Philippines lowers growth target for 2024, raises deficit ceilings

THE Philippines has lowered its target growth range for this year, and also turned slightly less optimistic about next year’s outlook due to high inflation and an anticipated slowdown in the global economy, its economic planning minister said on Thursday (Apr 4).

The Philippines now expects the economy to grow between 6 and 7 per cent in 2024, from a 6.5 to 7.5 per cent projection last December, with the target range for next year narrowed to 6.5 to 7.5 per cent, from 6.5 to 8 per cent, Arsenio Balisacan told a media briefing.

The lower growth goals also took into account last year’s below-target 5.6 per cent economic expansion, oil price movements and expected trends in inflation and the foreign exchange market, Balisacan said.

Elevated food prices and possible wage-hike and transport costs could also dampen consumer spending, he added.

“On the external front, the global economic slowdown may weaken external demand, while increasing geopolitical and trade tensions could disrupt supply chains,” Balisacan said.

“Despite the anticipated risks, we remain optimistic about the country’s sustained growth momentum.”

The 6.5 to 8 per cent growth projections for 2026 to 2028 were kept unchanged.

The government also raised its budget deficit ceilings for 2024 to 2028 to allow for greater flexibility to fund its infrastructure programme.

“We need to continue borrowing. It’s not in our interest to drastically reduce that deficit, because that then will impact on growth,” Balisacan said, adding that roads and bridges funded by loans will raise the economy’s potential and boost productivity.

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Foreign exchange assumptions this year were narrowed to 55 pesos to 57 pesos against the US dollar, but were kept at 55 to 58 pesos against the greenback from 2025 to 2028.

Inflation targets were kept at 2 to 4 per cent until 2028.

Next year, the government plans to propose to Congress a 7.5 per cent increase in the national budget to 6.2 trillion pesos (S$148.1 billion) from this year’s 5.77 trillion pesos.