ING Bank Manila still expects the Philippine economy to grow within the 6-percent level this year despite the slower expansion in the first half, as the government plans to accelerate fiscal spending in the remainder of 2019.
Citing historical trend, ING Bank Manila senior economist Nicholas Mapa said Friday public construction had been able to perform quite well in the second half of 2016, 2017 and 2018 despite the presence of storms and the rainy season.
Mapa also said the government’s spending on the operations and maintenance of the bureaucracy remained in growth (up 9 percent in the first half) despite the budget impasse.
“With the latest DBM [Department of Budget and Management] release showing the government’s resolve to boost growth via expenditures, we can expect growth to finish the year on a strong note,” Mapa said.
He said capital formation would rebound as construction and durable goods recover from their dip.
“With less than five months to go before the close of the year, DBM numbers do show the resolve of the government to get spending back to their 2018 ways and we can expect the Philippines to chase escape velocity to vault growth back into the 6-percent handle to finish the year,” Mapa said.
Economic growth in the second quarter further slowed to a four-year low of 5.5 percent from 5.6 percent a quarter ago and 6.2 percent a year ago, weighed down by the El Niño dry spell, rising protectionism in advanced economies, delay in the approval of the national budget for 2019, and the ban on construction activities in the run-up to the midterm elections last May.
The Philippine Statistics Authority said the sluggish and slower-than-expected expansion for the April-to-June period was the slowest since the 5.1-percent GDP expansion in the first quarter of 2015. It was also the second successive quarter that economic growth stood below 6 percent.
The second-quarter figure brought the first-half GDP average to just 5.6 percent, well below the low end of the target range of 6 to 7 percent earlier set by the government for the entire year.
Economic Planning Secretary Ernesto Pernia said the economy had to grow by an average of at least 6.4 percent in the second half to reach the low end of 6 to 7 percent target range in 2019.
Pernia said public construction dropped by 27.2 percent in the second quarter and offset the growth of private construction.
With the sluggish second-quarter GDP performance, Pernia conceded that the “realistic growth projection for the economy” was between 6 percent and 6.5 percent for 2019.
The government operated on a reenacted budget in the full first quarter. President Rodrigo Duterte signed the P3.7-trillion national budget for 2019 only in April after an impasse between the two houses of Congress.
Finance Secretary Carlos Dominguez III earlier said the government must increase spending in the months ahead to achieve an economic growth of more than 6 percent.
Dominguez said to achieve this year’s disbursement target, the government must spend a total of around P2.996 trillion from the second to fourth quarters of the year.