Hike in gov’t spending seen accelerating PH growth

The pickup in government spending in the second quarter augurs well for economic growth in the second half of the year, the Metrobank Group’s First Metro Investment Corp. (FMIC) said yesterday.

In its joint July 2017 The Market Call capital market research report with the University of Asia and the Pacific, FMIC noted that disbursements for infrastructure and other capital outlays climbed by 31.4 percent year-on-year to P46.2 billion in May, reversing the 21.2-percent drop last April.

“This, along with other initial economic data up to June, suggests that the economy should improve on its 6.4-percent GDP [gross domestic product] growth in the first quarter,” FMIC said.

In particular, “fears of government underspending may dissipate as national government expenditures in May, excluding interest payments, surged by 21.1 percent,” FMIC noted.

“To be sure, the huge uptick in government spending in May could be a one-month spike, but it does give us some confidence that the national government is addressing project bottlenecks in infrastructure projects such that the second half should be significantly better than the 6.4-percent GDP growth in the first quarter,” FMIC added.

According to FMIC, “this noteworthy gain suggests that the administration’s ‘Build, Build, Build’ program is making a headway.”

In April, economic managers unveiled the “Dutertenomics” thrust of “Build, Build, Build,” which they claimed would usher in a “golden age of infrastructure.”

“Recall that the national government has revealed the three-year rolling infrastructure program (Trip) from 2018 to 2020, amounting to P3.6 trillion (P1.13 trillion for 2018, P1.18 trillion for 2019 and P1.29 trillion for 2020). Some big-ticket projects under the program include the modernization, upgrade and extension of the MRT, LRT and PNR (railways); modernization, development and operation of the Bacolod-Silay, Iloilo, Davao, Laguindingan and New Bohol gateways (air); and the revival of the Pasig River Ferry Service and the broader roll-on, roll-off service for inter-island travel around the country (maritime), among others,” FMIC pointed out.

“We believe that the national government will continue to fast-track spending, especially on key infrastructure projects as it intends to spend P8-9 trillion in the next six years,” according to FMIC.