Amid high inflation and slower growth, the country’s economic managers will revisit macroeconomic as well as fiscal targets this month, especially as they see achieving the 7-8 percent growth goal for the year as a “challenge.”
In its midyear report on the 2018 national budget, the Cabinet-level Development Budget Coordination Committee (DBCC) said they would “meet in October to assess the impact of recent developments on the macroeconomy and the fiscal sector, and formulate and discuss appropriate policies and strategies moving forward.”
In the report dated Sept. 28, the DBCC noted that the average gross domestic product growth of 6.3 percent in the first half still maintained the Philippines’ status as among the fastest-growing economies in Asia.
“This growth rate, however, is less than what is expected,” the DBCC noted.
As the economy needed to grow by 7.7 percent in the second half to reach the lower end of the full-year target, the DBCC said “the government considers this a challenge, but nonetheless, maintains the growth target for 2018 with the aim to accelerate efforts to boost the growth momentum moving forward but mindful of domestic and external risks.”
For the DBCC, the economy would be buoyed by higher household consumption— thanks to better labor market conditions and higher take-home pay due to the Tax Reform for Acceleration and Inclusion (TRAIN) Act—faster government spending on public goods and services, partly due to the rollout of big-ticket “Build, Build, Build” infrastructure projects, as well as more investments expected to come in once the 11th Foreign Investment Negative List, currently just awaiting the President’s signature, reduces restrictions on foreign investors.
The DBCC was also pushing for crop diversification to address the “almost stagnant” output of the agriculture sector, while awaiting the entry of the third telco player, which “can enhance output in the communications sector and support the growth of small business, particularly retail trade.”