Govt may miss 2019 GDP growth target
Credit to Author: ANNA MARIE G. ORDOÑEZ| Date: Wed, 30 Oct 2019 18:34:20 +0000
PHILIPPINE economic growth is projected to recover in the second half of 2019, but the full-year figure might still fall below the government’s target, according to economists.
In a report on Wednesday, Union Bank of the Philippines (UnionBank) chief economist Ruben Carlo Asuncion said the country’s economy “is seen to recover starting Q3 (third quarter), but still not enough to reach the government’s target of 6 to 7-percent growth this year.”
Economic growth is expected to settle at 6.1 percent in the third quarter and 6.4 percent in the fourth, higher than the 6 percent and 6.3 percent recorded in the comparative quarters of 2018, he added.
These projections are also higher than the 5.5-percent growth recorded in the second quarter.
“State spending accelerated in Q3 due to the government’s effort to catch up with its expenditure. Expenditures jumped 39 percent to P415.1 billion in September, the fastest growth for this year,” Asuncion noted.
The economist also said the country’s manufacturing performance and trade continued to drag growth in the July-to-September period.
Growth in the agriculture sector, he added, is “still [under] threat due to the delayed implementation of the supposed benefits from the [Rice Tariffication Law] and the entry of African swine fever.”
Asuncion also said that while household spending slowed in the second quarter, it could rebound in the third on the back of easing inflation and higher remittances from overseas Filipino workers, which would boost consumption.
“Economic growth is expected to have been driven by robust remittances, improving employment and benign inflation. Improvement in government spending is a critical growth driver. However, [the] ERU (Economic Research Unit) [of UnionBank] still thinks that it will be difficult to reach the set government target,” he said.
Budget delay still haunts
Asuncion’s counterpart at Security Bank Corp. (SBC), Robert Dan Roces, also believes the government would not be able to hit its full-2019 growth goal.
“The ghosts of the delayed passage of the national budget for 2019 still continues to haunt economic growth as we expect Q3 GDP (gross domestic product) to rebound to 5.8 percent,” Roces said in a separate report.
“Leading indicators suggest an otherwise unremarkable recovery for the quarter, as sluggish growth in capital goods and a slowing imports sector offset gains from higher household consumption on the back of slower inflation, and a late surge in public spending seeking to play catch-up after getting derailed by the late budget,” he explained.
According to the Security Bank chief economist, private investments would also be a source of weakness because of external uncertainties.
He said the bank forecast economic growth in the fourth quarter to hit between 6.2 and 6.4 percent, while full-year growth is likely to settle at 5.8 percent.
Roces said, however, that inflation would continue to decelerate.
“For October inflation, we estimate price growth YoY (year-on-year) to be at 0.8 percent as derived from a steady trajectory of [a] 0.2-percent month-on-month growth,” he said.
“The slow inflation rate may be attributed to essentially unchanged price levels in rice, electricity and transport costs, plus favorable year-over-year base effects. We expect inflation to remain below target until November,” the economist added.