MANILA (UPDATE) - Philippine economic managers on Tuesday announced that they had narrowed the range of their gross domestic product growth forecast for 2022 due to the effects of the Ukraine crisis, and rising interest rates.

The Philippine economy will likely grow between 7 to 8 percent in 2022, which was narrower than the earlier 7 to 9 percent growth forecast, according to the Development Budget Coordination Committee.

Besides the Ukraine war, which pushed up prices of oil and other commodities, the DBCC also cited the US Federal Reserve’s move to raise interest rates, and the slowdown of China’s economy, as external risks to growth.

The DBCC meanwhile retained the 6 to 7 percent growth forecast for 2023 to 2025 “as the economy is expected to sustain its strong recovery in the medium term.”

• Philippine economy expands 8.3 percent in first quarter of 2022

The inflation forecast was also raised to a range of 3.7 to 4.7 percent, from the earlier 2 to 4 percent. This follows the uptick in the price of food and energy due to the Russia-Ukraine conflict and disrupted supply chains, the DBCC said.

This was slightly higher than the Bangko Sentral ng Pilipinas’ revised inflation projection of 4.6 percent for the year.

• BSP raises inflation forecast to 4.6 percent in 2022

“Nevertheless, the DBCC maintained the inflation rate assumption at 2 to 4 percent for 2023 to 2025, consistent with the latest forecasts of other agencies and its deceleration over the medium-term,” the cabinet-level body said.

The price of Dubai crude, which the Philippines uses, is expected to average between $90 to $110 per barrel this year, the DBCC said. But for 2023, Dubai crude is expected to slide $80 to $100 per barrel, and then $70 to $90 per barrel in 2024 to 2025 “as oil supply is expected to catch up over the medium term.”

Meanwhile, the DBCC said shifting the entire country to Alert level 1, increasing the vaccination rate, and reopening all face-to-face classes were crucial to further strengthening domestic demand, cushioning the impact of external events, and achieving the country’s growth targets.

Socioeconomic Planning Secretary Karl Chua said the economy remains strong amid the challenges overseas.

Chua said he has already contacted returning Socioeconomic Planning Sec. Arsenio Balisacan.

“We have sent our congratulations, and our offer to meet with him, anytime that he would like to meet. We are also preparing our transition notes to share with him. “

Members of the DBCC are preparing to meet with their counterparts in the incoming cabinet of the presumptive president Ferdinand Marcos Jr. They however declined to talk about what they would be proposing to the next economic team.

Budget OIC Secretary Rose Marie Canda meanwhile advised the incoming administration to work within a "tight" budget.

“For prudent fiscal management, we have to stick to a P5.268 trillion budget for 2023. It may be tight, but we have to live within that level, if we want to be respected in the international financial community," Canda said.

- With a report from Warren de Guzman, ABS-CBN News

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