The Philippine economy is expected to grow faster in the second half on the back of strong government spending, ING Bank said Tuesday.
“Strong government spending will likely bolster growth into second half of 2018 and offset a likely slowdown in household spending due to accelerating inflation and elevated borrowing costs,” ING Bank in Manila senior economist Nicholas Mapa said.
“Our forecast for 6 percent to 6.5 percent growth in the second half will rely more heavily on the national government’s ability to pump prime to offset the projected deceleration in household consumption as the twin effects of accelerating inflation and higher borrowing costs begin to bite,” he said.
The Philippine economy, as measured by gross domestic product, grew 6.3 percent in the first six months.
The interagency Development Budget Coordinating Committee downgraded the 2018 GDP growth target to a range of 6.5 percent to 6.9 percent from the previous estimate of 7 percent to 8 percent, amid the global economic challenges, high oil prices and faster inflation rate.
The government’s infrastructure spending along with other capital outlays reached P68.4 billion in August, 70.5 percent or P28.3 billion more than the same period last year, according to the Budget Department.
“We owe it to the Filipino people that implementing agencies immediately utilize the public funds that have been released to ensure the effective delivery of public services within the fiscal year. This is in accordance with annual cash-based budgeting that Congress should pass into law for future administrations to adhere to,” Budget Secretary Benjamin Diokno said.
The department attributed the higher spending to the various projects implemented by the Department of Public Works and Highways which include road widening, repair, construction, flood control and drainage improvement projects.
The agency said the modernization program of the Armed Forces of the Philippines also contributed to the surge in spending with the procurement of military communication equipment.
Expenditures for infrastructure and other capital outlays hit P505.6 billion in the first eight months of the year, an increase of 49.8 percent or P168 billion from a year ago.