March 22, 2019
A reenacted budget will lead to slower Philippine growth, analysts said on Thursday, affirming warnings aired by economic managers.
“[A] full-year reenacted budget will probably pull GDP (gross domestic product ) growth to about 5.5-6 percent,” Security Bank Corp. Assistant Vice President and chief economist Robert Dan Roces told reporters.
Infrastructure spending will be primarily hit and result in a first-half slowdown, he pointed out.
“What’s crucial for them (the government) now is to get the budget passed after the elections for spending to go up,” Roces said.
“We hope budget gets passed because a lot of stuff depends on that.”
The economy grew by 6.2 percent last year, lower than government’s downwardly-revised target of 6.5-6.9 percent, as inflation surged. The expansion was also slower compared to the 6.7 percent and 6.9 percent recorded in 2017 and 2016, respectively.
Economic managers last week cut their 2019 and 2020 targets to 6.0-7.0 and 6.7-7.5 percent, respectively, from 7.0-8.0 percent, citing the budget impasse, an ongoing El Niño and the US-China trade war.
While lawmakers have already ratified a reconciled version of the 2019 budget bill, the measure has yet to be transmitted to Malacañang given the Senate’s claims that the House of Representatives made post-bicameral conference committee changes.
A meeting called by President Rodrigo Duterte failed to resolve the impasse and both sides appear to be digging in.
The dispute, political economist and Foundation for Economic Freedom President Calixto Chikiamco said, highlights the effects of politics on the economy.
Acknowledging the “negative impact”, he nonetheless said this could be offset by election spending.
“Normally, consumption spending goes up in election year,” Chikiamco noted.
The government has been operating on last year’s P3.767-trillion budget since the start of the year. While larger, agencies can only spend for items detailed in the 2018 outlay and cannot embark on programs and projects supposed to be implemented this year.
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