ECONOMIC managers on Monday approved revisions to the country’s medium-term macroeconomic assumptions and fiscal program to reflect emerging domestic and global developments.
The gross domestic product (GDP) growth target for this year was narrowed to 6.0-6.5 percent from 6.0-7.0 percent, while those for next year to 2028 were revised to 6.0-8.0 percent from 6.5-7.5 and 6.5-8.0 percent, respectively.
Speaking after a meeting of the interagency Development Budget Coordinating Committee (DBCC), Finance Secretary Ralph Recto said that GDP growth this year was unlikely to hit 7.0 percent, hence the reduced target band.
Finance Secretary Ralph Recto. Photo courtesy of Department of Finance
“Despite domestic challenges, we are optimistic that we can still attain our growth target for the year of 6.0 to 6.5 percent,” economic managers said in a joint statement.
“In particular, we expect the Philippine economy to bounce back during the last quarter, given the anticipated increase in holiday spending, continued disaster recovery efforts, low inflation, and a robust labor market,” they added.
GDP targets moving forward were expanded, meanwhile, to reflect “the anticipated impact of structural reforms and evolving domestic and global uncertainties.”
The inflation outlook, however, was narrowed to 3.1-3.3 percent for 2024 from 3.0-4.0 percent but is still expected to hit 2.0-4.0 percent next year up to 2028.
Economic managers said a reduction in rice import tariffs, increased production and favorable global supply conditions would help inflation hit the midpoint of the 2.0- to 4.0-percent target.
“We are determined to maintain price stability by keeping inflation low and stable amid easing monetary conditions, improving labor market conditions, and productivity-enhancing structural reforms,” they said.
The peso is now expected to average P57-57.50 to the dollar this year instead of the P56-58:$1 set during the last review in June. The outlook for next year was revised to P56-58 from P55-58 while that for the next three years was kept at P55-58:$1.
Economic managers said they were confident that the currency would remain strong due to sustained remittance growth, a recovery in travel services, and growing business process outsourcing revenues.
“These favorable developments will support and keep the currency resilient against global headwinds,” they said.
Trade outlook
Economic managers also revised the growth outlook for exports this year to 4.0 percent from 5.0 percent, while that for imports was kept at 2.0 percent.
Exports are still expected to grow by 6.0 percent in 2025 and 2026-2028. Imports growth assumptions are also kept at 5.0 and 8.0 percent for 2025 and 2026-2028, respectively.
This year’s lower exports assumption was said to be due to a slowdown in export revenues in recent months as well as the revision in the outlook for the domestic semiconductor sector.
As for oil prices, Dubai crude is now expected to range from $78-81 per barrel this year, up from $70-85 previously.
For 2025 to 2028, the crude oil price assumptions were reduced to $60-80 per barrel from $65-85 given “anticipated improvements in global oil production over the medium term.”
Fiscal program
The revenue assumption for 2024 was raised to P4.38 trillion from P4.27 trillion, while those for 2025 to 2028 were kept at P4.644 trillion, P5.063 trillion, P5.627 trillion and P6.249 trillion.
The DBCC said revenues would be propelled by “recalibrated legislative measures that will provide a significant revenue boost to the government, such as the recently enacted VAT (value-added tax) on Digital Services Act and by tax administration reforms centered on digitalization.”
Disbursements were also revised to P5.907 trillion from P5.754 trillion for this year but were retained over the next four years at P6.182 trillion, P6.540 trillion, P7.027 trillion and P7.621 trillion.
This year’s deficit is expected to be a wider P1.524 trillion instead of P1.484 trillion. For 2025 until the medium term, the targeted shortfalls were kept at P1.538 trillion, P1.477 trillion, P1.399 trillion and P1.372 trillion.
“The DBCC will remain steadfast in sustaining the country’s high-growth trajectory and managing inflation, accelerating the implementation of well-targeted social services and structural reforms that will enable us to achieve our goal of reducing poverty incidence and decreasing unemployment rates,” the economic managers said.
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