Nomura keeps 2019 PH growth outlook at 6%
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Thu, 28 Nov 2019 17:00:07 +0000
NOMURA Securities Ltd. retained its growth forecast for the Philippine economy this year and next as it expects the timely passage of the 2020 national budget.
In a report on Thursday, Nomura economist Euben Paracuelles said the financial institution maintained its 6-percent and 6.7-percent growth forecast for the country’s gross domestic product (GDP) in 2019 and 2020.
He also said accelerating public investment spending and strengthening overall domestic demand would be supported by positive developments in the proposed P4.10-trillion national budget for next year.
According to Paracuelles, the approval of the Senate’s version of the budget on Wednesday paved the way for the bicameral committee to start deliberations today, November 29, to reconcile any difference from the House of Representatives’ version before sending it to Malacañang for President Rodrigo Duterte’s signature.
“Compared to the 2019 budget, which suffered a four-month delay and contributed to the growth slowdown in [the first half of] 2019, every step of this year’s budget approval process in Congress has been done much earlier,” the economist said.
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.
Paracuelles also highlighted the fact that the Senate approved a bill to extend the validity of the 2019 budget until Dec. 31, 2020.
“This is relevant because, after the shift to cash-based budgeting, government agencies are required to spend their allocations within the fiscal year,” he explained.
“So the four-month delay [in] passing the 2019 budget necessitated the extension of its validity beyond this fiscal year to allow for the disbursement of any remaining unspent allocations in the early part of 2020, instead of being sent back to the Treasury,” Paracuelles said.
Philippine economic growth accelerated to 6.2 percent in the third quarter after the slower-than-expected 5.6-percent and 5.5-percent GDP expansions in the first and second, which were primarily blamed on the budget impasse.