Philippines: NEDA still optimistic on growth target

MANILA, Philippines — The country’s economic growth may exceed the target set by the government for this year, given its latest performance and expectations of strong growth in the last quarter of the year, the National Economic and Development Authority (NEDA) said.

In a briefing yesterday, NEDA Secretary Arsenio Balisacan said the country’s average gross domestic product (GDP) growth has already reached 7.7 percent in the first three quarters of the year, exceeding the government’s 6.5 to 7.5 percent growth projection  for the year.

“I think given the indications we are seeing in the fourth quarter, it’s (GDP growth) likely going to exceed the upper limit of that range,” he said.

If not for the high inflation rate, he said the country would have posted more robust economic growth.

The country saw its headline inflation rate hit eight percent in November, a 14-year high, due to faster increases in food prices. This brought the average inflation rate for the January to November period to 5.6 percent.

“We expect to see robust growth in the fourth quarter,” Balisacan said.

NEDA Assistant Secretary Sarah Daway-Ducanes said the fourth quarter is historically the time when remittances are coming in for the Christmas season.

“So remittances are helping boost consumption,” she said.

She said consumption would continue to be strong given pent-up demand, as people were unable to go malls and eat in restaurants when lockdowns were imposed.

Balisacan said consumption and services, which have been fueling the country’s growth, are expected to remain major growth drivers in the near term.

“Moving forward, in the medium term, we need to expand, diversify those sources of growth. Instead of just looking at consumption, we need to see more investment,” he said.

He said the government would also want to see trade, manufacturing, construction, utilities, and even mining having strong contributions to growth over the medium term.

“Agriculture, of course,is also going to be a driver to the extent we can increase productivity there, temper any pressures exerted on food prices,” he said.

For next year, the government recently reduced its GDP growth target to six to seven percent from the previous 6.5 to eight percent, citing external headwinds that could slow the country’s growth.

In addition to a six to seven percent GDP growth next year, Balisacan said the government is aiming for headline and food inflation rates of 2.5 to 4.5 percent, and unemployment rate of 5.3 to 6.4 percent.

He also said the government expects to see poverty incidence fall to about 16.2 percent next year from 18.1 percent in 2021.

Mindful of challenges which include monetary tightening worldwide that have caused slowdowns and are expected to result in recessions in developed economies and slower growth in emerging economies like the Philippines, he said the country has ensured the timely completion of the Philippine Development Plan (PDP) or the country’s overall blueprint for socioeconomic development for next year until 2028.

The PDP, which was approved by the NEDA board chaired by President Marcos last Friday, seeks to address short term issues such as protecting people’s purchasing power, mitigating the socioeconomic scarring in human capital from the pandemic, and ensuring vulnerable sectors are given assistance.

Over the medium term, the PDP also aims to promote job creation and accelerate poverty reduction.

Aside from the implementation of the PDP starting next year, Balisacan said NEDA is also looking at finalizing the Regional Development Plans, the Public Investment Program for 2023 to 2028, and the three-year rolling Infrastructure Plan for fiscal year 2024 to 2026.

He said NEDA also plans to issue the National Innovation Agenda and Strategy Document 2022 to 2032 next year to guide the country in improving its innovation system.

NEDA likewise aims to pursue major national projects including public-private partnerships in critical infrastructure.

Balisacan said the NEDA wants to see the completion of registration of 92 million Filipinos to the Philippine Identification System.

He said NEDA also aims to conduct a comprehensive review that will lead to adopting a five-year Most Favored Nation or MFN tariff structure.