August 13, 2019
THE government might be able to achieve the lower end of its economic growth target of between 6.0 percent and 7.0 percent for this year once government spending accelerates in the second half, according to an economist from the Rizal Commercial Banking Corp. (RCBC).
“To achieve the minimum target of 6 percent for GDP (gross domestic product) in 2019, GDP growth should be at least 6.4 percent in 3Q (third quarter) and 4Q (fourth quarter) of 2019,” Michael L. Ricafort, RCBC head of economics and industry research division and corporate planning group, told The Manila Times.
“[The] 6-percent GDP growth target for 2019 remains achievable through measures such as the accelerated and catch-up government spending on infrastructure,” he added.
Ricafort’s statement came after the National Economic and Development Authority and the Philippine Statistics Authority announced on August 8 that the country’s economic growth slowed to an-over-four-year low of 5.5 percent in the second quarter from 5.6 percent in the first.
“The 2Q (second quarter) 2019 GDP growth of 5.5 percent is the slowest in 17 quarters (more than four years) and below market expectations, again largely due to government underspending, with the delay in the approval of the 2019 national budget on April 15, 2019; the election ban on some government construction/infrastructure projects; the mild El Niño drought that weighed on agriculture; and the slower global economic growth due to the US-China trade war that weighed on exports and manufacturing,” he explained.
Government spending slowed to 6.9 percent in April to June from 11.9 percent last year, while capital formation contracted by 8.5 percent in the three-month period from the 8.0-percent growth posted in 2018.
To prevent underspending, the government must “increase the urgency and ensure the timeliness in the passage of future national budgets by lawmakers in able to prevent the negative consequences in terms of government underspending and slower economic growth,” Ricafort said.
The government, he added, must also expedite infrastructure spending, including the catch-up plan to boost greater economic growth and make up for the government underspending earlier this year.
“Other sources of faster GDP growth include increased investments due to the sharp decline in interest rates, faster growth in consumer spending due to sharp decline in inflation and interest rates, narrower trade deficit/net imports, some pick-up in exports and manufacturing, stronger growth in OFW (overseas Filipino workers) remittances, sustained growth in BPO (business process outsourcing) revenues, and continued growth in foreign tourism.”
Earlier, Socioeconomic Planning Secretary Ernesto Pernia said he was still hopeful that economic growth would fall between 6.0 percent and 6.5 percent this year, despite the slowdown in the first half.
“I think there’s room for really redoubling efforts to spend on public infrastructure. As you know, the multiplier effect of government spending, especially on infrastructure is pretty high, so that could spell the difference among other things that the Congress and, well other sectors like tourism and agriculture would be contributing to a better growth performance,” he added.
Credit belongs to : www.manilatimes.net