Economic managers on Friday lowered the growth forecast for next year and also adjusted other macroeconomic assumptions to reflect latest domestic and global developments.
"Given the positive developments in the Philippine economy and the recent global trends, the Development Budget Coordination Committee (DBCC) has revisited the government's medium-term macroeconomic assumptions, fiscal program, and growth targets for FYs (fiscal years) 2023 to 2028," they said in a joint statement.
Despite many analysts forecasting a growth miss, the interagency DBCC said the economy was still likely to expand by 6.0 to 7.0 percent this year. The outlook for 2024, however, was narrowed to 6.5 to 7.5 percent with the previous 6.5 to 8.0 percent now limited to 2025-2028.
Gross domestic product (GDP) growth remained below target at 5.5 percent as of end-September.
This was still one of the highest in the Asia-Pacific region, the DBCC said, with corresponding GDP per capita also above pre-pandemic levels.
"This growth momentum is expected to continue for the rest of the year and surpass that of our neighboring countries," it added
The DBCC revised the 5.0- to 6.0-percent inflation assumption for this year to just 6.0 percent, and the rate is expected to fall within the 2.0- to 4.0-percent target next year up to 2028.
The projected Dubai crude oil price for 2023 is now estimated to be between $82 and $85 per barrel, compared to the previous range of $70 to $90.
The forecast for 2024 remains unchanged at $70 to $90 per barrel, while that for 2025-2028 was raised to $65 to $85 from $60 to $80.
The peso-dollar rate assumption for this year was adjusted to P55.50-P56:$1 from P54-P57:$1. The 2024 and 2025-2028 forecasts were raised to P55-P58:$1 from P53-P57:$1.
"The peso will continue to be supported by structural foreign exchange inflows, narrower current account deficit projections, and ample foreign exchange reserves," the DBCC said.
Merchandise exports and imports forecasts were slashed to contractions of 4.0 percent and 3.0 percent, respectively, from the previously expected upticks of 1.0 percent and 2.0 percent.
For 2024, exports and imports are expected to rebound but grow by a slower 5.0 percent and 7.0 percent, respectively, from prior 6.0 percent and 8.0 percent assumptions.
Medium-term forecasts for both were kept at 6.0 percent and 8.0 percent.
The revenue assumptions for 2023 to 2028 were raised to P3.846 trillion, P4.235 trillion, P4.699 trillion, P5.283 trillion, P5.903 trillion and P6.622 trillion from the previous P3.729 trillion, P4.201 trillion, P4.692 trillion, P5.255 trillion, P5.895 trillion and P6.621, respectively.
The DBCC said this would be propelled by priority tax measures that "aim to broaden the tax base, improve tax administration, enhance the fairness and efficiency of the tax system, and promote environmental sustainability to address climate change."
Disbursements will be above 20.0 percent of GDP from 2023 to 2024, "driven by the agencies' catch-up plans and the accelerated implementation of programs on infrastructure, social protection, education, livelihood and employment, among others."
The deficit is also projected to progressively decline from 6.1 percent of GDP this year to the pre-pandemic level of 3.0 percent by 2028.
The DBCC set the proposed national budget for 2025 at P6.120 trillion, equivalent to 20.5 percent of GDP and up from the Congress-approved P5.768 trillion for next year.
"The DBCC is committed to continuing its proactive efforts to sustain the high growth trajectory of the Philippine economy and mitigate the lingering effects of high inflation amid a slower global economic scenario," it said.
"Pursuing a whole-of-government approach and a whole-of-society approach, we will strive to implement targeted measures, structural reforms, and strategies that will create a sustainable and future-proof economy for a significant improvement in the quality of life of Filipinos."
Source: Manila Times