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MANILA – Economic managers on Tuesday revised upwards the government’s 2021 growth target to between 5 percent to 5.5 percent as economic recovery continues to strengthen.
In a statement, the inter-agency Development Budget Coordination Committee (DBCC) said it kept the 7 percent to 9-percent growth target, as measured by gross domestic product (GDP), for 2022 and the 6 percent to 7-percent target for 2023-2024.
“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.
The domestic economy ended its five-quarter contraction in the second quarter of this year when it posted a 12-percent expansion. This continued in the next three months with a growth of 7.1 percent.
The DBCC said the government’s accelerated vaccination program against coronavirus disease 2019 (Covid-19) “has enabled the safe and targeted reopening of the economy.”
It said around 41.5 million Filipinos are now fully vaccinated and the country has registered a drop in Covid-19 cases and deaths since movement restrictions were relaxed in the last quarter of 2020.
This resulted in the 1.3 million increase in employment compared to the pre-pandemic level, as well as the above-target revenue collections and a strong economic recovery.
The DBCC said the Economic Development Cluster has crafted the 10-point policy agenda to “shift the country from a pandemic to an endemic paradigm.”
These 10-point agenda cover metrics, vaccination, healthcare capacity, economy and mobility, schooling, domestic travel, international travel, digital transformation, pandemic flexibility bill, and medium-term preparation for pandemic resilience.
“Through these strategies, we will sustain our recovery and restore our path to a rapid and inclusive growth,” the DBCC said.
Aside from the growth target, the Committee also adjusted the macroeconomic targets for this year.
Inflation is now expected to stay between 4.3 percent to 4.5 percent; Dubai crude oil price at USD68-70 per barrel; foreign exchange rate, 49-50; growth of goods exports, 16 percent; and growth of goods imports, 30 percent.
These were previously at 2 percent to 4 percent for inflation; USD50-70 per barrel for Dubai crude oil; foreign exchange, 48-53; growth of goods export, 8 percent; and growth of goods import, 12 percent.
For 2022-2024, projections for inflation, foreign trade, and foreign exchange rate were kept but assumption for Dubai crude oil was hiked to USD60-80 per barrel for the three-year period.
“This is mainly due to the optimistic demand outlook for oil as the global economy gradually rebounds in the medium term,” the DBCC said.
In terms of the fiscal program, revenue projection for this year is expected to hit PHP3.027 trillion because of “increased economic activity and improved services of our revenue agencies arising from their digitization projects.”
Revenue collections are seen to return to pre-pandemic levels in the next three years at PHP3.304 trillion in 2022, PHP3.624 trillion in 2023, and PHP4.049 trillion in 2024.
Budget disbursement is expected to hit PHP4.633 trillion this year, up by 9.6 percent year-on-year, to be driven by higher spending on infrastructure and other capital outlays, personnel services, transfers to local government units, and equity and interest payments.
The 2022 disbursement program was kept at PHP4.955 trillion but those for 2023 and 2024 was hiked to PHP5.059 trillion and PHP5.347 trillion, respectively.
With the higher-than-expected revenues for this year, the budget gap is seen to be lower at 8.2 percent of domestic output.
This is expected to further go down to 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.”
“While the threat of new Covid-19 variants may persist in the short-term, we are now in a much stronger position to manage possible spikes in cases and safely reopen the economy to alert level 1 in January 2022. Our effective management of Covid-19 will solidify our recovery and sustain our growth beyond this pandemic,” the statement added. (PNA)
