The Development Budget Coordination Committee has lowered its growth forecast for the Philippine economy this year to 6% to 7% from 6.5% to 7.5%
For 2022, the GDP is seen to return to pre-COVID-19 growth levels by growing at 7% to 9% and by 6% to 7% in 2023 and 2024
The Philippines has to grow at least 10% in the next three quarters to reach lower end of GDP target
Goods exports will expand 8% this year and 6% by 2022, while goods imports are expected to grow by 12% this year and 10% in 2022
Revenues are maintained at the DBCC-approved levels in December 2020 at P2.88 trillion for 2021 and will increase to P3.29 trillion for 2022
The Development Budget Coordination Committee (DBCC) has lowered its growth forecast for the Philippine economy this year to 6% to 7% after new COVID-19 variants emerged and stricter quarantine restrictions were imposed in the National Capital Region (NCR) Plus area in the second quarter of the year.
In December last year, DBCC had a slightly higher projection of 6.5% to 7.5% gross domestic product growth for this year. To reach the lower end of this original full-year target, Socioeconomic Planning Secretary Karl Kendrick Chua earlier said the Philippine economy will have to grow by at least 10.1% in the remaining three quarters.
For 2022, the GDP is seen to return to pre-COVID-19 growth levels by growing at 7% to 9%, and is expected to grow by 6% to 7% in 2023 and 2024.
“The effects of the COVID-19 pandemic may remain in the short-term, but we are optimistic that the economy will return to its upward growth trajectory starting this year,” the committee said in a statement.
The country’s GDP shrank 4.2% in the first quarter of 2021, its fifth consecutive quarter of decline amidst continuing restrictions due to the COVID-19 pandemic.
DBCC said its growth prospects and economic recovery will be underpinned by three interventions to arrest the spread of COVID-19 and help the poor cope with the impact of the quarantines.
These interventions include the intensified implementation of the prevent, detect, isolate, treat, and recover strategy and the full vaccination of residents in areas with the highest risk, such as the NCR Plus areas of Metro Manila, Bulacan, Cavite, Laguna, and Rizal, as well as Pampanga, Cebu City, and Davao City.
Another intervention is the reduction of the gap from detection to isolation of COVID-19 positive cases from seven to five days. This involves measures such as the use of digitally assisted contact tracing, which could potentially reduce cases by around 51% according to epidemiological models.
Lastly, around P170 billion will be needed to fund supplemental social support for those hardest hit by the pandemic as well as to fund improved health protocols. A version of this proposal is currently being deliberated in the Lower House, and is contingent on raising additional savings and revenues to remain deficit neutral.
In line with recent positive trends in global trade, the DBCC forecasts that goods exports will expand 8% this year and 6% in 2022.
Goods imports are also expected to grow by 12% this year and 10% in 2022 as domestic demand bounces back.
For 2023 to 2024, goods exports and imports are projected to grow by 6% and 8%, respectively.
Furthermore, the growth forecast for services exports is maintained at 6% for 2021 to 2024. On the other hand, services imports are projected to grow by 7% in 2021 and by 8% for 2022 to 2024.
Revenues are maintained at the DBCC-approved levels in December 2020 at P2.88 trillion for 2021 and will be increased to P3.29 trillion for 2022.
As economic activities are expected to pick up over the medium term, revenue collections are pegged at P3.59 trillion and P4 trillion for 2023 and 2024, respectively.
DBCC primarily reviews and approves the macroeconomic targets, revenue projections, borrowing level, aggregate budget level and expenditure priorities, and recommends to the Cabinet and the President the consolidated public sector financial position and the national government fiscal program.