NextGen Day

MANILA – Following the robust output in the first quarter of the year, economic managers cut the government’s 2022 growth objective from 7-9 percent to 7-8 percent on Tuesday, taking into account the influence of foreign developments.

National Economic and Development Authority (NEDA) Secretary Karl Kendrick Chua stated in a virtual briefing following the 181st meeting of the inter-agency Development Budget and Coordination Committee (DBCC) that the 8.3 percent output in the first quarter of this year is sustainable.

“The Philippine economy is on a road to rapid and inclusive growth that is sustainable.” “Taking into account external threats that have emerged in the last six months, we have lowered the GDP target for this year from 7-9 percent to 7-8 percent,” he stated.

The conflict between Russia and Ukraine, the Federal Reserve’s policy rate hike of 75 basis points, and the slowing development of China’s economy, the world’s second-largest, are among the risks.

The robust domestic economy, according to Chua, will counteract these factors.

“And the closer we go to Alert Level 1, the sooner we can start face-to-face schooling and speed vaccination, especially for youngsters and the elderly.” Executive Order 166, which asks for the economy to be fully reopened, serves as our guidance. Despite these external obstacles, the domestic economy remains robust,” he remarked.

Allowing face-to-face lessons is beneficial to economic activity, according to Chua, “since those studying account for roughly 40% of the population.”

Despite the reduction in the growth target for this year, the 6-7 percent growth target for 2023 to 2025 was maintained.

Another change to the year’s macroeconomic assumptions is the average inflation rate, which has been raised to between 3.7 and 4.7 percent, owing to increases in the price of oil and other commodities on the international market as a result of the Russia-Ukraine conflict. Previously, this range was between 2 and 4%.

The average rate of price rise as of the end-April this year was 3.7 percent. The impact of increasing oil prices on food and services, among other things, drove inflation to 4.9 percent in April from 4 percent the previous month.

The DBCC raised its income forecast for 2023 from PHP3.624 trillion to PHP3.633 trillion, citing continued strong domestic economic activity.

During the DBCC meeting in December, the revenue assumption for 2024 was raised to PHP4.063 trillion from PHP4.048 trillion.

Government revenues are expected to reach PHP4.549 trillion by 2025.

Disbursements for the next two years have also been increased to PHP5.086 trillion and PHP5.392 trillion, respectively. The prior estimates were PHP5.059 trillion in 2023 and PHP5.347 trillion in 2024.

Disbursements are expected to total PHP5.723 trillion by 2025.

“Given the revised revenue and disbursement program, the DBCC maintained its target deficit for 2023, 5.1 percent for 2024, and projected the figure of 4.1 percent for 2025 as the government continues to adopt a fiscal consolidation strategy to lower the deficit back to pre-Covid-19 levels,” Tina Rose Marrie L. Canda, officer-in-charge of the Department of Budget and Management (DBM), said during the same briefing.
She went on to say that, because of the expected rise in income next year, the planned national budget for 2023 has been set at PHP5.268 trillion, up from PHP5.024 trillion this year.

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