Economic managers are holding on to the government’s growth targets for the year even after the disappointing first quarter, citing measures that could spur a recovery in the coming months.
The Philippine economy grew by 5.2 percent in January to March of this year, the slowest rate since 2012, official data released last month showed. This fell short of the state’s target range of 7 to 8 percent.
Despite the rough start, the economy can still be expected to rally later in the year on the back of higher investment flows and increased state spending ahead of next year’s national elections.
“I would tend to agree with… that it’s too early to abandon our 7 to 8 percent growth target,” Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said. “After all, this is just one data point,” he said.
Economic Planning Secretary Arsenio Balisacan said the economy would have to grow north of 7 percent for the rest of the year for the state’s goal to be met.
Underspending by the national government, coupled with weak demand for the country’s exports, were tagged as the main culprit for the first quarter slowdown.
Budget and Management Secretary Florencio “Butch” Abad blamed weak disbursements on bureaucratic bottlenecks in the rollout of projects.
The International Monetary Fund (IMF) earlier this year projected that the Philippine economy would expand by 6.7 percent. In light of the weak first quarter, the IMF said its forecast might have been too generous.
For his part, Tetangco said there remained enough cash in the economy to support domestic output.
“We see that with sufficient liquidity, and as domestic credit remains healthy, there are developments that should boost economic performance going forward,” the central bank chief said.