The Philippine economic managers revised the medium-term macroeconomic assumptions for 2024 at the 188th Development Budget Coordination Committee (DBCC) meeting. 

They forecast that despite headwinds, the Philippines will become an upper middle income country by late next year or 2026.

Inflation remains a challenge for the economy with officials changing their inflation assumption to 3 to 4 percent for the year. 

That’s slightly different from the earlier assumption of 2 to 4 percent at their last DBCC meeting in April. 

But Budget Secretary Amenah Pangandaman said they remain optimistic they can return to the previous target in the coming years.

“We are determined to achieve price stability and return to the target range of 2.0 to 4.0 percent from 2025 to 2028 through the proactive implementation of monetary policy measures and well-targeted government interventions that address the primary drivers of inflation,” Pangandaman said.

Inflation quickens to 3.7 percent in March 

There were also slight changes in other macroeconomic indicators like the Dubai crude oil prices, Peso-Dollar exchange rate, among others. Peso-US dollar assumption is P56-58 against the US dollar, slightly higher than the previous assumption of P55-57.

Government is looking at the foreign exchange rate as it will also affect the Gross National Income (GNI), which will determine the country’s shift towards an upper middle income country. The criteria to reach the upper middle income status is for GNI per capita to hit $4,465.

Currently, the Philippines GNI per capita is around $3,950. Originally, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said reaching the upper middle income status will be in 2025.

But because of the downward growth forecast, he said becoming an upper middle income country may happen late next year or early 2026. He said, “The computation of the GNI is so much dependent, influenced by the exchange rate. It depends how far our exchange rate will go, next year until 2026.”

Converge net income rises 22 percent in 2023 

The Gross Domestic Product assumption is at 6 to 7 percent this year, which has been already been narrowed in the April meeting from the previous 6.5 to 7.5 percent.

The officials said government continues to help beef up the economy by attracting more investments, and strengthening social programs for the people. They will also push for legislative reforms for the economy.

“Four of them are revenue measures- excise tax on single use plastic bags, VAT on digital services, CREATE More, and the mining fiscal regime. On the broad macro economy, it would be the Department of Water and right of way,” said Special Assistant to the President for Investment and Economic Affairs Frederick Go.