Philippines revises 2022 growth outlook to 7-8%, raise inflation goal to 3.7%-4.7%
By Robina Asido
The Development Budget Coordination Committee (DBCC) on Tuesday revised the full-year growth target to 7 - 8 percent from 7 to 9 percent for 2022.During a virtual press briefing, National Economic and Development Authority (NEDA) Secretary Karl Kendrick Chua explained that this year's growth target was revised due to external risks factors in the past months.
"We have revised the GDP growth target for this year from 7 to 9 to 7 to 8 percent taking into consideration external risks that have materialized in the last six months, the Russia, Ukraine, the US monetary normalization and the slowdown of China," he said.
But, despite the external risk, Chua said the domestic economy remains "very strong".
"Nonetheless, we will grow by 7 to 8 percent this year supported by our very strong domestic economy and the more we shift to alert level 1, begin face to face schooling, accelerate vaccination specially of children and seniors we can fully reopen the economy and we have as our guide Executive Order 166 that call for the full reopening of the economy, despite this external risk the domestic economy remains very strong," he said.
Budget and Management OIC and Undersecretary Tina Rose Marie Canda said "the real GDP growth was retained at 6 - 7 percent for 2023 to 2025 as the economy is expected to sustain its strong recovery in the medium term."
Canda added inflation rate for 2022 was also adjusted while forecasts for 2023 to 2025 remain the same. The previous inflation forecast for 2022 was 2-4 percent.
"The average inflation rate assumption for 2022 was adjusted upwards and is projected to range from 3.7 to 4.7 percent, 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," she said.
"Nevertheless, the DBCC maintained the inflation rate assumption at 2 to 4 percent for 2023 to 2025, consistent with the latest forecasts of other agencies and its deceleration over the medium-term," she added.
Canda said considering the potential supply disruptions caused by the Russia-Ukraine conflict, the assumption for the price of Dubai crude oil per barrel for this year increased to $90 to $110 per barrel.
"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," she said.
Canda said as economic activity is expected to pick up over the medium-term the "revenue collections for 2025 are also expected to increase further to PhP 4.549 trillion (16.1 percent of GDP)."
"Revenue projections were revised upward to P3.633 trillion (15.3 percent of GDP) for 2023 and to P4.063 trillion (15.6 percent of GDP) for 2024," she said.
"Consistent with higher revenue projections, disbursements were also revised upwards to P5.086 trillion (21.3 percent of GDP) and P 5.392 trillion (20.8 percent of GDP) for 2023 and 2024, respectively. Meanwhile, disbursements are projected to reach P5.723 trillion (20.2 percent of GDP) for 2025," said Canda.
"Given the revised revenue and disbursement program, the DBCC maintained its target deficit at 6.1 percent of GDP for 2023, 5.1 percent of GDP for 2024, and projected the figure of 4.1 percent of GDP for 2025 as the government continues to adopt a fiscal consolidation strategy to lower the deficit back to pre-COVID-19 levels," she added.
Canda said economic progress in the past two years demonstrates an effective risk management approach of the government.
"With the full implementation of Executive Order No. 166 adopting the 10-point policy agenda, we will be able to accelerate and sustain economic recovery from the COVID-19 pandemic," she said.DMS
