Spending spree resumption repairs damage from 2019 budget delay, says BSP

Faster economic growth in the third quarter of 2019 was proof that the government campaign to splurge on projects was finally repairing the damage done by Congress’ delay in approving the 2019 budget, according to the Bangko Sentral ng Pilipinas (BSP).

BSP Governor Benjamin Diokno said growth targets had been put within reach by a massive spending spree on infrastructure projects through the “Build, Build, Build” program.

Growth in gross domestic product (GDP) in the third quarter of 2019 exceeded “consensus forecast,” a sign that the “catch-up plan is working,” said Diokno.

On Thursday, Nov. 7, the government announced a GDP growth of 6.2 percent in the third quarter of 2019 beating forecasts by experts of a 6 percent growth and an improvement of the 5.5 percent growth in the first half of the year.

The government wanted to hit a growth of 6-7 percent at the end of 2019 but is conceding that the final number would probably be closer to 6.

But Diokno said Philippine GDP growth was impressive amid a “slowing global economy.”

Private economists chimed in on the factors behind the country’s stellar economic performance.

Jun Neri, lead economist of Bank of the Philippine Islands, said strong household consumption in the third quarter of 2019 and inflation rates getting skimpier had driven growth.

“Declining interest rates and improving remittance flows also provided additional boost to the domestic demand,” he said in a note for reporters.

He said increased sales of food and clothes and increased spending on transportation, communication and recreation had helped.

But he noted that capital formation, or the use of money to buy new equipment for new or existing businesses, had remained weak. He attributed this to a decline in durable equipment purchases, particularly on transport.

The delay in infrastructure construction also “tempered demand for machinery and equipment,” Neri said./TSB