Philippines reduces GDP growth forecast for 2023 in response to global threats

MANILA, Dec 5 (Reuters) – The Philippines cut its economic growth forecast for 2023 on Monday, taking into consideration the expected slowdown in global activity, but maintained its growth targets for the subsequent five years.

The inter-agency Development Budget Coordination Committee (DBCC) revealed during a media conference that the Southeast Asian nation’s economy is now projected to expand by 6.0%-7.0% in 2019, a lower and tighter range than the prior official aim of 6.5%-8.0%.

“The global downturn is harming the adjustment,” said Benjamin Diokno, secretary of the Treasury.

Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said this week that the likelihood of global GDP dropping below 2% next year was growing due to the consequences of the conflict in Ukraine and simultaneous slowdowns in Europe, China, and the United States.

The DBCC, however, maintained the 6.5%-8.0% growth projection for 2024-2028.

Following the removal of practically all COVID-19 limitations and the resumption of a greater number of commercial operations, authorities said that the economy was on course to expand between 6.5% and 7.5% in 2022, faster than the 5.6% increase in 2021.

The government also altered its expectations about foreign currency rates.

It anticipates the peso to trade at 54-55 versus the U.S. dollar in 2022, compared to 51-53 before, at 55-59 in 2023, and at 53-57 in 2024, compared to 51-55 previously for 2023 and beyond.

After falling to a historic low of 59 in recent weeks, the peso has rebounded versus the dollar owing to a series of interest rate rises by the Bangko Sentral ng Pilipinas (BSP) to match the aggressive tightening by the U.S. Federal Reserve.

Governor Felipe Medalla said last week that the BSP is expected to raise rates by 25 to 50 basis points at its December 15 meeting.

During the same briefing, economic authorities backed the development of a sovereign wealth fund, but Medalla cautioned against the concept and emphasized the necessity of openness.

Monday, the bicameral legislature of the Philippines authorized a record-breaking 5.268 trillion pesos ($94.4 billion) for the 2023 national budget, the first full-year spending plan under President Ferdinand Marcos Jr. ($1 = 55.8050 Philippine pesos)

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