The UK-based Oxford Economics expects Philippine economic growth to rebound as the government finally spends its P3.7-trillion budget for 2019 after months of delay.
“GDP (gross domestic product) growth slowed sharply to 5.6 percent year-on-year in the first quarter of the year amid delays in public spending and a substantial drag from net exports,” Oxford Economics director of global macroeconomic research Ben May and economist John Payne said in their “Global macro themes and asset views chartbook” report for the month of May.
The state planning agency National Economic and Development Authority (Neda) has estimated that if not for the budget impasse, first-quarter GDP would have had grown by 6.6 percent, while the Department of Finance had expected a 6-year high economic expansion of 7.2 percent during the January-to-March period if only this year’s appropriations were passed and implemented on time.
Due to squabbles among legislators for “pork” funds, it was only last April 15 that President Duterte signed the 2019 national budget—but after he vetoed P95.3 billion in projects that were not included in his administration’s priorities.
On May 2, Department of Budget and Management Officer in Charge Janet B. Abuel issued National Budget Circular No. 577, which served as the implementing guidelines of the 2019 general appropriations Act (GAA) under Republic Act (RA) No. 11260. Government agencies then started to spend their respective programmed budgets for the year.
Oxford Economics added that it expected monetary policy “to become more accommodative as the BSP (Bangko Sentral ng Pilipinas) is seen cutting rates by 50 bps (basis points) in 2019.”
The BSP two weeks ago cut the policy rate by 25 bps to 4.5 percent given slowing inflation as well as respectable economic growth.
Headline inflation declined to a 16-month low of 3 percent in April, averaging 3.6 percent during the first four months—already within the government’s 3 to 4 percent target range.