Philippines downgrades 2022 economic growth target

The government’s economic cluster on Tuesday trimmed its economic growth target for the year, citing heightened external risks and the normalization of monetary policy.

Following its 181st meeting, the inter-agency Development Budget Coordination Committee (DBCC) slashed its gross domestic product (GDP) growth target range to 7.0% to 8.0% from the previously set range of 7.0% to 9.0%.

“In light of heightened external risks such as the Russia-Ukraine conflict, China’s slowdown and monetary normalization in the United States, the full-year growth target was slightly revised,” Department of Budget and Management (DBM) officer-in-charge Tina Rose Marie Canda said at a virtual briefing.

The Philippines opened the year with a faster-than-expected economic growth of 8.3%, which compares with the 7.8% in the fourth quarter and the -3.8% the first quarter of 2021.

“Shifting the entire country to Alert Level 1, increasing the vaccination rate, especially for seniors and children, and reopening all face-to-face classes are crucial to further strengthen domestic demand, cushion the impact of external events, and achieve our growth targets,” Canda said.

Metro Manila and several areas will remain under Alert Level 1 — the loosest form of COVID-19 restrictions — until the end of May.

The Alert Level 1 allows intrazonal and interzonal travel regardless of age and comorbidities, and all establishments, persons, or activities to operate, work at full on-site capacity subject to minimum public health standards

The DBCC also expects inflation to fall between the 3.7% to 4.7% range, possibly breaching the government’s inflation target of 2.0% to 4.0%, citing developments overseas.

Inflation is then seen to decelerate back to the target range in 2023 to 2025.

“The average inflation rate assumption for 2022 was adjusted upwards and is projected to range from 3.7% to 4.7%, following the uptick in the price of food and energy as a result of ongoing geopolitical tensions from the Russia-Ukraine conflict and disrupted supply chains,” Canda said.

The economic cluster also increased its assumption for the price of Dubai crude oil per barrel for the year to $90 to $110 per barrel, due to the potential supply disruptions caused by the conflict between Russia and Ukraine.

This is expected to fall between $80 to $100 per barrel in 2023, and from $70 to $90 per barrel in both 2024 and 2025. — RSJ, GMA News