Despite the Bangko Sentral ng Pilipinas' (BSP) differing estimates, the government's chief economist is optimistic that the country will achieve its growth target this year, expecting the constraints to be resolved in the second semester.

At a televised Malacañang briefing on Wednesday, Aug. 23, National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan maintained that the 6.0 percent to 7.0 percent gross domestic product (GDP) target for 2023 is achievable.

Balisacan's comments come in response to the recent report from the BSP Monetary Board, which suggested that GDP growth is expected to fall short of the government's medium-term targets.

For 2024 to 2025, the Development Budget Coordination Committee, an inter-agency body responsible for establishing the government's macroeconomic assumptions, has set a growth target of 6.5 percent to eight percent.

The BSP expects weaker than expected growth due to the cumulative effect of monetary policy adjustments.

Since May 2022, the BSP has implemented an aggressive monetary tightening cycle, leading to a total of 425 basis points increase in borrowing costs to date.

Although the effects of interest rate hikes are still present, Balisacan said they are expected to gradually diminish until the end of this year or possibly early next year.

“We have identified the sources of the slowdown and we think that we can speed up the implementation of projects and programs to benefit the economy for the second half of the year,” Balisacan said.

The economy recorded a modest growth rate of 4.3 percent in the second quarter, short of the 6.4 percent GDP recorded in the first quarter of 2023.

The country’s growth was pegged at 5.3 percent in the first semester. In order to meet the full-year goal, the country's GDP would need to grow by at least 6.6 percent in the second half.

However, Balisacan said the upward trend of inflation, driven by escalating oil and rice prices in the global market, presents a potential risk to economic growth.

In light of this concern, Balisacan said it is essential to consider extending the tariff reductions on pork, corn, rice, and coal, which are slated to expire by the year-end.

“I believe that it is necessary to review the current circumstances to determine if further extension of the tariff rates is warranted,” the NEDA chief said.

“Considering the current situation, which includes rising world prices of rice and the lasting effects of floods and typhoons, we need to be cautious about undoing the progress made,” Balisacan said.

“Therefore, I believe that it may not be the right time to lift the low tariffs on essential commodities,” he added.

Last Aug. 5, Finance Secretary Benjamin E. Diokno said a meeting would be held in September to assess the necessity of extending Executive Order No. 10 issued by President Marcos in December 2022.

EO 10 has maintained reduced tariff rates for four commodities until Dec. 31, 2023.

The reduced rates are 15 percent (in-quota) and 25 percent (out-quota) for pork, five percent (in-quota) and 15 percent (out-quota) for corn, and 35 percent (in-quota and out-quota) for rice.

Meanwhile, coal will remain duty-free until year’s end, subject to semi-annual reviews.

EO 10 is already an extension of EO 171, issued by former President Duterte, which reduced the tariff rates for in-quota and out-quota pork shipments.