The interagency Development Budget Coordination Committee on Wednesday reduced the upper end of its 2019 economic growth forecast to a range of 6 percent to 6.5 percent from the previous estimate of 6 percent to 7 percent amid the lingering trade tensions in advanced economies that are impacting global growth.
It retained the growth forecast of 6.5 percent to 7.5 percent from 2020 to 2022.
Meanwhile, the Asian Development Bank on Wednesday cut its economic growth forecasts in developing Asia this year and next year as growth as external and domestic factors are expected to weigh on China and India.
The ADB said in a supplement to its Asian Development Outlook 2019 Update that the gross domestic product in the region would expand 5.2 percent in both 2019 and 2020, down from the September forecast of 5.4 percent growth this year and 5.5 percent next year.
“While growth rates are still solid in developing Asia, persistent trade tensions have taken a toll on the region and are still the biggest risk to the longer-term economic outlook,” ADB chief economist Yasuyuki Sawada said in a statement.
“Domestic investment is also weakening in many countries, as business sentiment has declined,” he said.
The ADB expects the Philippine economy to grow 6 percent in 2019 and 6.2 percent in 2020.
Global trade tensions are expected to affect Philippine exports. The DBCC reduced the goods export growth target to 1 percent for 2019 and 4 percent for 2020 because of the unresolved trade row between the US and China.
The assumptions for 2021 and 2022 were retained at 6 percent as global economic activity is expected to recover in the medium-term.
“Assumptions in services exports growth were maintained at 9 percent from 2019 to 2022. The services imports growth projection for 2019 was adjusted downward to 2 percent in 2019, and fixed at 4 percent in 2020 and 5 percent in 2021 and 2022,” it said.
Revenue collections are projected to reach P3.15 trillion in 2019, equivalent to 16.8 percent of the gross domestic product, while disbursements are targeted to hit P3.76 trillion in 2019 equivalent to 20 percent of GDP.
Revenuesin 2020 are projected to increase to P3.49 trillion, equivalent to 16.6 percent of the GDP, while disbursements are programmed at P4.16 trillion, or 19.8 percent of GDP.
Projected revenue and disbursement are estimated to rise to P4.31 trillion (17 percent of GDP) and P5.12 trillion (20.2 percent of GDP), respectively, by 2022.
“The comprehensive tax reform program can help ensure a reliable revenue base and, more importantly, enhance the modernization of our economy. Quickly completing the passage of the remaining tranches of the tax reform will ensure a steady revenue flow and equitable sharing for the government’s social and infrastructure programs while securing fiscal stability long into the future,” the DBCC said.
“The speedy passage of the Corporate Income Tax and Incentives Rationalization Act will help attract additional investment into the country and the alcohol and e-cigarette excise tax adjustments will substantially bridge the funding gap for the Universal Health Care program,” it said.
Given the revenue and disbursement program adopted by the DBCC, the deficit target was maintained at 3.2 percent of GDP from 2019 to 2022 to sustain the government’s investments in infrastructure and human capital development.
“Accounting for the aforementioned factors, the GDP growth target is projected at 6 percent to 6.5 percent in 2019 and 6.5 to 7.5 percent in 2020 to 2022,” it said.
The DBCC said inflation in 2019 would likely settle at an average 2.4 percent, lower than the previous assumption of 2.7 percent to 3.5 percent. Inflation forecast for 2020 to 2022 was kept at 2 to 4 percent.
The peso-dollar exchange rate assumption was revised to a range of P51 to P52 against the greenback in 2019 and from P51 to P54 against the dollar from 2020 to 2022.
“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.
The DBCC is composed of the Department of Budget and Management, Department of Finance, the National Economic and Development Authority and the Bangko Sentral ng Pilipinas.
