While high inflation will slightly dampen growth this year, expectations of robust domestic demand outweighing external risks will support the Philippine economy over the next six years, President Marcos’ economic officials said.
On Friday, Finance Secretary Benjamin Diokno said more aggressive interest rate hikes by the Bangko Sentral ng Pilipinas (BSP) to curb rising consumer prices would slow economic growth in the second half of 2022.
Even then, the Development Budget Coordinating Committee (DBCC) had confirmed the Marcos administration’s growth target of 6.5-7.5% for this year, below the reduced target of 7-8. % left by the Duterte administration.
While expensive goods and services were expected to persist, the DBCC raised its inflation assumptions to 4.5-5.5% this year and 2.5-4.5% next year, above the target range of 2-4% manageable BSP price increases conducive to economic growth. growth.
The spike in inflation will mostly be driven by expensive fuel, as the DBCC predicted Dubai crude oil prices would hover between $90-$110 a barrel in 2022, then “normalize” to $80-100 a barrel in 2023 Diokno added that the uncertainties brought about by developments abroad, particularly the protracted conflict between Ukraine and Russia, have helped temper growth expectations for this year.
But Diokno said “we should be happy” with a potential gross domestic product (GDP) expansion of 7% in 2022, which he said should be the “best performance” of Asean+3. Philippines and its nine Southeast Asian neighbours, the ASEAN+3 included China, Japan and South Korea.
“Increasing household consumption and private investment, along with a robust manufacturing industry, high immunization rate, improved health care capacity and the upward trend in tourism and employment have given us enabled us to safely reopen the economy and record positive growth for the first three months of 2022,” said Budget Secretary and DBCC Chair Amenah Pangandaman. Diokno said last week that he ‘expects double-digit or double-digit GDP growth in the second quarter to top the surprise 8.3% growth in the first quarter.
For 2023 to 2028, the DBCC has also set in stone the “more ambitious” annual growth aspiration of 6.5 to 8 percent, under the six-year fiscal framework, to be presented to Congress for final approval by President, to return the budget deficit to pre-pandemic levels equivalent to 3% of GDP, reduce the poverty rate to 9% by 2028 and upgrade the Philippines to upper-middle-income status before the end of the Marcos administration.
Socio-economic planning secretary Arsenio Balisacan said the projected downward trend in world oil prices would bode well for the Philippines’ medium-term outlook.
Balisacan, who heads the state planning agency National Economic and Development Authority, said while a slowing Chinese economy coupled with a looming recession in the United States would reduce Philippine exports to these two economic giants, a decline oil demand from their weaker economies would drive prices. down all over the world.
As domestic consumption and investment accounted for a “big chunk” of GDP, Balisacan expects a buoyant Philippine economy to offset the negative effects of external shocks. INQ
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