The Development Budget Coordination Committee (DBCC) has revised upwards its growth assumptions for 2021, following a strong performance in the third quarter and as coronavirus disease 2019 (COVID-19) cases significantly declined.
The DBCC said yesterday growth assumption for 2021 was adjusted upwards to five to 5.5 percent, from its earlier assumption of six to seven percent, which was also revised downwards in May from the original forecast of 6.5 to 7.5 percent.
The Asian Development Bank (ADB) also revised its growth outlook for the Philippines for this year and next, to5.1 percent and six percent, respectively.
The DBCC retained growth targets for the medium-term at seven to nine percent for 2022 and at six to seven percent by 2023 and 2024.
The economy grew by 7.1 percent in the third quarter.
“As we continuously relax restrictions and increase mobility, economic performance is expected to accelerate further in the last quarter of the year,” the DBCC said.
With the strong economic performance in 2021, the DBCC is optimistic the country’s GDP will return to its pre-pandemic level by 2022.
“Our accelerated vaccination drive has enabled the safe and targeted reopening of the economy. With 41.5 million Filipinos now fully vaccinated, we have seen COVID-19 cases and deaths fall sharply even as we relaxed restrictions in the last quarter of the year,” the DBCC said.
“This led to an additional employment of 1.3 million compared to the pre-pandemic level, above-target revenue collections, and a strong and early recovery,” it added.
For 2021, inflation is seen at 4.3 to 4.5 percent, Dubai crude oil at $68 to $70 per barrel, foreign exchange rate at P49 to P50 to a dollar, while growth of goods exports and imports are 16 percent and 30 percent, respectively.
For 2022 to 2024, the projections for inflation, foreign trade, and foreign exchange rate were maintained given recent economic developments.
The assumption for the price of Dubai crude oil per barrel was revised upwards to $60 to $80 per barrel for 2022 to 2024 mainly due to the optimistic demand outlook for oil as the global economy gradually rebounds in the medium-term.
Revenue projection for 2021 is expected to exceed the target and reach P3.027 trillion, returning to pre-pandemic levels at P3.304 trillion in 2022, P3.624 trillion in 2023 and P4.049 trillion in 2024.
Full-year disbursements for this year are expected to reach P4.633 trillion, which is 9.6 percent higher year-on-year.
“This is mainly attributed to the accelerated spending performance seen in infrastructure and other capital outlays, personnel services, transfers to local government units, and equity and interest payments,” the DBCC said.
For 2022, total disbursement program was maintained at P4.955 trillion. Disbursement levels for 2023 and 2024 were slightly adjusted upwards to P5.059 trillion and P5.347 trillion, respectively, the DBCC said.
“Given the higher-than-target revenues and lower-than-programmed disbursements for 2021, the deficit program for this year is estimated at a lower level of 8.2 percent of GDP,” the DBCC said.
Previously, the deficit program for 2021 is 9.3 percent of GDP.
The DBCC said this is projected to move in a downward trajectory for the upcoming years with 7.7 percent of GDP in 2022, 6.1 percent of GDP in 2023 and 5.1 percent of GDP in 2024, as the government continues to pursue a fiscal consolidation strategy over the medium term.
The Asian Development Outlook 2021 released yesterday showed inflation outlook for 2021 and 2022 is 4.4 percent and 3.7 percent, respectively, mainly due to rising fuel prices.
These are up from ADB’s September forecast of 4.1 percent in 2021 and 3.5 percent for 2022.
