The Philippine economy did creditably well in 2019 despite adversities.
The late approval of the 2019 budget, the lingering trade spat between the US and China, as well as typhoons and other natural calamities would have slowed down the economic growth of the Philippines, but they did not.
The Philippines registered a gross domestic product growth of 6.4 percent in the fourth quarter from a year ago, becoming the second-fastest growing economy in the region. The performance ranked the Philippines behind Vietnam’s 7 percent and ahead of China’s 6-percent expansion.
The economy overall grew just 5.9 percent for the full of 2019, the slowest in eight years and slightly below the low-end of the 6-percent to 6.5-percent revised target of the government for the year. Still, the growth was respectable as other nations grappled with the global economic slowdown stemming from the slow resolution of Brexit, the nagging US-China trade war and the ban on government construction works leading to the local elections in May.
Economic Planning Secretary Ernesto Pernia noted that the Philippine economy would have expanded close to 7 percent for the entire 2019 had the budget been passed on time. The delayed approval of the P3.7-trillion 2019 budget resulted in a full percentage point loss in economic growth.
The government had to implement a catch-up spending program starting in the third quarter of the year to keep the economic growth on target. As a result, public construction jumped 34 percent in the fourth quarter of 2019 to make up for the sector’s slowdown in the first six months of the year following the budget delay. Services recovered with a 7.9-percent expansion in the last three months of 2019, followed by the industry sector with 5.4 percent.
Economic fundamentals are supporting the Philippine economy and shielding it from adverse external factors. A tame inflation, declining interest rates, higher revenue collections and a manageable public sector debt have steadied the ship after a boom-and-bust cycle that prevailed in the ’70s, ’80s, and ’90s.
With the timely approval of the 2020 budget, the economy is now well-poised to grow 7 percent this year.