Government economic managers said Tuesday there is a strong basis to retain the 2022 gross domestic product growth target of 7 percent to 9 percent, but warned that the Russia-Ukraine conflict could have an indirect impact on world prices and economic performance.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said during the Philippine economic briefing the Russia-Ukraine war is one of the key risks that could dampen the growth target.
“Growth will be supported by the implementation of the 2022 national budget, ‘Build, Build, Build’ program, the Corporate Recovery and Tax Incentives for Enterprises law and Executive Order No. 166, adopting the Ten-Point Policy Agenda to Accelerate and Sustain Economic Recovery from the Pandemic,” Diokno said.
He said game-changing legislation such as the amended Public Services Act would also drive economic growth. The economic outlook this year would also be supported in part by the BSP’s efforts toward financial digitalization and inclusion, and promotion of a stable inflation and financial environment conducive to economic growth, he said.
“However, the favorable economic outlook comes with risks. One of the key risks to domestic and global economic growth is the ongoing conflict between Russia and Ukraine. Its direct impact is inconsequential, yet its indirect impact through higher world oil prices and slower global growth could be significant,” Diokno said.
Finance Secretary Carlos Dominguez III said economic managers were looking at the fuel prices and the potential impact to GDP growth. “We are evaluating the increase in fuel prices… Definitely it will be a drag to the economy, but we are quite prepared to handle this,” he said.
Dominguez said President Rodrigo Duterte “masterfully steered” the Philippines from being an inward-looking economy to one that is ready to compete with the rest of the world, through his slew of hard-won reforms that would immensely benefit the next administration as it continues the job of returning the country to the path of rapid and inclusive growth.
He said among these reforms that languished for decades in the shelves of the Congress but were fully enacted under the Duterte administration are the Comprehensive Tax Reform Program, which lowered both personal and corporate income taxes and modernized the fiscal incentives system; the series of increases in the excise taxes of “sin” products to improve funding for the Universal Health Care program; and the Rice Tariffication Law, which lowered rice prices and provided a steady flow of funds for the modernization of the agriculture sector.
Dominguez said another lasting legacy of President Duterte is the “Build, Build, Build” program, which raised infrastructure spending to above 5 percent of GDP, double the level recorded by the previous four administrations.