The government’s 6-7 percent full-year growth goal for 2019 would still be achievable on the back of easing inflation, the country’s chief economist said.
Socioeconomic Planning Secretary Ernesto Pernia told reporters last Friday that while government spending on capital investment and infrastructure projects was down at the start of the year—no thanks to late budget approval—private consumption amid slowing consumer price increases would be bolstering growth.
“There’s going to be a catch-up, especially in terms of consumption spending because of much lower inflation,” said Pernia, who heads the state planning agency National Economic and Development Authority.
Inflation fell to a 40-month low of 0.9 percent year-on-year in September, bringing the nine-month average to 2.8 percent, which was within the government’s 2-4 percent target range.
Pernia noted that in the case of poor families belonging to the bottom 30-percent income households, the rate of increase in prices of commodities they buy slid to a 46-month low of 0.9 percent year-on-year.
“That’s going to give a further kick to consumption spending. As you know, consumption spending is about 70-75 percent of GDP (gross domestic product). So that’s going to make a difference,” Pernia said.
While Pernia declined to cite a figure, he said third-quarter GDP growth—to be announced by the government next month—would be “better.”
During the first half of 2019, GDP growth slowed to 5.5 percent as the government underspent P1 billion a day on public goods and services from January to April.
For the entire year, hitting the lower end of the GDP growth target range would be “no problem,” Pernia said.
Headline inflation averaged a 10-year high of 5.2 percent in 2018. The elevated inflation environment spoiled economic growth, which at 6.2-percent was a three-year low.