MANILA -- Government economic planners are optimistic about hitting this year’s gross domestic product (GDP) target of 6.5 percent to 7.5 percent after the economy expanded slightly lower than the target band in 2019 due to the delayed national budget approval.
The Philippine economy expanded by 6.4 percent in the fourth quarter of 2019, bringing the full-year economic growth to 5.9 percent that was the slowest in eight years and modestly below the low-end of the government’s 6.0-6.5 percent revised target for the year. The GDP grew by 6.2 percent in 2018.
“We have seen our economy facing several challenges right at the start of 2019 as the budget impasse led to delays in the implementation of government programs and projects. Adding to the problem was the election ban on certain, mainly infrastructure projects,” Socioeconomic Planning Secretary Ernesto Pernia said in a press briefing on Thursday.
President Rodrigo Duterte signed the 2019 budget only in April.
But Pernia said the Congress and the Department of Budget and Management (DBM) have ensured the timely passage of the country’s 2020 spending plan and approved the validity extension of the 2019 fiscal program until the end of this year, which he considered both are “critical to our efforts to spur economic growth.”
“Other things being equal, compared with 2019, I think the economic growth, given the favorable passage of the budget and also the extension of the 2019 budget until the end of the year, the favorable impact would be bigger in terms of economic performance,” he added.
Pernia, also Director-General of the National Economic and Development Authority (NEDA), underscored the need to reconfigure budget and disbursement protocols that are more robust.
“We now need to significantly improve the absorptive capacity of government agencies for faster implementation and completion of key social programs and infrastructure projects. We also need to swiftly address issues such as the difficulty in the acquisition of right-of-way, delays in procurement, restrictive auditing rules, and skills shortages,” he added.
NEDA Undersecretary Rosemarie Edillon said efforts to improve the absorptive capacities of government agencies so far have not been a problem under the Duterte administration.
“(But) still we cannot be complacent. We think it (GDP growth target still) is very much achievable this year,” she said.
In 2020, Edillon said they are banking on the manufacturing and construction sector amid the government’s “Build, Build, Build” program, boosting the economy to faster growth.
“Services will still be a growth driver, especially since we are looking forward to a new telecommunication (player) this year so our communication sub-sector of course,” she said in an interview, citing also sectors that rely heavily on the communications infrastructure.
Pernia said with 6.4-percent growth in the fourth quarter, the Philippines likely ranked second only behind Vietnam’s 7.0 percent, and higher than China’s 6.0 percent growth rate.
The Philippine Statistics Authority (PSA) reported that among the major economic sectors, services posted the fastest growth in October to December with 7.9 percent.
Industry grew by 5.4 percent, while agriculture, hunting, forestry, and fishing registered a growth of 1.5 percent.
“On the supply side, the 7.9 percent growth in the services sector was mainly driven by the acceleration of public administration and defense, trade, and other services. However, this was partly tempered by the slowdown in agriculture,” he said.
On the demand side, Pernia said growth was driven by the ramping up of government spending after the budget delay in the first half of 2019.
“Public construction significantly increased by 34 percent in fourth-quarter 2019, with the completion of projects of the Department of Public Works and Highways, payment for the acquisition of right-of-way, and construction of government buildings,” he added. (PNA)