The country’s chief economist predicted an economic growtb of 6.5 percent in 2019 despite the harm done by Congress’ failure to pass this year’s national budget on time.
Socioeconomic Planning Secretary Ernesto M. Pernia told reporters that this year’s gross domestic product (GDP) growth would hit the middle of the government’s target pf 6-7 percent GFP growth in 2019, an election year.
The projected 6.5 percent growth would be higher than 2018’s 6.2 percent, which was lowest in three years partly because of a 10-year high inflation rate that reached 5.2 percent under the administration of President Rodrigo Duterte.
While the rate of increase in prices of basic commodities was already easing, the delayed implementation of the P3.7-trillion appropriations for 2019 resulted in government underspending during the first four months, stomping on growth targets and leading yo a four-year low GDP growth if just 5.6 percent.
But Pernia, at the sidelines of the European Innovation, Technology and Science Center Foundation (EITSC) advocacy forum On Thursday (June 20), said the Philippine economic outlook in 2019 “would still be quite respectable.”
He said the Philippines “will remain among the best-performing economies in Asia.”
Growth of 7-8 percent, necessary to sharply reduce poverty, was not achievable, however, “because we have been hamstrung” by the delay in the 2019 national budget “that really swivelled our government spending on infrastructure and othet government services.”
The government had operated under reenacted appropriations as President Rodrigo Duterte signed the 2019 budget only on April 15, no thanks to the squabble between the Senate and House of Representatives over pork barrel funds.
This prevented the government from spending P1 billion a day on public goods and services from January to April.
“As you know, government spending is a very strong stimulus in economic growth,” said Pernia.
“I think it can be multiplied as much as 10 times. Every peso the government spends will be multiplied 10 times in terms of impact on the economy, and that’s because when government spends, several rounds of spending follow—the workers that receive the payment, for construction workers, they spend again and again, so that’s how it works,” Pernia noted.
“That’s why it was unfortunate that Congress was not able to get the 2019 budget passed before the end of 2018 because that would have increased our economic growth in the first quarter by at least one percentage point—so instead of 5.6 percent only, we could have grown at 6.6 percent,” the Neda chief added.
Due to delayed budget implementation, the regional macroeconomic surveillance organization Asean+3 Macroeconomic and Research Office (Amro) cut its 2019 and 2020 growth forecasts for the Philippines to 6.3 percent and 6.5 percent. (Editor: Tony Bergonia)