Economic activity is expected to improve in the fourth quarter as mobility curbs are further eased. — PHILIPPINE STAR/ MICHAEL VARCAS
By Jenina P. Ibanez, Senior Reporter
ECONOMIC MANAGERS raised the gross domestic product (GDP) growth projection to 5-5.5% for this year, citing the continued easing of lockdowns and the uptick in business activity.
The interagency Development Budget Coordination Committee (DBCC) at a press briefing on Tuesday said it had raised the GDP growth target from the downgraded 4-5% goal given in August.
“As we continuously relax restrictions and increase mobility, economic performance is expected to accelerate further in the last quarter of the year,” the economic team said after a special meeting on Tuesday.
The DBCC expressed optimism that the country’s GDP would “return to its pre-pandemic level by 2022.”
The medium-term growth targets were kept at 7-9% for 2022, and 6-7% for 2023 and 2024.
Socioeconomic Planning Secretary Karl Kendrick T. Chua said the government is still waiting for health experts’ conclusions on the effects of the Omicron variant.
“So far, what is important is that we control our borders so that we allow the core majority to continue a safe living within the borders,” he said at the news briefing.
“The (COVID-19) cases have been falling significantly. Severe and critical cases are very low.”
The Health department reported 235 coronavirus cases on Tuesday, bringing the total active cases to 10,526.
DBCC said the 2021 inflation would hit 4.3%-4.5% from the previous 2-4% estimate, while the 2-4% forecast was kept for 2022 to 2024.
The foreign exchange rate was revised to P49-50 a dollar from P48-53.
The DBCC also raised the growth target for exported goods to 16% this year from the 10% it projected at the July meeting, and kept the 6% annual growth forecasts for 2022-2024.
Imported goods are expected to grow by 30% this year, higher than the 12% seen previously.
The price of Dubai crude oil per barrel is now projected at $68-70 this year from the previous projection of $50-70 per barrel from 2021 to 2024.
“The assumption for the price of Dubai crude oil per barrel was revised upwards to $60 to $80 per barrel for 2022 to 2024. This is mainly due to the optimistic demand outlook for oil as the global economy gradually rebounds in the medium term,” the economic team said.
The DBCC increased its revenue outlook to P3.027 trillion this year, higher than the programmed P2.881 trillion, due to increased economic activity and improved digitalization by revenue agencies.
Revenue projections for the next three years were raised to P3.3 trillion (from P3.29 trillion) in 2022, P3.62 trillion (from 3.59 trillion) in 2023, and P4.049 trillion (from P4 trillion) in 2024.
The DBCC kept its spending projection of P4.95 trillion for 2022, and slightly raised spending to P5.06 trillion (from P5.02 trillion) in 2023 and P5.35 trillion (from P5.3 trillion) in 2024.
Budget Undersecretary Tina Rose Marie L. Canda said the combination of higher-than-expected revenues and lower-than-expected disbursements had affected spending this year.
“Some of our disbursement patterns — for instance for travel, for training — have been put on hold as a result of this pandemic and we haven’t anticipated that. That’s why disbursements are not as high as we expected them to be,” she said.
The 2021 disbursement would be 9.6% higher year on year, the economic team said.
“This is mainly attributed to the accelerated spending performance seen in infrastructure and other capital outlays, personnel services, transfers to local government units (LGUs), and equity and interest payments,” DBCC said.
The deficit ceiling was set at 8.2% of GDP this year, lower than the 9.5% ratio previously adopted.
Meanwhile, the DBCC raised the deficit threshold to 7.7% of GDP in 2022, 6.1% in 2023, and 5.1% in 2024. The deficit ceiling was previously pinned at 7.5% of GDP in 2022, 5.9% in 2023, and 4.9% in 2024.
“While the threat of new COVID-19 variants may persist in the short term, we are now in a much stronger position to manage possible spikes in cases and safely reopen the economy to Alert Level 1 in January 2022,” economic managers said.
The Cabinet-level DBCC is composed of heads of the Department of Budget and Management, National Economic and Development Authority, Department of Finance, as well as the Executive Secretary. The Bangko Sentral ng Pilipinas also sits as the committee’s resource institution.