President Marcos’ economic team narrowed its growth outlook for next year given the global headwinds, the Development Budget Coordination Committee (DBCC) said.

On Monday, Dec. 5, the inter-agency body tasked to set the government’s macroeconomic assumptions revised downwards its gross domestic product (GDP) target to six percent to seven percent for 2023.

The new GDP target band is slower compared with the previous 6.5 percent to 8.0 percent.

Budget Secretary Amenah F. Pangandaman, who chairs the DBCC, said the revision was due to multiple headwinds weighing on the country’s growth.

The DBCC, however, maintained its GDP assumption of 6.5 percent to 7.5 percent despite better than expected growth in the first three-quarters of the year at 7.7 percent.

“This momentum is expected to slightly decelerate in 2023 and range from 6.0 to 7.0 percent considering external headwinds such as the slowdown in major advanced economies,” Pangandaman said.

Nevertheless, the DBCC expects growth to pick up in 2024 to 2028 at 6.5 percent to 8.0 percent.

Likewise, the economic managers expect a faster pace of increase in consumer prices. The DBCC expects inflation to pick up at 5.8 percent this year from 4.5 percent to 5.5 percent due to “persisting high prices of food and transport costs.”

“Nonetheless, inflation is expected to moderate in the medium-term reaching 2.5 to 4.5 percent in 2023 before returning to the target range of 2.0 to 4.0 percent in 2024 until 2028,” Pangandaman said.

Meanwhile, the assumption for the price of Dubai crude oil for 2022 is slightly adjusted to $98 to $100 per barrel considering global supply constraints on oil.

“This is expected to gradually slide to $80 to $100 per barrel in 2023 before stabilizing at $70 to $90 per barrel in 2024 to 2028 as oil supply catches up with demand over the medium-term,” the budget chief said.

For the peso-dollar exchange rate, the assumptions for 2023 and 2024 were adjusted upwards as the peso continues to depreciate due to heightened global uncertainties and aggressive monetary policy tightening of the US Federal Reserve.

“This is expected to range from 54 to 55 in 2022 and further increase to 55 to 59 in 2023,” Pangandaman said.

“Nonetheless, the peso is expected to appreciate and stabilize at 53 to 57 in 2024 to 2028, with the BSP’s policy normalization measures and expected pick-up in foreign exchange inflows,” she added.

As domestic demand recovers, goods imports growth projection for this year is increased to 20.0 percent and revised to 4.0 percent in 2023.

Goods exports, on the other hand, are adjusted downwards to 4.0 percent in 2022, and 3.0 percent in 2023 but are expected to stabilize at 6.0 percent in the medium term.

“Both trade assumptions reflect the gradual recovery of trade with the normalization of economic activities, globally and domestically,” Pangandaman said.