By Louise Maureen Simeon, December 6, 2022; The Philippine Star

Manila, Philippines — The economic team of the Marcos administration expects external headwinds to take a toll on overall growth next year amid still-elevated commodity prices and slowdown in major economies.

During yesterday’s briefing by the Cabinet-level Development Budget Coordination Committee (DBCC), the economic team slashed its 2023 gross domestic product (GDP) growth target to six to seven percent from the previous 6.5 to eight percent goal set in July.

Moreover, this marks a slowdown from the 6.5 to 7.5 percent expectation for the year, which the DBCC retained.

Finance Secretary Benjamin Diokno said the global slowdown was factored into the adjustment.

The world economy is seen hitting the brakes next year as the impact of the super-sized interest rate hikes are felt.

National Economic and Development Authority Undersecretary Rosemarie Edillon, for her part, is banking on a resurgent domestic demand that could potentially offset downside risks.

She said the dynamics in China, a major trading partner, was likewise considered as the Asian neighbor is a significant factor in trade and tourism.

“But we hope to be more than compensated by young domestic tourists,” Edillon said.

Nonetheless, GDP is seen picking up from 2024 to 2028 and register a 6.5 to eight percent growth, the original target of the DBCC.

The government is banking on modernizing agriculture and agribusiness, revitalizing the industry sector and reinvigorating the services sector.

On commodity prices, the DBCC also hiked its inflation assumption for 2022 to 5.8 percent from the previous expectation of 4.5 to 5.5 percent given the persisting high prices of food and transport costs.

But this is expected to moderate in the medium term, reaching 2.5 to 4.5 percent in 2023, before returning to the target range of two to four percent in 2024 until 2028.

“By 2023, there will also be a slowdown in inflation. We’re hoping that the global oil prices will stabilize next year,” Edillon said.

“And although there will be a slowdown in household consumption, we think that will improve consumer sentiment because there are still other sectors that need to ramp up their economic activities like tourism,” she said.

The assumption for the price of the global benchmark Dubai crude oil was also adjusted upward to $98 to $100 per barrel, considering global supply constraints on oil, before going down slightly to $80 to $100 per barrel next year.

By 2024, it is projected to further decline to $70 to $90 as oil supply is expected to catch up and stabilize over the medium term.