ECONOMIC managers on Monday upgraded the growth projections for goods exports this year and for services exports in 2022 while affirming the assumptions on the country’s GDP growth for this year until 2024.
Goods exports are now seen by the Cabinet-level Development Budget Coordination Committee (DBCC) to rise by 10 percent this year from its previous projection of 8 percent, “following an expected recovery in external demand.”
Meanwhile, the growth of service exports in 2022 was revised upward to 7 percent from its old projection of 6 percent as it expects travel and BPO receipts to improve with the gradual reopening of the economy.
As Covid-19 cases in the country are declining since the peak in April this year and the economy is in gradual reopening mode with more targeted granular lockdowns, the DBCC kept unchanged its growth targets of 6 to 7 percent this year, 7 to 9 percent in 2022, and 6 to 7 percent in 2023 and 2024.
To support this outlook, the DBCC said it will continue to back the gradual and safe reopening of the economy subject to the strictest compliance with minimum public health standards.
Building consumer and business confidence, improving health systems capacity, and preventing transmissions of the Delta variant are also hinged on the intensified implementation of the prevent, detect, isolate, treat, and recover strategy, along with the full vaccination of residents in high-risk areas.
An accelerated vaccination rollout coupled with relaxation of quarantine restrictions in high-risk areas will also allow more businesses to operate and consumers to participate in socioeconomic activities, the DBCC said.
“With these actions, the DBCC is optimistic that the country’s GDP may return to its pre-pandemic levels as early as 2022. The DBCC will review the GDP growth projections after the release of the Q2 GDP in August,” it said.
In terms of the government’s medium-term fiscal program, the DBCC also kept its revenue projections at P2.88 trillion for 2021 (14.5 percent of GDP), P3.29 trillion for 2022 (14.9 percent of GDP), P3.59 trillion for 2023 (14.8 percent of GDP), and P4.0 trillion for 2024 (15.1 percent of GDP).
On the other hand, estimates for disbursements this year and 2022 were also kept at P4.74 trillion (23.9 percent of GDP) and P4.95 trillion while the DBCC downgraded its disbursement projection for 2023 and 2024 to P5.02 trillion (20.7 percent of GDP) in 2023 and P5.3 trillion (19.9 percent of GDP) in 2024 due to the revised projections for the National Tax Allotment.
In its meeting last May, the DBCC estimated disbursements in 2023 to reach P5.11 trillion in 2023 and P5.4 trillion in 2024.
On infrastructure program disbursement for 2022, the DBCC now expects it to increase to P1.29 trillion or 5.8 percent of GDP from the original estimate of P1.25 trillion.
Given the updated NTA projections and the block grant to Bangsamoro Autonomous Region in Muslim Mindanao, the DBCC also upgraded its outlook on infrastructure program disbursement to P1.28 trillion or 5.3 percent of GDP in 2023 from its previous projection of P1.26 trillion.
In 2024, the DBCC revised its projection upward to P1.35 trillion or 5.1 percent of GDP from its original estimate of P1.32 trillion.
According to DBCC, the infrastructure program will average 5.4 percent of GDP over the next three years.
The DBCC now sees the country’s budget deficit settling at 9.3 percent of GDP. This will then go down to 7.5 percent in 2022, 5.9 percent in 2023, and 4.9 percent in 2024.
“This fiscal consolidation strategy will continuously be adopted by the government to ensure fiscal sustainability over the medium-term and to bring back the country’s deficit to pre-pandemic levels,” it said.
In the same meeting, the DBCC also approved the expenditure ceiling of the 2022 National Expenditure Program (NEP) of P5.024 trillion, higher by 11.5 percent than the 2021 NEP.
“The proposed 2022 national budget will continue to invest in building the country’s resilience amidst the pandemic by prioritizing funding for Covid-19 response measures, such as health care development and social services, while also ramping up economic growth through investments in public infrastructure,” it said.
Image courtesy of Nonie Reyes