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Duterte admin lowers GDP target to 6%-7%

The Development Budget Coordination Committee (DBCC) on Tuesday revealed the new macroeconomic and fiscal targets for the next six years under the Duterte administration.

In terms of economic growth, newly-appointed Budget and Management Secretary Benjamin Diokno told reporters the Cabinet-level DBCC has downgraded the gross domestic product (GDP) target for the year, noting the administration is still adjusting and will be doing so in the next six months.

Diokno said the committee has set a gross domestic product (GDP) target of 6.0 percent to 7.0 percent this year, revising the Aquino administration’s 6.8 percent to 7.8 percent which was projected in February.

“Conservative this year, because half the year is over. We have the next six months to work on achieving a higher rate,” Socioeconomic Planning Secretary Ernesto M. Pernia said during a briefing in Pasay City.

Pernia noted there may be a slowdown in the second semester of the year, but declined to elaborate.

He said the economic uptrend is expected to continue in the second quarter of the year and may as high as 7 percent, still from by election-related spending.

The DBCC also downgraded its economic targets for 2017, aiming for a 6.5 percent to 7.5 percent compared with the 6.6 to 7.6 percent earlier set.
From 2018 to 2022, the DBCC is forecasting a 7 percent to 8 percent in GDP growth.

24/7 construction

Asked how this will be achieved, Diokno said the targets are consistent with the strategy of the new administration to boost infrastructure spending which will be increased to 5.2 percent of the GDP.

“We are considering 24/7 construction for all major Metro Manila projects and maybe projects in Cebu and Davao. Don’t be surprised if constructions are going on in the middle of the night,” Diokno said.

“Given the extent and the size of the projects we are planning to do, things will get worse before they get better... We are going to fix all the major roads, all the major constructions,” he added

Lower revenue goal

This year's revenue is expected to reach P2.573 trillion, compared to P3 trillion in expenditures, Finance Secretary Carlos Dominguez said.

The DBCC expects revenue to reach P2.975 trillion and P3 trillion in succeeding years, Dominguez noted.

The original revenue goal in 2017 was P3 trillion, but Duterte’s economic managers expect a drop this year due to lower collections of the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR).

Foreign exchange

The peso is also expected to trade within the P45-to-48:$1 range in the next six years, according to Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo.

“The reason is that... we expect the balance of payments (BOP) and current accounts to remain in surplus. We expect that despite the challenging external conditions we’re able to maintain the current account surplus on account of remittances, BPOs (business process outsourcing), tourism, and other income items,” he said.

Macroeconomic goals

The economic managers also revealed other macroeconomic assumptions such as inflation at 2.0 to 4.0 percent in 2016 to 2018.

Dubai Crude Oil prices are seen ranging from $35 to $50 per barrel this year, $40 to $50 in 2017, $45 to $60 in 2018, and $50 to $65 in 2019 to 2022.

Foreign interest rates are seen at 0.8 percent to 1.8 percent this year, 1.0 percent to 2.0 percent in 2017, and 1.5 percent to 2.5 in the run up to 2022.

In terms of trading, exports have been pegged to grow by 3 percent this year, 6.0 percent in 2017, 8.0 percent in 2018, 10 percent in 2019 and 2020, and 11 percent in 2021 and 2022.

Imports, on the other hand, are expected climb by 7.0 percent in 2016, 10.0 percent in 2017, 11.0 percent in 2018, 12.0 parent in 2019 and 2020, and 13.0 percent in 2021 and 2022. – VDS, GMA News