Duterte's economic team sees faster growth in 2021, adjusts medium-term fiscal outlook

Metro Manila (CNN Philippines, December 14) — President Rodrigo Duterte’s economic team hiked its growth target band for the Philippine economy this 2021, with output expanding faster than expected during the third quarter despite the return of lockdowns during the period.

The Development Budget Coordination Committee (DBCC) now expects the economy to expand within 5-5.5% this year, up from its prior 4-5% goalposts which were lowered with the re-tightening of mobility restrictions due to a Delta variant-driven surge in COVID-19 infections.

“Despite the imposition of stringent quarantines to contain the spread of the threat of the Delta variant, the Philippine economy grew by 7.1 percent in the third quarter of 2021. As we continuously relax restrictions and increase mobility, economic performance is expected to accelerate further in the last quarter of the year,” it said in a statement on Tuesday.

To achieve the latest forecast range, Socioeconomic Planning Secretary Karl Chua says economic growth should hit 7-8% this September to December.

"More or less that is where we are headed and I hope we can do better," he said, stressing there is significantly much more economic activity this quarter.

Economic growth has averaged 4.9% in the first three quarters of 2021.

The team, composed of the Department of Budget and Management (DBM), Department of Finance (DOF), and the National Economic and Development Authority (NEDA), likewise kept its 7-9% target band for 2022 and 6-7% estimates for 2023 and 2024.

“With our strong economic performance in 2021, the DBCC is optimistic that the country’s GDP will return to its pre-pandemic level by 2022,” it said, also noting the country is in a "much stronger position" to ease to the loosest Alert Level 1 this January.

The DBCC’s announcement comes after international organizations such as the World Bank and the Asian Development Bank raised their growth forecasts for the Philippines.

Fiscal program projections

The economic team also updated its fiscal outlook for the medium term.

For instance, it expects revenues to hit ₱3.02 trillion this year — breaching the ₱2.88-trillion projection for 2021 owing to wider economic activity and better services from revenue agencies due to digitalization efforts.

"This strong revenue collection performance is seen to continuously improve with revenues returning to pre-pandemic levels at ₱3.304 trillion in 2022, ₱3.624 trillion in 2023, and ₱4.049 trillion in 2024," said the DBCC.

Disbursements, meanwhile, are projected to fall short of the pegged ₱4.74 trillion tally this year, settling instead at ₱4.63 trillion, with agencies still grappling with changes ushered in by the COVID-19 health crisis.

"At the moment, I think agencies are still in that adjustment period where implementation is affected by the pandemic. Our infra agencies primarily are the worst hit. Some of our disbursements patterns — for instance travel, training — these have been put on hold as a result of this pandemic and we haven't anticipated that," said acting DBM chief Rose Marie Canda.

The inter-agency body kept its ₱4.95-trillion disbursement forecast for next year.

However, it raised its projections for 2023 and 2024 at ₱5.06 trillion and ₱5.34 trillion — inching past the earlier ₱5.02 trillion and ₱5.3 trillion estimated levels.

Economic managers likewise now see an 8.2% deficit-to-GDP ratio for 2021, easing from the prior 9.3%.

"This is projected to move in a downward trajectory for the upcoming years with 7.7 percent of GDP in 2022, 6.1 percent of GDP in 2023, and 5.1 percent of GDP in 2024, as the government continues to pursue a fiscal consolidation strategy over the medium term," the DBCC stated.