The government not only slightly cut its growth target for this year but also tempered projections for the next three years over worries that slow infrastructure development will fail to support faster economic expansion.
At the Cabinet-level, interagency Development Budget Coordination Committee (DBCC) meeting Monday, the gross domestic product (GDP) growth projection for 2016 was lowered to 6.8-7.8 percent from 7-8 percent previously, although the target range of 7-8 percent for the medium-term was maintained, officials said.
For 2017, the growth target was 6.6-7.6 percent; for 2018, 7-8 percent; and for 2019, 6.9-7.9 percent.
A ranking official who attended the DBCC meeting told the Inquirer Tuesday that the National Economic and Development Authority (Neda) actually tempered the growth targets for next year until 2019 due to the current poor state of infrastructure.
“We might experience a lack in roads and power projects,” the official said.
The Aquino administration has been underspending on public goods and services despite government coffers being awash with cash thanks to increasing tax revenues.
Officials had blamed “slow” disbursements to “institutional weakness” such that agencies struggle to spend budgets as programmed.
The official noted that the private sector had estimated that the Philippine economy could be growing by as much as 10 percent starting next year had the government been able to fast-track vital infrastructure projects.
Despite delays in rolling out infrastructure, however, the official said the country remains a model in public-private partnership (PPP) as a means to bolster infrastructure development.
As of January this year, 12 PPP projects had been awarded, while 14 projects were in different stages of procurement, two were for roll-out, seven were pending government approval, and two projects were undergoing studies, the PPP Center said on its website.
In a press conference, Neda Assistant Director-General Rosemarie G. Edillon said external developments were the primary reason for the slight downgrade in the growth goal for this year, especially the slowdown in China and the continuous decline in global oil prices.
The government hence also cut its exports and imports growth targets for 2016 to 5 percent (from 6 percent previously) and 10 percent (from 12 percent), respectively, based on the Bangko Sentral ng Pilipinas’ Balance of Payments and International Investment Position Manual or BPM6 projection.
As for domestic risks to economic expansion, Edillon cited climatic challenges, such as the prolonged dry spell due to El Niño, although steps are being undertaken to mitigate its effects.
Despite external challenges, Budget Secretary Florencio B. Abad pointed out that the economy continued to be more driven by domestic demand.
Edillon noted that domestic demand grew 8 percent last year, pushing the GDP to expand by 5.8 percent in 2105, even as net exports pulled down economic output below the official 7-8 percent growth target as well as the “realistic” projection of 6-6.5 percent.