Hitting 2018 growth goal now ‘less likely’

Prevailing high consumer prices would make it more difficult to achieve the government’s economic growth target of 7-8 percent for this year, the country’s chief economist said.

Asked by the Inquirer on Friday if the gross domestic product (GDP) growth goal for 2018 was still attainable given elevated inflation, Socioeconomic Planning Secretary Ernesto M. Pernia replied: “Possible, but maybe less likely.”

As such, “the economic team will revisit the growth target,” said Pernia, who heads the state planning agency National Economic and Development Authority.

Pernia said the economic managers might meet on Sept. 14 to discuss a more realistic GDP growth goal for the year.

In a separate text message also on Friday, Budget Secretary Benjamin E. Diokno said that they had yet to schedule a Cabinet-level Development Budget Coordination Committee (DBCC) meeting.

Diokno explained that the DBCC’s executive technical board, a “mirror image” of the committee composed of the undersecretaries representing their respective principals, could meet while the economic managers attend the Philippine Economic Briefing in London on Sept. 24-29.

GDP expansion averaged 6.3 percent in the first half as high headline inflation “spoiled” the growth potentials during the first two quarters.

In the second quarter alone, growth eased to 6 percent year-on-year, the slowest in three years, as a mix of environmental policies and the higher-than-expected rate of increase in prices of basic commodities tempered the country’s output.

To reach the lower end of the full-year GDP growth target, the economy must expand by 7.7 percent during the second half.

But in August, inflation accelerated to a more than nine-year high of 6.4 percent, above expectations of economists from both the government and the private sector.

Surging food prices, especially of rice, coupled with rising global oil costs and higher prices of “sin” products due to the higher excise taxes slapped under the Tax Reform for Acceleration and Inclusion (TRAIN) Act, pushed headline inflation to its fastest since the 6.6 percent posted in March 2009.

At the end of the first eight months, the inflation rate already averaged 4.8 percent, above the government’s target range of 2-4 percent.