Socioeconomic Planning Secretary Arsenio Balisacan. INQUIRER FILE PHOTO
MANILA, Philippines—Economic managers are confident that the second quarter marked a return to growth upwards of 7 percent amid a surge in state spending and private investment to complement the country’s traditionally strong consumption sector.
Socioeconomic Planning Secretary Arsenio Balisacan earlier this week said the government was confident that growth was likely “better” than the first-quarter performance, although he refused to give a definite forecast.
In the first quarter, the economy grew by a disappointing 5.7 percent, slower than the previous three months’ 6.3 percent, and below the state target of 6.5 to 7.5 percent.
Both the World Bank and the International Monetary Fund (IMF) believe the Philippines will grow slower than the government’s target for the year.
Department of Finance (DOF) Undersecretary and chief economist Gil Beltran, however, sees a better picture for the April to June period of the year.
“The slowdown of growth in the first quarter… is just a short-term phenomenon and should not be seen as a trend,” Beltran said in a statement on Wednesday. Earlier in the week, he said the economy likely grew by at least 7 percent.
“The medium-term growth prospects of the economy are sound. The Philippine economy has the capacity to grow faster than the 7.2 percent attained last year with or without the boost from election spending,” he said.
Among the indicators for the stronger performance in the second quarter were the 13-percent growth in factory output, investments in ecozones that rose 27 percent, and foreign direct investments (FDI), which rose by more than a third as of May.
“Likewise, slow government expenditures in the first quarter may be reversed in the next few months as the disbursement rate is one of the eligibility requirements of the performance-based bonus (PBB),” Beltran said.
He said when government departments were reminded that disbursement rates below 90 percent would automatically disqualify them from PBB, government expenditures quickly rebounded by a hefty 44 percent in June 2014.–Paolo G. Montecillo