7 to 8% growth target challenging – Balisacan

MANILA, Philippines — The inter-agency Development Budget Coordination Committee (DBCC) is set to meet later this week to review growth targets to take into account the impact of price increases and disruptions caused by the conflict between Russia and Ukraine.

Socioeconomic Planning Secretary Arsenio Balisacan told reporters the DBCC would meet on Friday to review the recent performance and targets.

“We do not know yet what the decision will be and what the outcomes of the discussion will be, but I would expect that given the unexpected surges in some of the prices and prolonged disruptions initially triggered by this Ukraine war, seven to eight percent (economic growth) might be a challenge,” said Balisacan, who also served in the same post during the term of former president Benigno Aquino III.

Earlier this year, the DBCC revised its gross domestic product (GDP) growth target to seven to eight percent from the original seven to nine percent range, citing risks from external factors like the Russia-Ukraine conflict, slowdown in production in China, as well as the policy normalization by the US Federal Reserve.

“But still, if we can grow six to seven percent this year, that will be remarkable. We’ll probably still remain among the fastest growing countries in Asia,” Balisacan said.

He expects the Philippine economy to grow a little above six percent this year.

The Philippine economy grew 8.3 percent in the first quarter, a turnaround from the 3.8 percent contraction in the same period last year.

For the entire duration of the term of the Marcos administration, Balisacan is hopeful that a 6.5 to eight percent GDP growth is still achievable.

He said President Marcos and the economic team are in agreement on the need to quickly revive job creation and poverty reduction by steering the economy back to a high-growth path while addressing government debt and the sharp prices of food and essential commodities.

“In particular, we aim for economic growth at least at par with pre-pandemic levels through 2028,” he said, noting that growth must be pro-poor and be able to weather adverse global events, such as the pandemic, calamities due to climate change, and geopolitical and technological disruptions.

“With quality growth and jobs, we aim to rapidly reduce poverty to single-digit level at the end of the administration,” he said.

While the aim is to do better and raise the country’s economic performance, he said there may be a need to revisit the targets under Ambisyon Natin 2040, given the setbacks caused by the COVID-19 pandemic.

Ambisyon 2040 represents the collective long-term vision and aspirations of the Filipino people of seeing the Philippines as a prosperous middle class society where no one is poor.

“Our priority is to recover quickly from the pandemic and go back to the high growth trajectory, but this time mindful that we would like to grow more inclusive and more resilient so that next time we have a pandemic, disruptions, technological or global, the economy should not be sharply affected,” Balisacan said.

Meanwhile, First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Capital Markets Research said in its Market Call released yesterday that it expects sustained robust growth in the second quarter and the rest of the year.

“Indications to support this include: manufacturing remained expansive in May, in April job gains in manufacturing and construction and recoveries in accommodation and food services, transportation and storage, and education and NG (national government) spending recovered in April,” FMIC-UA&P Capital Markets Research said.

While inflation may test the six percent level, it said the job increases and the stimulative effect of the peso depreciation on overseas Filipino remittances, business process outsourcing earners, and exports should offset the negative effect on consumption spending.

FMIC-UA&P sees inflation averaging 5.4 percent in the second quarter and 5.7 percent in the third quarter, and will likely start easing by the fourth quarter.

“The peso depreciation will encourage domestic food producers to step up their uptick with foreign products becoming more expensive,” it said.

Headline inflation - the rate of increase in the consumer price index (CPI) – rose to 5.4 percent in May from 4.9 percent in April, with the latest result being the highest recorded inflation rate since December 2018.

The Philippine Statistics Authority is set to release the CPI data for June today (July 5).