The economy can count on a boost later this year as politicians compete to make it on top of the voters’ lists ahead of next year’s national polls, the central bank said.
Election spending is expected to put more cash in people’s pockets in the coming months, complementing the recent boon consumers have received from cheap fuel. Higher government spending, as the Aquino administration has promised to deliver, is also seen pumping more money into the country. As a result, the economy is expected to be in a better shape.
‘’Domestic demand is likely to receive further boost from the government’s commitment to ramp up public spending as well as anticipated spending in preparation for the 2016 elections,’’ the Bangko Sentral ng Pilipinas (BSP) said in a report.
This comes as the government pursues a growth target that would see the economy perform better than most of the Asia Pacific region for the fourth year in a row.
Last year, gross domestic product (GDP), or the sum of all spending in the country, rose by 6.1 percent. This was slower than the 7.2-percent expansion booked a year earlier, but still better than the average in the last decade.
In 2015, the government is pushing for growth of as high as 8 percent, which would see the country performing better than regional heavyweight China.
Apart from higher government disbursements, the BSP said cheap fuel would also help consumers. Since last year, the price of oil in international markets has gone down by half following oil exporters’ decision to sustain production despite supply glut.
‘’Lower cost of fuel and other energy-related consumer items can also boost household real income, enhancing further domestic consumption,’’ the BSP said.
About two-thirds of the Philippine economy is made up of consumer spending.
Apart from leaving more money in consumers’ wallets, cheap fuel also helps bring down the prices of goods. Fuel accounts for one-tenth of the consumer price basket tracked by the government.
Last month, inflation stood at 2.5 percent, steady from 2.4 percent the month before. This year, the BSP expects the average rise of consumer prices to stay within the target range of 2 to 4 percent.