The research arm of debt watcher Moody’s believes the Philippine economy grew at a slower pace last year due to budget delays, albeit it can finally keep up with the government’s targets this year as the country prepares to spend more on critical infrastructure.
In its Asia-Pacific Economic Preview released Monday, Moody’s Analytics said “Philippine GDP [gross domestic product] growth likely improved to 6.2 percent year-on-year in the December [2019] quarter following the 6.1-percent expansion in the September quarter and 5.5 percent in the June stanza.”
As such, Moody’s Analytics expects full-year GDP expansion to have settled at 5.8 percent last year, slower than the three-year low annual growth rate of 6.2 percent posted in 2018 and below the government’s narrower target range of 6-6.5 percent for 2019.
The government will disclose the country’s 2019 GDP performance on Jan. 23, Thursday.
“Growth in 2019 was weighed down by budget delays alongside subdued external conditions weighing on exports,” Moody’s Analytics said.
To recall, the government underspent P1 billion a day on public goods and services between January and April last year as it operated using reenacted 2018 funds. Congress failed to pass the budget on time due to squabbles over alleged “pork” funds.
President Duterte signed the P3.7-trillion 2019 national budget only in mid-April.
To counter the effects of the underspending, the economic team undertook a “bold” spending catch-up plan. Major infrastructure agencies, such as the departments of Public Works and Highways (DPWH) and of Transportation (DOTr), fast-tracked the implementation of P803-billion worth of projects for the rest of 2019.
For 2020, Moody’s Analytics sees the Philippines’ GDP growth jumping to 6.7 percent, “supported by higher government spending and expected modest improvements in global demand.”
The government targets economic growth of 6.5-7.5 percent yearly starting this year until 2022.