The inter-agency Development Budget Coordinating Committee on Friday kept the 2023 gross domestic product growth forecast at 6 percent to 7 percent on continued resilience of the economy despite headwinds from both domestic and external fronts.
The DBCC is composed of the heads of the Department of Finance, Department of Budget and Management and the National Economic and Development Authority.
Budget Secretary Amenah Pangandaman, in a joint statement signed by the DBCC members, noted the 6.4-percent GDP growth in the first quarter, making the country one of the best-performing economies in the region. The growth was faster than those of Indonesia, China and Vietnam.
“We have maintained our growth assumptions at 6 to 7 percent for 2023 and 6.5 to 8 percent for 2024 to 2028, taking into account both domestic and external risks. These projections have already taken into account the risks posed by El Nino and other natural disasters, global trade tensions, and value chain disruptions, among other factors,” Pangandaman said.
DBCC expressed confidence the country could withstand these risks and achieve upper-middle income status in the next two years through the implementation of near- and medium-term strategies, such as ensuring timely and adequate importation, providing preemptive measures to address El Nino, strengthening biosecurity, enhancing agricultural productivity, and pushing for legislative reforms including the Livestock, Poultry, and Dairy Competitiveness and Development Act.
NEDA Secretary Arsenio Balisacan said he is confident of the economy’s continued resilience, as the robust domestic demand is the major source of growth.
“Our strategy is to strengthen it so it will not be affected much by external factors,” Balisacan said, adding the country’s macroeconomic fundamentals remained strong.
“Domestically, inflation is going down…The Bangko Sentral ng Pilipinas is also taking a cue from the slowing inflation. All these factors convinced us to believe that the domestic economy will remain strong,” Balisacan said.
Finance Secretary Benjamin Diokno cited the recent move by Fitch Ratings when it affirmed the Philippines’ “BBB” credit rating and upgraded its outlook from ‘negative’ to ‘stable’.
“BSP also cut the reserve requirements by 250 basis points. That means more loanable funds for consumers. The World Bank also upgraded its growth forecast for the Philippines this year to 6 percent from 5.6 percent… So there is a lot of good news,” Diokno said.
DBCC adjusted the average inflation rate assumption for 2023 to 5 percent to 6 percent from the previous estimate of 5 percent to 7 percent partly due to a consistent slowdown in consumer prices over the past four months.
Inflation is seen to return to the target range of 2 percent to 4 percent by 2024 to 2028 as the administration, through the Interagency Committee on Inflation and Market Outlook, provides proactive measures to address the main drivers of inflation.
The assumption for the price of Dubai crude oil for 2023 and 2024 was kept at $70 to $90 per barrel before stabilizing at $60 to $80 per barrel in 2025 to 2028 as the latest future prices and forecasts still suggest falling global crude oil prices over the medium term.
The peso-dollar exchange rate assumption for 2023 is adjusted to 54 to 57 and is expected to be broadly stable at 53 to 57 for the remainder of the medium term.
Goods exports and imports growth projections for 2023 were revised downwards at 1 percent and 2 percent, from 3 percent and 4 percent, respectively, following the trend in near-term global demand outlook and trade prospects.
“The DBCC maintains its commitment to ensuring sound fiscal management guided by the Medium-Term Fiscal Framework. This is reflected in our strong fiscal performance for the first four months with actual revenues inching up to P1.26 trillion, higher by 11.2 percent due to improved tax administration,” they said.
This is projected to reach P3.729 trillion by the end of the year and further rise to P6.622 trillion in 2028 through the implementation of revenue-generating measures over the medium term.
“Meanwhile, disbursements will remain above 20 percent of GDP over the entire plan period, with priority given to infrastructure and socio-economic development. Deficit is also targeted to gradually reach pre-pandemic levels of 3 percent of GDP in 2028 from this year’s 6.1 percent,” they said.
Pangandaman said the national government is preparing the 2024 proposed national budget amounting to P5.768 trillion, up by 9.5 percent from the 2023 budget.
The 2024 national budget will continue to prioritize expenditure items that promote social and economic transformation through infrastructure development, food security, digital transformation, and human capital development, she said.