THE new administration intends to revise targets set by previous administrations under AmBisyon and Development Budget Coordination Committee (DBCC) forecasts for the year, according to the National Economic and Development Authority (Neda).
In a briefing on Monday, Socioeconomic Planning Secretary Arsenio M. Balisacan said revising the targets will consider the impact of the pandemic on the economy as well as recent economic developments such as the spike in oil prices, as well as recession fears.
Economists from the Asian Development Bank (ADB) earlier estimated that oil prices could reach $200 per barrel, while JP Morgan said it could be as high as $300 per barrel should the war in Eastern Europe escalate.
“Understandably, we may need to revisit the targets, given the setbacks caused by the pandemic. Nonetheless, the aspirations and vision remain relevant, guiding us to stay the course toward improving the welfare of Filipinos,” Balisacan said.
Balisacan said for the DBCC targets, the committee will be meeting on Friday to discuss the targets. He said the target of 7 to 8 percent may not be feasible this year given the risks and the headwinds the economy is currently facing.
Nonetheless, Balisacan said, posting a growth of 6 to 7 percent this year “will be respectable.” He said this level of growth will still place the Philippines as the fastest growing country in the region.
Balisacan earlier told the BusinessMirror that a growth of 6.5 to 7 percent this year may be possible given the impact of the elections on the economy and the low-base effects from the growth posted last year.
On poverty
Balisacan said the increase in commodity prices is one of the factors that would not only cut economic growth but also erode poverty reduction efforts.
He said the poor are very sensitive to the increase in commodity prices, particularly the increase in food prices, since this has a higher weight in the basket of goods compared to other commodities.
In May, the poorest Filipinos saw inflation post a 7-month high, according to the PSA. Inflation in the Philippines for the bottom 30-percent income households accelerated to 4.3 percent in May 2022 from 3.8 percent in April 2022. Inflation in May 2021 was higher at 4.5 percent.
The average inflation for this income group of consumers from January 2022 to May 2022 stood at 3.5 percent.
The higher inflation in the country for the bottom 30-percent income households was mainly due to the increase in the inflation for food and non-alcoholic beverages at 4.1 percent, from 3.6 percent in April 2022.
In order to cushion the impact on the poor and prevent any further increase in poverty nationwide, Balisacan said the government is keen on extending subsidies for the most vulnerable Filipinos.
He said this can only be done through proper targeting and preventing more leakage in the subsidies. Balisacan said this is behind efforts to ramp up the implementation of the National ID. (Full story here: https://businessmirror.com.ph/2022/07/04/neda-dg-fiscal-food-woes-top-pbbm-agenda/)
The budget for these subsidies, however, may be included in the 2023 budget. Balisacan said the national government has one month to tweak the budget proposal according to the priorities of the Marcos administration.
Priority for BBM
On Monday, BusinessMirror reported the Marcos administration intends to prioritize the economic recovery; address the food crisis and fiscal concerns; and mobilize spending such as those intended for infrastructure.
Balisacan, a known running enthusiast, said in a virtual interview with the BusinessMirror that the President conveyed this sense of urgency to the entire economic team.
Foremost on the agenda, Balisacan said, is the economic recovery. He said improving the country’s GDP growth also means being on track to sustaining this growth and this means recovering from the pandemic quickly.
One of the most serious wounds inflicted on the economy by the pandemic is due to education, he pointed out, as he stressed the need to address the losses in human capital development because the country’s long-term economic growth is at stake.
Image credits: Alysa Salen