Diokno says GDP target to be revised below 7%

Inflation rate at more than 6 percent may take its toll on the full-year economic growth and compel economic managers to redial the target numbers, Budget Secretary Benjamin Diokno said Wednesday.

Inflation clocked in at 6.4 percent in August, the fastest in over nine years since it came in at 6.6 percent in March 2009. 

Diokno said higher inflation acts as “GDP deflator.”

Socioeconomic Planning Secretary Ernesto Pernia earlier said that if not for the higher inflation the gross domestic product growth (GDP) in the second quarter could have been higher than 6 percent.

With inflation at 6.4 percent in August, Diokno said it is highly likely that the 7 to 8 percent GDP target will be “revised below 7.”

Target, forecast

The Development Budget Coordination Committee (DBCC) will convene in the third week of September to discuss adjustments in economic parameters, including the inflation target and forecast for the whole year.

The government is targeting inflation to settle within 2 to 4 percent. The DBCC also forecast 2018 inflation to clock in at 4 to 4.5 percent.

Diokno said the DBCC will adjust upward both the target and forecast.

“But for 2019, it remains at 2 to 4 percent,” he said, noting that inflation is expected to taper off starting the fourth quarter of the year. —VDS, GMA News