MANILA, Philippines — The economy may recover from the downturn starting in the second quarter with the passage of the 2019 national budget and the easing of domestic inflation, according to the Department of Finance.
In a statement, Finance Secretary Carlos Dominguez said the growth in the country’s gross domestic product (GDP) is expected to accelerate for the rest of the year after settling at a four-year low of 5.6 percent in the first quarter.
Dominguez expressed his confidence as the government would now be able to pursue and accelerate its priority programs following the enactment of the 2019 General Appropriations Act (GAA) last April, while domestic consumption is projected to increase with the inflation rate continuing to trend downwards.
“Economic growth is expected to finish stronger over the
April-June period and for the rest of 2019 as the government puts Build, Build, Build on the fast lane following the passage of the 2019 GAA and domestic consumption picks up amid cooling inflation,” Dominguez said.
According to Dominguez, the Duterte administration is planning to implement a catch-up plan to accelerate investments and offset the funds unspent in the first quarter due to the budget delay and the construction ban during the election season.
Latest data from the Bureau of the Treasury (BTr) showed that government disbursements in the first three months amounted to only P777.99 billion, 11.2 percent or P98.31 billion lower than the target of P876.3 billion.
Dominguez said this translates to about P1 billion a day in funds which could have been spent for investments in infrastructure and human capital development.
This, he said, dragged the economy down in the first quarter.
“The budget impasse in the Congress during the year’s first three months had set off a spending cutback, which, in turn, stifled economic activity,” Dominguez said.
“Were it not for the Senate-House deadlock over the 2019 General Appropriations Bill, which forced the government to operate on a reenacted 2018 budget for the entire first quarter, the economy could have received a tremendous boost from what should have been much higher state spending on infrastructure modernization and human capital formation at the onset of 2019,” Dominguez said.
Still, Dominguez said a GDP growth rate of 5.6 percent in the first quarter was a “decent expansion” and has mantained the Philippines’ rank as one of the region’s fastest-growing economies.
Dominguez also pointed out that economic managers have anticipated the adverse economic impact of the Congress’ budget deadlock, prompting the Development Budget Coordination Committee (DBCC) to adjust in March the 2019 GDP growth target to a range of six to seven percent from the original seven to eight percent goal.
According to the Philippine Statistics Authority (PSA), the country’s GDP grew at a rate of 5.6 percent in the first quarter, slower than the 6.3 percent recorded in the previous quarter, and the 6.5 percent posted in the first quarter of 2018.
Services contributed the most to GDP with four percentage points, followed by industry with 1.5 percentage points, and agriculture with 0.1 percentage point, the PSA said.
On the expenditure side, the major contributors to GDP growth were household final consumption expenditures at 4.3 percentage points; durable equipment, 1.1 percentage points; and government final consumption expenditure 0.8 percentage point.