PHL adjusts economic projections amid global uncertainties

The Development Budget Coordination Committee (DBCC) has recalibrated the Philippines’ medium-term macroeconomic assumptions and fiscal program for Fiscal Years 2024 to 2028, reflecting proactive measures to align with emerging domestic and global economic developments.

Inflation and Monetary Policy Adjustments

The DBCC has adjusted its inflation target to 3.0-4.0% for 2024, significantly lower than the global average of 5.9% projected by the IMF.

“We are determined to achieve price stability and return to the target range of 2.0 to 4.0 percent from 2025 to 2028,” a DBCC official stated. Measures include the new Comprehensive Tariff Program to make essential commodities more affordable and the Food Stamp Program to aid vulnerable sectors.

Oil Prices and Exchange Rate Stabilization

Dubai crude oil price assumptions have been narrowed to USD 70-85 per barrel for 2024, with a consistent range of USD 65-85 per barrel projected for 2025 to 2028.

The peso-dollar exchange rate for 2024 has been revised to Php 56-58/USD, with expectations of stabilization due to rising tourism receipts, BPO revenues, and overseas remittances.

Trade Growth Projections

Goods exports growth is revised upwards to 5.0% in 2024, driven by a positive first quarter performance and a stronger global semiconductor market.

Conversely, goods imports growth is projected to slow to 2.0% in 2024 but will rebound to 8.0% from 2026 to 2028, supported by sustained infrastructure investments.

Economic Growth and Fiscal Program

The Philippine economy leads the ASEAN-6 with a 5.7% growth in the first quarter of the year.

“This robust growth momentum is expected to continue over the medium term,” with GDP growth anticipated to reach 6.5-8.0% from 2026 to 2028, said the DBCC.

This growth trajectory positions the country on the path to becoming an upper-middle-income economy within two years and reducing the poverty rate to single digits by 2028.

Revenue and Spending Projections

Revenue collections from January to May 2024 increased by 16.3% year-over-year, reaching Php 1.853 trillion.

The DBCC forecasts average annual revenue growth of 10.3%, achieving Php 6.250 trillion by 2028.

The spending performance is also robust, with disbursements expected to reach Php 5.754 trillion by the end of 2024.

High investments in infrastructure will continue, anticipated to be 5.0-6.0% of GDP annually.

Deficit and Debt Management

The fiscal deficit is projected to decrease from 5.6% of GDP in 2024 to 3.7% by 2028. The debt-to-GDP ratio is expected to drop from 60.6% in 2024 to 56.0% in 2028, remaining well within the IMF-recommended threshold.

Proposed FY 2025 National Budget

The proposed FY 2025 national budget is set at Php 6.352 trillion, a 10.1% increase from FY 2024. It focuses on economic and social transformation, aiming to develop individual and family capabilities, generate quality jobs, and foster a resilient environment.

The DBCC remains committed to sustaining the Philippines’ high-growth trajectory and mitigating inflation amid global economic challenges, ensuring a future-proof economy for all Filipinos.