ADB again prunes PH growth forecast, but sees rosy picture ahead

The impact of the delay in enactment of the 2019 national budget continued to unravel with the Asian Development Bank (ADB) again pruning its growth forecast for the Philippines.

The delay in the approval of the 2019 budget had caused a slowdown in growth in the first quarter of the year.

The ADB’s Asian Development Outlook 2019 Update report released on Wednesday, Sept. 25, showed that the growth projection for the Philippines was slashed to 6 percent from the 6.2-percent forecast in July and 6.4 percent last April.

The updated projection, however, was still within the government’s downgraded target of 6-7 percent growth for 2019.

“The downward revision in growth comes from the slowdown in domestic investment in the first half of 2019 mainly caused by the delayed passage of the 2019 national budget, which held back public expenditure, particularly on infrastructure,” the ADB said in a statement.

First-half GDP growth slowed to an average of 5.5 percent year-on-year due to the impasse caused by legislators fighting over pork barrel funds, which are their sources of kickbacks.

The government operated using the reenacted 2018 appropriations at the start of the year, forcing it to underspend by as much as P1 billion in the first four months of 2019.

The ADB expected the government to catch up on spending on public goods and services.

It also expected inflation to further ease to 2.6 percent from projections of 3 percent last July and 3.5 percent last April. Easing inflation, the ADB said, was largely due to “improved domestic rice supplies” as a result of the removal of quantitative restrictions on rice importation. /TSB