Pernia expects GDP growth to reach 6.5% in 2016

DAVAO CITY—The economic team of President-elect Rodrigo R. Duterte sees the economy expanding by at least 6.5 percent this year, a more conservative outlook than the target set by the outgoing Aquino administration.

Incoming Socioeconomic Planning Secretary Ernesto M. Pernia said in a briefing here on Monday that the prevailing economic growth target range of 6.8-7.8 percent for 2016 was “not impossible” but noted that the Duterte administration should be “conservative.”

“Since it’s the start of the new administration, we will have adjustment pains. It will not be smooth-sailing right away. There may be some adjustment hiccups,” said Pernia, who will also be incoming Director-General of state planning agency National Economic and Development Authority (Neda).

The incoming Neda chief said a 6.5- percent gross domestic product (GDP) growth by yearend was “feasible.”

Pernia and incoming Budget chief Benjamin E. Diokno said they would convene the Cabinet-level interagency Development Budget Coordination Committee as soon as the next administration settles down in July.

The elections in May would likely boost second-quarter GDP growth to be “a little bit higher or the same” as the better-than-expected 6.9-percent expansion posted in the first quarter, Pernia told reporters.

But Pernia admitted economic growth in the second half may be expected to slow down, even as prospects remained rosy amid a change in national government leadership.

“The confidence in the new administration as a result of improving law and order and [combating] corruption, this may encourage more businessmen to come in and also consumers to buy such that consumption spending will also pick up,” Pernia said.

For the part of Diokno, economic growth this year may settle at an even lower 6.2 percent, with second-quarter GDP expansion expected to be faster than the first quarter, after which the last two quarters would slow.

“The third quarter is rainy season; it will be difficult to implement projects when it’s rainy season. And the new administration has to adjust during the third quarter,” the incoming Budget chief explained. Ben O. de Vera