Philippine economy on the way to recovery
MANILA – Budget and Management Secretary Wendel E. Avisado in a press briefing late Thursday afternoon said following the prolonged imposition of community quarantines across the country, the Development Budget Coordination Committee (DBCC) said the emerging Gross Domestic Product (GDP) growth rate for the year has been adjusted from 8.5 to 9.5 percent.
With a lower projection compared to July 2020, the easing of restrictions alongside the improvement of the healthcare system capacity will push the country’s economy to recovery.
The economy gradually recovered and had a small contraction of 11.5 in the third quarter from 16.9 percent during the second quarter.
“On a quarter-to-quarter, seasonably adjusted basis, the economy grew by 8 percent in the third quarter,” Mr. Avisado said from a prepared statement as he expressed optimism for further improvement in the fourth quarter GDP figures.
The DBCC expressed confidence the inflation rate will be within 2.4 to 2.6 percent and projects inflation for 2021 and 2022 will be from 2.0 to 4.0 percent. While they earlier projects Dubai crude oil would cost US$35 to 40 per barrel this year, they adjusted it to US$40 to 42 per barrel. They projected crude oil for 2021 to 2022 would be US$ 35 to 50 per barrel.
On the exchange rate, the DBCC said the assumption s was revised to P48 – 50 against the US dollar and would be from P48 to 52 against the US dollar from 2021 to 2022.
“In line with the recent trends in global trade, the growth assumption for goods exports is maintained at -16 percent for 2020, while growth of goods imports for 2020 was further adjusted t0 -20.0 percent. These are expected to pick up b y 2021 and 2022 with the growth of goods exports maintained at 5.0 percent and growth of goods imports pegged at 8.0 percent,” Secretary Avisado quoting from the DBCC’s prepared statement said.
However, services exports and import growth assumption in 2020 are likely to contact further by 21.4 percent and 19.0 percent, respectively. A rebound may be achieved with 6.0 percent for services exports and 7.0 percent for services imports due to the gradual opening up of the domestic economy and increase in travel-related movements.
They also cited the above-target performance of the Bureau of Internal Revenue and the Bureau of Customs from July 2020, the estimated revenues collections have been increased from P2.52 trillion to P2.85 trillion or 15.7 percent of GDP.
Revenue projections for 2021 amounts to P2.88 trillion and for 2022, it is projected to collect some P 3.31 trillion. The adjustments, according to the DBCC, are based on the impact from the implementation of the CREATE bill by the Senate.
Disbursements for 2020 are expected to reach P4.23 trillion or 23.3 percent of GDP and 11.5% more than 2019. They attributed the narrower gap in spending compared to that registered in September due to the implementation of Bayanihan II and the government’s efforts and projects to reach their targets despite the COVID-19 pandemic.
The government’s disbursements for infrastructure during the third quarter surpassed the program and may amount to P824.9 billion or 4.5% of GDP by yearend, compared to the 4.2% forecasted last July. The total disbursement program has been secured at P4.66 trillion or 23.4% pf GDP for 2021 and P4.95 trillion or 21.9 percent of GDP for 2022.
With the revised revenue and disbursement program the deficit for 2020 has narrowed from 9.6 percent of GDP to 7.6 percent of GDP in 2020. This is adjusted to an estimated 8.9 percent of GDP in 2021 and 7.3 percent of GDP in 2022.
With the national government’s macroeconomic assumptions and fiscal targets, the proposed Fiscal Year 2020 cash budget is P5.024 trillion which is higher by 11.5 percent than the Fiscal Year 2021 National Expenditure program and 22.2 percent of GDP.
Secretary Avisado said the 20200 national budget will prioritize funding for health-0related responses and measures to accelerate economic growth.
Quoting from the latest Labor Force Survey conducted by the Philippine Statistics Authority, the DBCC said there were positive results from the executive’s efforts to bring the economy back to its feet and inclusive growth would become a reality.
The officials who took part in the 178th Development Budget Coordination Committee Meeting were Finance Secretary Carlos G. Dominguez III, Acting Socioeconomic Planning Secretary Karl Kendric T. Chua, Bangko Sentral ng Pilipinas Deputy Governor Francisco Dakila, Jr., and Budget and Management Secretary Wendel E. Avisado. (Melo M. Acuna)
DBCC Chair and Budget and Management Secretary Wendel A. Avisado. (Screen grab from DBCC Press Briefing/Melo M. Acuna)