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Eco managers modify goals in light of recent developments

The government’s growth target for 2022 has been decreased by economic managers who have taken into account the implications of the most recent foreign developments.

Amenah Pangandaman, secretary of the Department of Budget and Management (DBM), stated in a briefing on Friday that “in consideration of recent external and domestic developments,” the most recent gross domestic product assumption for the year was changed to between 6.5 percent and 7.5 percent, lower than the 7 percent to 8 percent approved by economic managers in May.

The predictions for 2023–2025, however, were increased from the previous 6–7 percent range to 6.5–8 percent.

The growth estimate for 2026–2028 ranges from 6.5 to 8 percent.

According to a statement, “the growth in household consumption and private investments, along with a strong manufacturing sector, high vaccination rate, improved health care capacity, and the upward trend on tourism and employment has allowed us to safely re-open the economy and register a positive growth for the first three months of 2022.”

The year’s inflation assumption was altered from 3.7 percent to 4.7 percent to between 4.5 percent and 5.5 percent.

The percentages for 2023 were also changed from 2 to 4 to 2.5 to 4.5 percent, however, the figures for 2024 and 2025 were left the same and even authorized as the range until 2028.

The adjustments were made because, in part because of the unpredictability of world oil prices, it is anticipated that the rate of price rises will pick up speed in the upcoming months.

Inflation for the first half of the year averaged 4.4 percent, exceeding the government’s target range of 2 to 4 percent.

Inflation is expected to be on average 5% this year, according to monetary officials.

The peso-US dollar estimate remained at PHP51 to PHP55 for the year, but the PHP50 to PHP53 to PHP51 to PHP55 figure for 2023 was revised, and this is also the assumption for 2028.

Export growth was assumed to increase by 7% this year and 6% through 2025, which was also chosen as the estimate until 2028.

The expected rate of growth for imports for this year has increased from 15% to 18%.

The assumption of a 6% growth in 2023 and an 8% growth in 2024–2025 was also maintained and used as the basis for assumptions up until 2028.

Revenue forecast

The revenue estimates of PHP3.304 trillion for this year, PHP3.632 trillion for 2023, and PHP4.062 trillion for 2024 were maintained in terms of fiscal numbers.

The PHP4.548 trillion 2025 projection, however, was increased to PHP4.576 trillion.

Revenues are anticipated to reach PHP5.155 trillion by 2026, then rising to PHP5.821 trillion and PHP6.589 trillion in the following two years.

The 2023 assumption was set at PHP1.453 trillion, and the budget gap for this year was maintained at PHP1.65 trillion.

According to the statement, “this will be accomplished through increased spending efficiency and alignment of budget goals that are anchored on the administration’s two eight-point socio-economic agendas, one for the near-term and one for the medium-term.”

Arsenio Balisacan, Secretary of socioeconomic planning, stated during the same briefing that the Philippine economy will gain from a potential recession in the United States and a slowdown in China “because that lowers the demand for oil.”

Rightsizing

A rightsizing measure that intends to improve government manpower by eliminating duplicate roles and creating a more effective bureaucracy will be endorsed by the DBM to Congress in the meanwhile.

The same policy was one of the Duterte administration’s priorities, according to Pangandaman, “although it was fairly unpopular.”

But she continued, “I think it’s wise to re-file the measure given the President’s (Ferdinand Marcos Jr.) directive to the Cabinet members to also look at your existing institutions.

Ernesto Pernia, a former secretary of socioeconomic planning, has stated that the policy was not intended to lay off employees but rather to transfer them to another division or department to improve unit operations and address redundancy.

Employees who will be impacted by the program will not be required to retire or resign under the proposal; instead, they will be given the choice to take advantage of retirement benefits or separation incentives, or they will be added to a talent pool that will be used to assign them to organizations that need to supplement their staff.

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