August 06, 2019
THE Philippine economy likely grew at a slower pace in the second quarter of 2019 than a year ago due to the continued impact of the delayed approval of this year’s national budget and the election ban on government spending, according to analysts surveyed by The Manila Times.
Poll results show estimates for April to June ranging from 5.7 to 5.9 percent, with a 5.8 percent average. This is lower than the 6.2-percent expansion in the same period in 2018 and slightly higher than the 5.6-percent growth in the first quarter.
The Philippine Statistics Authority will announce official second-quarter gross domestic product (GDP) growth data on August 8.
Security Bank chief economist Robert Dan Roces offered the highest projection at 5.9 percent.
“We expected real GDP growth in Q2 (second quarter) to rebound following a sluggish first quarter. However, leading indicators suggest otherwise, and as such, Q2 is bound to be unremarkable,” Roces said in a report.
This sluggishness, he added, “was due to reduced government spending, because of the delay in the approval of the 2019 budget, which was signed only in April, followed by a spending ban ahead of the midterm elections [on] May 13.”
A dispute between the Senate and House of Representatives over alleged insertions led to the budget’s approval being delayed for four-and-a-half months. This forced the government to operate on a reenacted budget during that time, unable to spend on projects and programs supposed to be implemented this year.
Government spending was not allowed from March to May because of the midterm polls, which saw many Duterte-backed candidates winning.
Roces said that, while the government committed to implement a catch-up spending plan to mitigate the impact of the delayed budget approval and spending ban, state spending still fell by 2.3 percent year-on-year to about P812.2 billion in the second quarter.
“In fact, government spending was at surplus for April and May, and only reverted to deficit by June, suggesting that the effects of the delayed budget have crept into the quarter,” he added.
Analysts from ING Bank Manila, Philstocks Financial Inc., HSBC Global Research and ANZ Research forecast economic growth as likely to have hit 5.8 percent.
ANZ Research economist Mustafa Arif said in a report that the lingering effects of the budget impasse were expected to weigh on domestic activity.
“We expect only a limited improvement in growth in Q2, reflecting sustained household spending and some improvement in the contribution from net exports. But the budget impasse and election-related construction ban have continued to weigh on growth,” he added.
For his part, ING Bank Manila senior economist Nicholas Antonio Mapa said household consumption would likely do the heavy lifting during the quarter as inflation decelerates.
Capital formation, he added, will also remain subdued as the economy continues to feel the effects of the Bangko Sentral ng Pilipinas’ rate hikes last year.
Philstocks research associate Japhet Louis Tantiangco said that, on the demand side, the main driver of growth during the period would be consumption amid the slowdown in consumer price growth.
“On the supply side, [the] main driver would be the service sector,” he added.
In a report, HSBC said the BSP would likely cut rates anew during its August 8 meeting, as economic growth was likely to remain below 6 percent in the quarter.
Regina Capital Development Corp., meanwhile, offered the lowest outlook of 5.7 percent.
“We think second-quarter GDP will improve slightly because of the election season and lower oil prices, compared to last year,” Regina Capital Head of Sales Luis Limlingan said.
“Downside risks, though, would be the delay in the [2019 budget passage] and global” economic slowdown, he added.
Credit belongs to : www.manilatimes.net