Amid global trade disruptions and geopolitical tensions, the Development Budget Coordination Committee (DBCC) has revised downward the economic growth target for this year to 6.0 to 7.0 percent, from the previous 6.5 to 7.5 percent.

Meanwhile, the growth target for 2025 was narrowed to 6.5 to 7.5 percent from the previous range of 6.5 to 8.0 percent. However, the 6.5 to 8.0 percent growth target for 2026 to 2028 was retained.

‘The government’s fiscal targets were revisited to reflect the current global and domestic environment and, ultimately, ensure that more strategic and growth-enhancing fiscal consolidation is being pursued,” the DBCC said in a statement.

However, the inflation target for this year until 2028 was still retained a 2 to 4 percent, following the proactive monetary policy actions undertaken by the Bangko Sentral ng Pilipinas (BSP) and the strategies being implemented by the current administration, through the Inter-Agency Committee on Inflation and Market Outlook.

The government also intends to accelerate the implementation of strategies under its Reduce Emerging Inflation Now (REIN) Plan to control inflation.

Assumptions

The revised lower growth targets and retained inflation rate were also made on assumptions that Dubai crude oil prices will go down to as low as $65 per barrel from 2025 to 2028.

“Meanwhile, the assumptions for the Dubai crude oil price were maintained at $70 to $90 per barrel for 2024, and $65 to $85 per barrel for 2025 to 2028. This reflects the latest futures prices and forecasts that suggest tempered global crude oil prices over the medium term,” the DBCC said.

Meanwhile, the assumption for the peso is it will not go above the P58 level against the US dollar.

“The peso-dollar exchange rate assumptions were narrowed to P55 to P57 against the US dollar in 2024 and retained at P55 to P58 against the US dollar in 2025 until 2028. The peso will continue to be supported by structural foreign exchange inflows and firm macroeconomic fundamentals of the country,” the DBCC said.

It added that the growth of goods imports this year is expected to settle at 4.0 percent in 2024 before increasing to 7.0 percent in 2025 and 8.0 percent in 2026 until 2028. Goods imports are expected to be propped up by investments in public infrastructure.

However, rising trade distortions and geoeconomic fragmentation will clip the growth in the export of goods in 2024 to 3.0 percent before rebounding by 6.0 percent annually in 2025 until 2028.

Real growth projections

When it comes to real economic growth based on gross domestic product (GDP), the DBCC said that the Philippines still performed better than its counterparts in the Association of Southeast Asian Nations (ASEAN).

Specifically, the Philippine economy finished strong with a 5.6 percent GDP growth rate in 2023, outpacing the ASEAN-6 countries such as Singapore (1.1 percent), Thailand (1.9 percent), Malaysia (3.7 percent), Vietnam (5.0 percent), and Indonesia (5.0 percent).

“Real GDP in 2023 is now higher by 8.6 percent compared to 2019 or pre-pandemic level,” the DBCC said.

“Multilateral organizations also affirmed the strength of the Philippine economy, expecting it to remain a frontrunner among ASEAN countries this year despite external challenges,” it added.

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