Moody’s: April-June growth ‘not very great’
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Thu, 27 Jun 2019 16:20:59 +0000
MOODY’S Investors Service on Thursday expressed some pessimism about the Philippine economy’s performance in the second quarter as it continued to flag the delayed approval of this year’s national budget as the main drag to growth.
“At this point, I don’t think you should be excited about Q2 (second quarter),” Moody’s Vice President and Senior Credit Officer Christian de Guzman told reporters in a briefing.
Although he did not give an exact forecast for gross domestic product (GDP) growth for April to June, de Guzman said Moody’s expectation was based on the fact the government lost its chance to spend for the first five months of the year.
“Because of the budget impasse, you lost four months. Because of the election ban, you also [lost] another month. So for Q2, our expectations…are not very great,” he said.
A dispute between Congress’ two chambers over alleged insertions resulted in the four-and-a-half-month delay of the passage of this year’s budget. This forced the government to run on last year’s budget, limiting it to spend for items detailed in the 2018 outlay and not on programs and projects supposed to be implemented this year.
This put total national government spending in January to March — which include expenditures for infrastructure and capital outlay, maintenance, personnel services and subsidies — at P778 billion, up 0.8 percent or P6 billion from the amount in the same period last year.
This also resulted in a lower-than-expected 5.6 percent Philippine economic growth in the first three months of the year, well below the government’s target.
The government also blamed the delayed budget on the P809-million budget deficit for the first five months of the year, which is 99.4 percent lower than the P138.7 billion in January to May 2018.
While its view of second-quarter GDP growth is less rosy, de Guzman stressed that Moody’s downwardly revised 6 percent full-year 2019 growth forecast for the Philippines remained intact.
“The upside risks and the downside risks right now are balanced for the 6-percent forecast that we have,” he said.
“Downside risks include a worsening [of] US-China trade tensions that will have a massive impact on the region, even though the Philippines is less exposed than other Asian countries. Other developments include, perhaps, the oil prices, if there is indeed an escalation of geopolitical tensions,” the official added.
“And on the upside, I think it is, perhaps, if there is further evidence that there is a significant catch up with regard to government spending.”
Earlier, the country’s economic managers unveiled their “catch-up plan” that set an infrastructure spending target of P792.97 billion for the second to fourth quarters after actual infrastructure spending reached P207.2 billion in the first.
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