DBCC revises 2019 economic targets

MANILA, Philippines — The inter-agency Development Budget Coordination Committee (DBCC) has slashed its domestic inflation forecast for 2019 following the implementation of measures to cut down food prices.

Budget officer-in-charge Janet Abuel said the DBCC, in its 176th meeting Thursday, revised its 2019 inflation forecast to a range of 2.7 percent to 3.5 percent from the previous assumption of three to four percent.

“The inflation rate assumption for 2019 is revised downward to the range of 2.7 to 3.5 percent, due to the government’s decisive steps to stabilize the general price level,” Abuel said.

Abuel was referring to the full implementation of presidential directives issued last year to increase food supply, as well as the passage of the Republic Act 11203 or the Rice Liberalization Act, which opened up the rice sector.

On the other hand, the DBM chief said the inflation assumption for 2020 to 2022 was retained at the two to four percent range.

Meanwhile, Abuel said DBCC’s peso-dollar exchange rate forecast for 2019 was adjusted to 51 to 53 to $1 for 2019, and 51 to 55 from 2020 to 2022, from the previous estimate of 52 to 55 against $1.

Abuel said this projects “the possible appreciation of the peso with easing inflation pressures and positive market sentiment with the recent sovereign credit rating upgrade of the Philippines.”

She said assumptions in goods exports growth dropped to two percent from the previous forecast of six percent for 2019, due to slower global growth, and maintained at six percent from 2020 to 2022.

Likewise, the DBCC’s goods import growth estimate was lowered to seven percent from nine percent in 2019, and maintained at eight percent from 2020 to 2022.

Services export growth assumptions was reduced to nine percent for this year up to 2022, while services imports growth was cut to three percent in 2019, four percent in 2020 and five percent in 2021 and 2022.

“Accounting for the aforementioned factors, the GDP growth target is maintained at six to seven percent in 2019, 6.5 percent to 7.5 percent in 2020, and seven to eight percent in 2021 and 2022,” Abuel said.

Meanwhile, Abuel said the DBCC has capped the Philippines’ fiscal deficit at 3.2 percent of gross domestic product (GDP) from 2019 to 2022.

This shows an upward adjustment from the three percent deficit-to-GDP ratio ceiling set for 2020 to 2022, as previously targeted by the DBCC.

Finance Assistant Secretary Maria Teresa Habitan attributed the adjustment to changes in the revenue program, as well as the pressure for infrastructure program to come on stream by 2022.

“We would want to hit our targets in terms of infrastructure spending as a percentage of GDP, so it could really bolster in terms of multiplier effect,” National Treasurer Rosalia De Leon said.