Philippines slashes economic growth outlook for 2023

The government’s economic cluster on Monday downgraded its growth outlook for the coming year, citing external headwinds such as the slowdown in major advanced economies.

In a press conference in Manila, DBCC chairperson and Budget Secretary Amenah Pangandaman said the inter-agency body now expects economic growth between 6.0% to 7.0% in 2023, lower than the earlier projected 6.5% to 8.0%.

The DBCC maintained its forecast range of 6.5% to 7.5% for 2022, with the third-quarter growth recorded at 7.6%, faster than the upwardly adjusted 7.5% in the previous quarter.

“This momentum is expected to slightly decelerate in 2023 and range from 6.0% to 7.0% considering external headwinds such as the slowdown in major advanced economies,” Pangandaman said following the DBCC meeting.

Among the external headwinds said to be considered are the expected global economic slowdown, and the renewed lockdowns in China given its zero COVID policy as cases continue to rise.

Moving forward, economic managers expect growth to pick up and range between 6.5% to 8.0% from 2024 to 2028, on the back of strategies and interventions outlined in the Philippine Development Plan 2023-2028.

“These include modernizing agriculture and agri-business, revitalizing the industry sector, and reinvigorating the services sector, among others,” Pangandaman said.

In the same press conference, Pangandaman said the DBCC expects inflation to average 5.8% this year, higher than the previous assumption of 4.5% to 5.5%, citing higher prices of food and transport costs.

Inflation clocked in at a 14-year high of 7.7% in October, with analysts expecting an even faster print in November. Official figures are set to be released on Tuesday, December 6.

Inflation is then expected to slow down to 2.5% to 4.5% in 2023, and fall to the government’s target range of 2.0% to 4.0% from 2024 to 2028.

In terms of the peso-dollar exchange rate, economic managers expect this to average between P54 to P55:$1 this year, despite hitting all-time lows earlier in the year.

The local currency closed last week at P55.74:$1, after hitting the record low of P59:$1 in October.

The body also downgraded its exports growth projection to 4.0% this year, while upgrading the import growth outlook to 20.0%.

In terms of revenues, the DBCC expects P3.515 trillion this year, following the better-than-expected performance in the first 10 months of the year.

“This is attributed to the improved tax collection and digitalization efforts of the government,” Pangandaman said.

This is expected to grow to P3.706 trillion in 2023, P4.198 trillion in 2024, P4.644 trillion in 2025, P5.210 trillion in 2026, P5.846 trillion in 2027, and P6.583 trillion in 2028.

The DBCC also revised its deficit projection for the year to 6.9% of the gross domestic product (GDP), while maintaining its target for the next six years, progressively falling from 6.1% in 2023 to 3.0% in 2028.

“This is aligned with the government’s Medium-Term Fiscal Framework, as the government continues to pursue a fiscal consolidation strategy over the medium term,” Pangandaman said.—AOL, GMA Integrated News