Economic managers have announced the revision of some economic targets after considering the impact of mostly external factors.
In a briefing, Budget and Management Secretary Benjamin Diokno said the gross domestic product (GDP) target for 2018 was cut to 6.5-6.9 percent from the original 7 to 8 percent, which is also the target until 2022.
In the first half this year, growth, as measured by GDP, it grew by 6.3 percent, with the first quarter figure at 6.6 percent and the second quarter at 6 percent.
The slowdown was traced partly to the government’s policy decisions like the six-month closure of Boracay Island, which decelerated the growth of the services sector; the imposition of excise tax on non-metallic and metallic minerals; and the stricter enforcement of aquaculture regulations in Laguna de Bay.
Aside from the GDP target, the average inflation assumption for 2018 was changed to 4.8-5.2 percent from 4 to 4.5. For 2019, the assumption is 3 to 4 percent.
The inflation target for 2018-20 is a range between 2 to 4 percent.
Average assumption for Dubai crude oil price was changed to USD70-80 per barrel for this year, USD75-85 per barrel for 2019, USD70-80 per barrel for 2020, and USD65-75 per barrel for 2021-22.
During the Development Budget Coordination Committee (DBCC) meeting last July, the average assumption for Dubai crude is USD55-70 per barrel for 2018 and USD50-65 per barrel for 2019-22.
The peso-US dollar rate is seen to average this year at PHP52.5-53 from PHP50-53 previously. For 2019-22, the foreign exchange assumption is between PHP52-55.
Export growth target for this year was cut from 9 percent to 2 percent and the 2019’s from 9 percent to 6 percent.
This, as growth of exports, remains moderate amid the big jumps in imports as account for higher requirement by the domestic economy.
Diokno, who is also the chair of the DBCC, said the change in the exports assumption was due to base effects in 2017.
Also changed are the assumptions for the 364-day Treasury bill (T-bill) this year to 4.4-4.6 and the 2019-22 to 4.5-5.5 percent. These were previously at 3 to 4.5 percent.
Finance Secretary Carlos Dominguez III, during the same briefing, said these changes were made to reflect current situation such as the impact of trade war, which was not seen a few months back.
“We are confident that the Philippine economy will weather these storms abroad but we are not complacent. We are taking very deliberate actions to address the issues that we are facing,” he said.
In a statement, economic managers said measures to address the issue on the demand-side include increasing household consumption with rice tariffication, social mitigating measures, and policy interventions in the education and labor sectors.
Other measures include encouraging the entry of additional investments by accelerating the infrastructure programs and boosting exports through the full implementation of the Export Development Plan.
Supply side-focused measures include improvement of the agriculture sector by cultivating high-value crops, investments in the capacity and technology of manufacturing, and innovation in and timely implementation of construction projects.
Dominguez said the economic slowdown in the second quarter of this year was partly due to the smaller contribution by the agriculture sector, thus, the identification of measures to boost the sector.
“Again, we are facing new realities. Everybody in the world is facing new realities and we are fortunate that our economy is strong enough and resilient enough to overcome these difficulties,” he said.
Dominguez said the country's banking sector continues to be strong, and this is among the reasons why the economy remains resilient.
“We have a very high foreign exchange reserves. They are almost seven months of imports and we have an administration that is closely coordinating their fiscal policy with monetary policy so these issues will be addressed,” he added.