2019 economic growth slowest in 8 yrs
The Philippine economy grew 5.9 percent in 2019, the slowest pace in eight years, despite the government’s efforts to step up spending on public goods and services after squabbles among legislators over “pork” funds delayed budget approval.
Socioeconomic Planning Secretary Ernesto Pernia told a press conference on Thursday that had the P3.7-trillion 2019 national budget been passed on time, the country’s gross domestic product (GDP) would have expanded by 6.9 percent.
“Our estimate was that a full percentage point was lost because of the delay in the passage of the budget. We could have hit close to, if not right smack into 7 percent,” said Pernia, who heads state planning agency National Economic and Development Authority (Neda).
It did not help that the government was also unable to rollout some infrastructure projects during the three-month election ban ahead of the May 13 polls, the Neda chief said.
Last year’s GDP growth rate was the lowest since 2011’s 3.7 percent.
Malacañang was, however, unfazed by this. Presidential spokesperson Salavador Panelo said “the government has competent economic managers who were doing their best to address economic issues.”
The government’s original growth target for 2019 was 7 to 8 percent, but the Cabinet-level Development Budget Coordination Committee later scaled it down to 6-7 percent, and much later to a narrower 6-6.5 percent after the third-quarter growth figures presented a more realistic target range.
GDP growth averaged 5.7 percent in the first nine months of 2019 as the impact of public underspending from January to April—estimated at P1 billion a day—lingered on despite the government’s catch-up plan that fast-tracked the implementation of big-ticket infrastructure projects before the year ended.
President Duterte signed last year’s budget only in mid-April such that the government had operated using reenacted funds at the start of the year.
National Statistician Claire Dennis Mapa nonetheless said fourth-quarter economic expansion was faster at 6.4 percent, higher than the 6.3 percent a year ago and the three preceding quarterly rates of 5.6 percent in January to March, 5.5 percent in April to June, and 6 percent in July to September.
Philippine Statistics Authority data showed the on the expenditure side, fourth-quarter government spending jumped 18.7 percent year-on-year, while consumer spending climbed 5.6 percent amid the Christmas holiday season.
Gross capital formation, or public investments, inched up 0.4 percent in the fourth quarter.The services sector grew 7.9 percent year-on-year in the fourth quarter; industry, 5.4 percent; and agriculture, hunting, forestry and fishing, 1.5 percent.
Pernia said the Philippines’ fourth-quarter growth was the second best in the region after Vietnam’s 7 percent. It surpassed the 6 percent posted by China.However, the uptick in the fourth-quarter growth was not enough to lift the full-year average within government target.
For the entire year, services grew 7.1 percent; industry, 4.9 percent; and agriculture, 1.5 percent.
Household consumption expenditures rose 5.8 percent for the full year, while government spending increased 10.5 percent.
But gross capital formation declined 0.6 percent in 2019, no thanks to the budget delay.
If in 2018 it was the high inflation episode that spoiled the Philippines’ economic growth, and last year the budget impasse hindered the economy from expanding to full potential, Pernia said the government was on the lookout for the impact of mostly external developments such as trade wars and tensions in the Middle East, as well as domestic risks coming from weather disturbances.
Also, the government was bracing for any impact of the spread of coronavirus and African swine fever here and abroad, Pernia said.
Pernia was nonetheless more optimistic of growth recovery in 2020 as this year’s P4.1 trillion national budget was already being implemented and spent.
The government targets a faster 6.5 to 7.5-percent GDP growth this year.
The Neda chief also expressed confidence that the World Bank this year would declare the Philippines’ ascent to the upper middle-income country status, or those with per capita income of more than $3,956.
Pernia said that despite the slower growth last year, poverty reduction and employment generation were expected to continue as they were based on the quality of economic expansion favoring sectors neglected in the past.
“The important thing is that the economic growth is job-generating that can absorb poor workers, the poor sector, and I think that has been happening and that is why we saw a sharp reduction in poverty from 2015 to 2018,” he said.
The national poverty incidence rate dropped to 16.6 percent in 2018 from 23.3 percent in 2015, while the unemployment and underemployment rates also fell to 14-year lows last year. —WITH A REPORT FROM JULIE M. AURELIO