PH may hit govt’s growth target this year
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Fri, 06 Dec 2019 16:16:18 +0000
Philippine economic growth is likely to hit the government’s target this year and would continue to accelerate in 2020 on the back of higher government spending, an analyst said.
In a market outlook briefing on Friday, Sun Life Philippines Chief Investments Officer Michael Enriquez projected the country’s gross domestic product to grow between 6.5 and 6.6 percent in the fourth quarter to bring the full-year expansion to 6 percent.
His full-year outlook settled at the lower end of the government’s downwardly revised 6 to 7 percent growth for this year.
Enriquez, however, pointed out that his forecast “is only possible if there is a sustained and ideally stronger spending than in the third quarter and a turnaround in private investments.”
He added there are still questions about how government can sustain spending and how the external trade account will eat into growth for the balance of the year.
Earlier, the country’s economic managers reported that state infrastructure and capital spending reached P628.5 billion from January to October, 5.5-percent lower than the actual P665.1 billion disbursements for the same period in 2018.
The 10-month figure puts the total national government spending — which includes expenditures for maintenance, personnel services and subsidies — at P2.93 trillion, up 5.05 percent or P141.3 billion from the amount in the same period last year.
Going forward, Enriquez foresees a “more favorable” Philippine economic growth of 7 percent next year from a combination of base-effects, the recovery of consumer spending, and stronger government spending following the lessons it has learned from the budget delay of 2019.
A dispute between the Senate and the House over alleged insertions resulted in the four-and-a-half-month delay in the passage of this year’s budget. This forced the government to run on last year’s outlay, limiting it to spend for items detailed in the 2018 appropriations and not on programs and projects supposed to be implemented this year.
“Next year, we are quite bullish on the overall economy. It will be fastest growing because the government is really keen on spending and we have seen this happening in the fourth quarter alone — the government has spent a lot to catch up,” Enriquez said.
The Sun Life executive is also optimistic the timely approval of the proposed P4.1-trillion 2020 budget would spur government spending, which will also push corporate activities.
“If the government starts spending, we also see more activity from the companies to start spending as well because they have to keep up with government,” he added.
Asked for factors that may affect growth, Enriquez warned some “regulatory overhang” may discourage investors next year.
“I think there are a lot of changes in regulations that affect some companies right now, especially the utility companies. It creates some negative outlook on how business is conducted in the country. It might shy away investors,” he said.