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The Philippine economy will likely grow from 6% to 7% in 2023
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The projection is slower than the previous assumption of 6.5% to 8% due to external headwinds
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2022 growth expectation has been maintained at 6.5% to 7.5% by the Development Budget Coordination Committee
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The imports growth projection for this year has been upgraded to 20% from 18%
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Exports forecast was, however, downscaled to 4% from 7% also this year
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The average inflation rate assumption for 2022 has been slightly increased to 5.8% from 4.5% to 5.5%
The Development Budget Coordination Committee (DBCC) has downscaled the 2023 Philippine economic growth projection to 6% to 7% from 6.5% to 8% on account of external headwinds.
The economic growth assumption for 2022 has been maintained at 6.5% to 7.5%.
In its recent review of the government’s medium-term macroeconomic assumptions, fiscal program, and growth targets for 2023 to 2028, the DBCC said the gross domestic products grew 7.7% in the first three quarters, surpassing the 6.5% to 7.5% target range, as the economy continues to reopen, domestic demand increased, and services and industry sectors improved.
For 2024 to 2028, growth is still expected to pick up at 6.5% to 8%, as the administration pushes for strategies and interventions under the Philippine Development Plan 2023-2028, DBCC said in a statement. These include modernizing agriculture and agri-business, revitalizing the industry sector and reinvigorating the services sector.
Goods imports growth projection for this year has been increased to 20% from 18% as domestic demand recovers and, for 2023, revised to 4% from 6%.
Expectations for goods exports, on the other hand, were adjusted downwards to 4% from 7% in 2022, and to 3% from 6% in 2023. Goods exports are seen stabilizing at 6% in the medium term.
DBCC said trade assumptions for both imports and exports reflect gradual trade recovery with the normalization of economic activities, globally and domestically.
Revenue projection for 2022 was adjusted upwards to P3.5 trillion from P3.304 trillion, following better-than-expected revenue performance from January to October 2022, attributed to improved tax collection and digitalization efforts of the government.
Revenue projections in the medium-term, meanwhile, are projected to be from P3.7 trillion in 2023 to P6.6 trillion in 2028, as tax reforms from the previous administration and strategies to ensure environmental sustainability are continuously pursued. Previously, the targets were slightly lower at P3.6 trillion in 2023 to P6.589 trillion in 2028.
The average inflation rate assumption for 2022 has been slightly increased to 5.8% from the previous assumption of 4.5% to 5.5% given the persistent high prices of food and transport costs. Inflation is expected to moderate in the medium-term reaching 2.5% to 4.5% in 2023 before returning to the target range of 2% to 4% in 2024 until 2028.
The assumption for the price of Dubai crude oil for 2022 has been slightly adjusted to US$98 to $100 per barrel considering global supply constraints on oil. This is expected to gradually slide to $80 to $100 per barrel in 2023 before stabilizing at $70 to $90 per barrel in 2024 to 2028 as oil supply catches up with demand over the medium-term.
The peso-dollar exchange rate assumptions for 2023 and 2024 were adjusted upwards as the peso continues to depreciate due to heightened global uncertainties and aggressive monetary policy tightening of the US Federal Reserve. This is expected to range from P54 to P55 in 2022 and further increase to P55 to P59 in 2023. Nonetheless, the peso is expected to appreciate and stabilize at P53 to P57 in 2024 to 2028.
