Duterte’s economic team trims 2022 growth forecast as external risks escalate

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Metro Manila (CNN Philippines, May 24) — President Rodrigo Duterte’s economic managers have scaled down their growth estimates for 2022 a few weeks before he steps down from office, citing “heightened” risks outside the country.

The Development Budget Coordination Committee now forecasts economic growth to be within 7-8% this year, slightly slower than the prior 7-9% target band. It cited external developments like the war between Ukraine and Russia, China’s economic slowdown, and the United States’ monetary policy normalization.

This is despite the economy's 8.3% expansion in the first three months of 2022, zooming past market forecasts. While Socioeconomic Planning Secretary Karl Chua said the revision took into account the aforementioned risks, he said the economy is on a sustainable path towards rapid, inclusive growth.

The inter-agency body is composed of the heads of the Department of Budget and Management, Department of Finance, and National Economic and Development Authority.

The DBCC likewise kept its 6-7% goalposts from 2023 to 2025 — with the economy expected to sustain a strong rebound in the medium term.

“Shifting the entire country to alert level 1, increasing the vaccination rate, especially for seniors and children, and reopening all face-to-face classes are crucial to further strengthen domestic demand, cushion the impact of external events, and achieve our growth target,” read its statement.

Higher revenues, disbursements seen

With economic activity seen to further improve ahead, the DBCC also adjusted its revenue and disbursement expectations until 2025.

It now expects revenues to hit ₱3.663 trillion or 15.3% of gross domestic product in 2023, up from the prior ₱3.624 trillion. From ₱4.049 trillion, the body now sees collections hitting ₱4.063 trillion in 2024 or 15.6% of GDP.

The economic team sees revenue collections hitting ₱4.559 trillion in 2025, or 16.1% of total domestic output.

The DBCC sees disbursements hitting ₱5.086 trillion next year or 21.3% of GDP, up from the previous ₱5.059 trillion. The estimate for 2024 is hiked to ₱5.392 trillion, or 20.8% of total output, from the prior ₱5.347 trillion.

Disbursements are expected to climb to ₱5.273 trillion in 2025, or 20.2% of the domestic economy.

The inter-agency committee likewise kept its target deficit-to-GDP ratios at 6.1% for 2023 and 5.1% for 2024, while forecasting a 4.1% figure for 2025.

This comes “as the government continues to adopt a fiscal consolidation strategy to lower the deficit back to pre-COVID-19 levels,” it added.