Economic team cuts 2023 growth forecast to 6%-7%, cites global slowdown

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Metro Manila (CNN Philippines, December 5) — The Philippine government on Monday lowered its economic growth projection for 2023, citing external factors such as the slowdown in major economies.

The Development Budget Coordination Committee (DBCC) now forecasts economic growth for 2023 to be within 6%-7%, down from the earlier assumption of 6.5%-8.0% expansion next year.

The target for 2022 was kept at 6.5%-7.5%. That is even after the 7.7% Gross Domestic Product (GDP) growth for the first three quarters exceeded this year's target range.

The inter-agency body said the momentum will decelerate next year due to “external headwinds such as the slowdown in major advanced economies.”

“It is the global slowdown that is affecting the adjustment,“ Finance Secretary Benjamin Diokno said in a media briefing.

Growth, however, is expected to pick up in 2024 to 2028 at 6.5%-8%, DBCC said.

The Department of Budget and Management previously said the government was targeting 6.5%-8.0% GDP growth for 2023-2025.

Poverty incidence is also projected to improve, reaching the 9% target of the administration. The rate was estimated at 18.1% in 2021. 

DBCC also forecasts a 2.5%-4.5% average inflation rate in 2023 before tapering to a target range of 2.0%-4.0% in 2024 until 2028. The 5.8% average inflation rate for 2022 exceeded the 4.5%-5.5% assumption.

The committee adjusted its revenue projections upward from ₱3.5 trillion assumption this year to ₱3.7 trillion in 2023 and ₱6.6 trillion in 2028.

With the government’s medium-term fiscal framework, DBCC forecasts ₱3.535 billion revenues for 2023 and ₱6.583 billion in 2028.

Disbursement projections from 2023 to 2028 were above 20% of GDP, reaching ₱5.2 trillion in 2023 and expanding to ₱7.7 trillion in 2028.

The inter-agency body revised its deficit projection to 6.9% of GDP for 2022 but said it will progressively decline from 6.1% of GDP in 2023 to pre-pandemic level of 3.0% of GDP in 2028.

It also revised exchange rate projections and expects the peso to trade against the US dollar at ₱55-59 in 2023 and at ₱53-57 in 2024, compared with the previous forecast of ₱51-55 for 2023 onwards. The peso is currently at ₱56 versus the dollar.