disruptions caused by the Russia-Ukraine conflict.
“Nonetheless, this is expected to decrease to $80 to $100 per barrel in 2023 and $70 to $90 per barrel in 2024 to 2025 as oil supply is expected to catch up over the medium-term,” the DBCC said.
“As we transition to a new administration, we are confident that the country will not see an end to the enactment of more game-changing reforms,” the DBCC said.
“The DBCC stands ready to work closely with the economic managers of the incoming administration to achieve more sustainable and inclusive growth for the Filipino people,” the inter-agency concluded.