Government spending jumped 28 percent in October from a year ago, following a 1.8-percent contraction in September, indicating strong economic activities at the start of the fourth quarter.
Data showed the government disbursed P227 billion in October, up 28 percent from the same month last year. This represented the highest growth this year and reversed the 6.9-percent contraction posted in the same month last year.
Total disbursements in the first 10 months hit P2.421 trillion, up by P204 billion or 10 percent from the same period in 2016.
“So if you take into account the first 10 months of the year, we have done very well in terms of government disbursements. Government spending is expected to further strengthen for the remaining two months of the year due to faster implementation of programs and projects,” a government official said.
Economists from First Metro Investment Corp. and University of Asia & the Pacific said in the November issue of the Market Call Capital Market Research that the national government’s infrastructure spending, as well as capital goods and consumer spending, would pick up further in the second half.
“Together with accelerating exports, propelled by unexpectedly stronger world economy, [this] should enable Philippine GDP growth to hit our 6.5 percent to 7 percent projection for the full year 2017,” the economists said in a joint statement.
“The economy’s twin-engines”•domestic demand and exports”•continue to propel growth in the second half. Robust national government spending especially on infrastructure and consumers’ opening their wallets with better-than-expected OFW remittances fuel the first engine,” the report said.
The report said with the US economy expanding 3 percent in the third quarter on top of 3.1 percent in the second quarter, and the EU, Japan and China growing above expectations, “we think exports will accelerate further in the fourth quarter, and provide the additional thrust to bring PH GDP growth within government targets.”
Economic growth accelerated to 6.9 percent in the third quarter from the revised 6.7 percent in the second quarter, driven by strong performance of the industry and services sectors.
The July-to-August GDP expansion was the fastest since the 7-percent growth recorded in the same period last year. This brought the average growth in the first nine months to 6.7 percent, within the government’s 2017 target range of 6.5 percent to 7.5 percent.
Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said the strong third-quarter expansion, together with manageable inflation, was in line with the regulator’s expectations and validated current policy settings.
Finance Secretary Carlos Dominguez III said an even better growth could be achieved in the succeeding quarters as the Duterte administration ramped up infrastructure spending and human capital development to boost the economy and move closer to financial inclusion.
Dominguez remained confident that the official full-year target expansion of 6.5 percent to 7.5 percent would be achieved, driven by the government’s accelerated spending on infrastructure which had the highest multiplier effect on growth and human capital formation.