DBCC to review macroeconomic assumptions, growth targets

THE DEVELOPMENT Budget Coordination Committee (DBCC) is set to review the government’s macroeconomic assumptions and growth targets at its meeting on Monday.

Budget Secretary Amenah F. Pangandaman said economic managers will see if there is a need to tweak the medium-term macroeconomic assumptions, growth targets and fiscal program, in light of recent developments.

“We’ll try to see if we are on track or if we adjust (the assumptions). First are targets, we’re trying to see if we can meet the targets in revenues and spending,” she said in a roundtable interview with BusinessWorld reporters and editors in Quezon City on Wednesday.

At its last meeting in December, the DBCC narrowed the gross domestic product (GDP) growth target for 2023 to 6-7%, from 6.5-8% previously, due to external headwinds and a global slowdown. It kept its 2024-2028 growth goal at 6.5-8%.

The DBCC also projected inflation to reach 2.5-4.5% this year.

This year, the Philippines’ macroeconomic indicators have been positive, Ms. Pangandaman said.

“So far, we are consistent, if you look at the numbers, we just have to wait for first-quarter gross domestic product (GDP) growth. But so far, our numbers are okay. Inflation is going down and the labor force participation rate is increasing,” she said.

The Philippine Statistics Authority (PSA) is set to release April inflation data on May 5 and first-quarter GDP data on May 11.

Inflation eased to 7.6% in March from 8.6% in February and a 14-year high of 8.7% in January. This brought the average first-quarter inflation to 8.3%, well above the central bank’s 6% full-year forecast.

Ms. Pangandaman said the government’s spending and revenue collections have been on track.

This year, the DBCC expects full-year disbursements to reach PHP 5.117 trillion, while revenues will hit PHP 3.71 trillion.

Budget Undersecretary Joselito R. Basilio said that if there are any revisions made by the DBCC, it would be for quarterly fiscal program or revenue targets.

“Definitely, the medium-term fiscal framework is consistent, there may be just quarterly changes in the fiscal program or revenue targets, but that’s still consistent,” he said at the same roundtable interview.

However, economists said the DBCC should consider revising its macroeconomic assumptions and targets.

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion in a Viber message said that full-year economic growth projection should be revised downward to 5-6%, while the inflation assumption should be raised to 5-7%.

“There may be a need to revise lower the GDP growth estimates amid risk of recession in the US, which is the world’s largest economy as could be exacerbated by the US banking turmoil that would increase the odds of US recession,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Mr. Ricafort noted that Philippine growth of at least 5.5-6% remains “possible for the coming years.”

The collapse of the Silicon Valley Bank and Signature Bank triggered a banking crisis in the US and rattled financial markets across the globe. This marked one of the biggest bank failures since the 2008 global financial crisis.

The International Monetary Fund expects US growth to slow to 1.6% this year and further to 1.1% in 2024, much lower than the 2.1% growth it registered in 2022. — By Luisa Maria Jacinta C. Jocson, Reporter