Growth targets put on hold this year

MANILA, Philippines - The government has adopted a wait-and-see stance on economic targets due to the volatility in global financial markets, Budget Secretary Florencio Abad said yesterday.

“There is so much volatility going around. You might as well wait for the end of the year to do that,” Abad told The STAR in an interview.

Abad chairs the inter-agency Development Budget Coordinating Committee (DBCC), which also includes the Department of Finance, the central bank, the Office of the President and the National Economic and Development Authority (NEDA).

Abad said the DBCC would no longer convene this year and would just wait until further economic data is available by the end of 2015.

He stressed, however, the Aquino administration would continue on working to hit its growth targets for this year. “The high-end of the target, I don’t think we can reach anymore. The low-end is even a challenge,” he said.

Economic growth slowed to 5.3 percent as of the first semester, way below the seven- to eight-percent target for the year. Earlier, NEDA director-general Arsenio Balisacan said the government is aiming for at least six percent expansion in 2015.

The Philippines, together with other Asian nations, has been hit by slowing growth due to slumping export demand overseas, particularly in China. The upcoming US Federal Reserve rate hike did not help as well.

Merchandise exports plunged 4.4 percent as of August, census data showed. The peso, meanwhile, is down more than four percent versus the greenback this year as funds flow out to the US where rates are expected to rise soon.

Nonetheless, Abad said the country could benefit from domestic drivers of growth, especially during the second semester.

“The second semester is (also) a faster spending period (for the government). Aside from that, two factors can contribute further to growth,” he explained.

“First are the measures we adopted to accelerate spending, and second is the pressure from agencies to complete public projects...before the election ban,” he added.