PRESIDENT Ferdinand “Bongbong” Marcos, Jr.’s economic team raised its inflation forecast for this year to a range of 4.5 to 5.5 percent, even higher than the level expected by the previous administration.
Following its first meeting under the term of President Marcos, the Cabinet-level Development Budget Coordination Committee (DBCC) on Friday announced that inflation for this year remains “elevated” as fuel and food prices rose as a result of the ongoing Russia-Ukraine war and supply chain disruptions.
The new projection is above the government’s target band of 2 to 4 percent and the 3.7 to 4.7 percent revised forecast of DBCC in May under the Duterte administration.
Likewise, the DBCC hiked its projection for inflation for next year to 2.5 to 4.5 percent, also above the former economic team’s previous forecast of 2 to 4 percent. From 2024 to 2028, it is expected to finally settle within their target band.
Apart from inflation, the DBCC also adjusted its projection for the peso-dollar exchange rate to P51 to P55 for next year until 2028 due to heightened global uncertainty such as the aggressive monetary policy tightening by the US Fed, market aversion amid Russia-Ukraine conflict, and increased global oil prices. However, it retained the previous forecast of P51 to P53 for the peso-dollar exchange rate for this year.
The DBCC also adopted the GDP growth targets that the economic team stipulated in their six-year Medium Term Fiscal Framework that they submitted to President Marcos earlier this week.
For this year, the Marcos administration is expecting the Philippine economy to grow 6.5 to 7.5 percent. However, this is slightly lower than the downscaled goal of Duterte’s economic team of 7 to 8 percent.
Nonetheless, the current economic team is more bullish in its GDP growth targets for 2023 to 2028 at 6.5 to 8 percent. To recall, the previous DBCC only targeted 6 to 7 percent for 2023 to 2025.
With these economic targets for this year and next year, Finance Secretary Benjamin Diokno has since expressed confidence that the country will post the highest growth rate for both years among the countries in the Association of the Southeast Asian Nations (Asean) Plus Three region, including China, Japan, and South Korea.
The finance chief said he would also recommend to President Marcos, who is the concurrent Agriculture secretary, to keep the implementation of the Rice Tariffication Law (RTL), which removed rice as a major contributor to inflation.
“That really is a good law. It has a major contribution to our desire to control inflation so I think it is not smart to go back to the old system. Naging problema na natin yan [That has been our problem] for the last 50 years,” Diokno said.
Marcos earlier suggested amend the RTL, which has replaced rice import quantitative restrictions with tariffs, to make the measure more local farmer-friendly and to redress the country’s overdependence on rice.