Moody’s further trims PH growth outlook to 5.8%
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Fri, 09 Aug 2019 16:25:09 +0000
MOODY’S Investors Service reduced anew its growth forecast for the Philippine economy this year to 5.8 percent from 6 percent following the government’s announcement of slower-than-expected expansion in the second quarter.
“Our expectation of a recovery in domestic demand in the second half of this year and into next year underpins our full-year forecasts for real GDP (gross domestic product) growth of 5.8 percent in 2019 and 6.2 percent in 2020,” the global debt watcher said in a report on Friday.
Moody’s revised outlook for the country’s economy is its second this year, with the previous figure itself a downward adjustment from the initial 6.2 percent.
The latest projection is lower than last year’s actual growth of 6.2 percent and falls near the lower end of the government’s downwardly revised 6.0 to 7.0 percent target.
This comes after the National Economic and Development Authority and the Philippine Statistics Authority revealed during a briefing in Pasig City on Thursday that the country’s GDP slowed to 5.5 percent in April to June, compared with 5.6 percent in the first quarter and 6.2 percent in the second quarter last year. It is the lowest in more than four years.
“While the growth of the exports of goods and services decelerated on account of weaker external demand, much of the slowdown was driven by government spending,” Moody’s said, pointing out that government consumption and public construction slowed dramatically in the first two quarters of this year because of the delayed passage of the 2019 national budget.
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.
Going forward, Moody’s latest forecast incorporated the country’s economic managers “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.
“At the same time, stable remittance inflows, low inflation and historically low unemployment will also support household consumption,” it said.
The Bangko Sentral ng Pilipinas earlier reported that personal remittances in the first five months of the year reached $13.707 billion, up 4.1 percent from $13.172 billion in the same period in 2018.
Unemployment fell to 5.1 percent in April from 5.5 percent in the same month last year — equivalent to 2.286 million out-of-work individuals, compared with 2.360 million previously — according to the Philippine Statistics Authority’s latest Labor Force Survey.