Philippines keeps 2023-2028 growth goal, downplays El Nino and other risks

Construction workers are pictured at the construction site of an apartment building in Pasay, Metro Manila in the Philippines May 22, 2017. (Reuters/Erik De Castro/File Photo)
  • 2023 GDP growth target retained at 6.0%-7.0%
  • 2024-2028 GDP growth target kept at 6.5%-8.0%
  • Macro targets take into account domestic, external risks

 The Philippine government on Friday maintained its 2023 gross domestic product growth target at 6.0% to 7.0%, confident the country can withstand external and domestic risks, including the impact of the El Nino weather phenomenon.

The GDP growth target for the 2024 to 2028 period was kept at 6.5% to 8.0%, an inter-agency panel added, following a review of macroeconomic and fiscal assumptions.

The panel includes the central bank, departments of finance and budget and the economic planning agency.

“These projections have already taken into account the risks posed by El Nino and other natural disasters, global trade tensions, and value chain disruptions, among other factors,” it said.

In the Philippines and other parts of Asia, El Nino usually causes hot, dry weather that results in lower agricultural production and disruption in water and power supplies.

President Ferdinand Marcos Jr, also the agriculture secretary, has directed all government agencies to implement water conservation measures in light of the looming long dry spell due to El Nino, his office said on Friday.

The agriculture department has also come up with measures to support the farm sector, including buffer stocking of inputs, adjusting planting calendar, and promoting drought-tolerant crops.

The Philippine economy grew at an annual pace of 6.4% in the first quarter, cooling to its slowest in two years as red-hot inflation and high interest rates dampened consumption.

Arsenio Balisacan, the economic planning minister, however, painted a rosy outlook for the year.

“Three-fourths of growth is domestic demand, and we plan to strengthen that to offset headwinds from the global economy,” he said.

The panel revised the 2023 inflation assumption to a narrower 5.0% to 6.0% versus the previous 5.0% to 7.0%, taking into account a recent easing of consumer price pressures.

The 2024-2028 inflation assumption was kept at 2.0% to 4.0%.

The government’s 2023 GDP growth target is anchored on an exchange-rate assumption of 54-57 pesos per dollar for 2023, revised from 53-57 pesos.

The rate assumption for 2024-2028 was unchanged at 53-57 pesos per dollar.

The fiscal assumptions were also unchanged, with annual budget deficits programmed at 6.1% of GDP for 2023, 5.1% for 2024, 4.1% for 2025, 3.5% for 2026, 3.2% for 2027 and 3.0% for 2028.

—Reporting by Neil Jerome Morales and Enrico Dela Cruz; Editing by Martin Petty and Sriraj Kalluvila