DBCC lowers growth forecast
The Duterte administration has trimmed anew its growth target for this year as delayed budget continued to take a toll on the economy, while rising uncertainties, including the US-Sino trade tensions, had forced the government to concede its eight percent goal in the medium-term.
The inter-agency Development Budget Coordination Committee (DBCC) announced yesterday that it has lowered this year's growth target to 6.0 percent to 6.5 percent from 6.0 percent to 7.0 percent to reflect weak economic activity in the first-half.
The DBCC, composed of President Duterte’s economic team, said the slower gross domestic product (GDP) in January to June was due to the delay in the budget approval, which slowed government spending.
The DBCC, likewise, cut its GDP goals for 2021 and 2022 to 6.5 percent to 7.5 percent from previous forecast of 7.0 percent to 8.0 percent, but kept next year’s target at 6.5 percent to 7.5 percent.
"We are going to be affected adversely by the trade war which will affect global growth," Economic Planning Secretary Ernesto Pernia told Reuters. "It is not only the Philippines that is down scaling the targets."
On Wednesday, Congress’ Bicameral Conference Committee approved the President Duterte’s ₱4.1-trillion budget for 2020, to avoid a repeat of this year's delays and pave the way for higher infrastructure spending to boost growth.
In July to September, the country’s GDP grew 6.2 percent from last year, exceeding the prior quarter's 5.5 percent growth, increasing the country's chances of meeting at least the bottom-end of this year's revised growth goal.
An inter-agency committee in charge of setting the government's medium-term macroeconomic and fiscal targets said it also revised foreign exchange assumptions.
The foreign exchange assumption is now 51 to 52 to the dollar for 2019, and 51 to 54 from 2020 to 2022, the DBCC said in a statement.
Export growth projections for this year and 2020 were cut to 1.0 percent and 4.0 percent, respectively, from the previous 2.0 percent and 6.0 percent due to the prolonged trade dispute. The government kept the export growth projection for 2021 and 2022 at 6.0 percent.
"We are committed to building a more effective and competitive economy, one that will provide good jobs to our workers, improve the living conditions of the poor, and create more opportunities for all Filipinos," the DBCC said.
At the start of Duterte' term in June 2016, his government set a medium-term growth target of as much as eight percent as it laid out an ambitious $180 billion infrastructure overhaul called the "Build, Build, Build."
Even that plan was modified after authorities admitted that several big ticket infrastructure projects, like long bridges, included in that program, were not feasible. (With Reuters)