The Barcelona-based FocusEconomics has slightly cut its 2019 growth forecast for the Philippines to 6.2 percent after economic expansion slowed to a four-year low in the first quarter due to the delay in the approval of this year’s budget.
FocusEconomics’ updated projection is lower than the previous forecast of 6.3 percent.
“The economy lost traction in the first quarter. The deceleration was partly due to notable slowdowns in government consumption and fixed investment growth, largely the consequence of the prolonged budget impasse, which delayed spending. More worryingly, the external sector softened amid weak electronics exports,” FocusEconomics noted in a May 21 report.
Gross domestic product (GDP) grew by a mere 5.6 percent during the January to March period, below the government’s downgraded 6-7 percent target range for the year, mainly due to underspending of about P1 billion a day on public goods and services.
FocusEconomics nonetheless noted that easing inflation and sustained strong dollar remittances from Filipinos living and working overseas helped private consumption pick up during the first quarter.
While manufacturing slowed at the start of the second quarter, FocusEconomics said it was optimistic that economic growth would accelerate moving forward after President Duterte signed the P3.7-trillion 2019 national budget on April 15.
FocusEconomics said budget implementation “should unleash pent-up spending.”
FocusEconomics added that “on the political front, Duterte appears to have secured a resounding victory in May’s midterm elections, which should provide policy continuity and allow him to continue with a major infrastructure push,” referring to the administration’s ambitious “Build, Build, Build” program.