The economy will likely expand 6.9 percent in the last quarter of the year on faster government spending, the Budget Department said Friday.
“We have now the momentum after a slow start in the first quarter at 5 percent, recovery in the second quarter at 5.8 percent, and sustained growth in the third quarter. It’s still possible to grow at 6 percent for the whole year of 2015,” Budget Secretary Florencio Abad said.
The economy expanded 6 percent in the third quarter, making the Philippines the third fastest-growing economy in Asia, after China and Vietnam, amid higher public spending and household consumption.
Philippine gross domestic product growth in the third quarter of the year was up 0.2 percentage points from 5.8 percent in the previous quarter and higher than 5.5 percent year-on-year.
The figure, however, was below the government’s target of 7 percent to 8 percent for the full year.
The economy should grow at least 6.9 percent in the fourth quarter to be able to reach the “realistic” growth target of 6 percent to 6.5 percent for the full year.
“As in the third quarter, public spending will once again play a pivotal role in the economic expansion in the fourth quarter. Historically, Q4 has always been a strong quarter in terms of public spending as agencies rush to finish their projects,” Abad said.
“Because of the reforms introduced, like the elimination of the need for SAROs, the significant reduction of lump sums and the advance procurement of goods and services, the DBM is certain to match its yearly average of 98 percent releases. As of end September, 96 percent of agency budgets have already been released,” Abad said.
The average government final consumption expenditure in the first nine months rose 7.2 percent, a reversal from last year’s contraction of 0.2 percent and up from a 2014 full-year rate of 1.7 percent.
“This simply shows that the government is proving successful in its efforts to overcome the spending bottlenecks that hampered growth in the first semester,” Economic Planning Secretary Arsenio Balisacan said earlier.
“What will further boost spending is the pressure to finish infrastructure projects from political leaders in the run up to the May 2016 elections. Performance is always an election platform and political leaders demonstrate that through the delivery of social services and public works projects,” Abad said.
Balisacan cited risks to economic growth, such as the lingering effects of El Niño and the uncertainties to be created by a change of leadership as a result of the upcoming elections.
The national elections in 2016, however, will be a driver to boost economic growth further in the fourth quarter.
“Consumption peaks up in fourth quarter, more than just holiday… Since [it is] national election, [we will] likely see not an ordinary year for the fourth quarter,” Balisacan said.
He said that the government was keeping the 7 percent to 8 percent full year target for 2016.