Pernia bullish on economy amid temporary price hike under TRAIN

MANILA -- The country’s chief economist remains bullish about the prospects for 2018, as the tax reform program boosts consumer spending and intensifies spending for infrastructure.

National Economic and Development Authority (NEDA) Director-General and Socioeconomic Planning Secretary Ernesto Pernia said the net effect of the Tax Reform for Acceleration and Inclusion (TRAIN) law is still “positive” on consumers.

“The heightened prices would be just temporary. It peters out over time,” he told reporters on Monday.

Under the TRAIN, personal income tax rates will be reduced and is expected to result in higher disposable income and consumer spending.

Consumer prices, however, are expected to increase on higher excise levies on oil, vehicles, cigarettes and sugar-sweetened drinks.

“Well, with the higher income for those earning below PHP250,000, there will be a lot of welfare enhancement on their part,” said Pernia.

 The NEDA chief further said 2018 is a bullish year for the country also on the back of increased infrastructure spending with the passage of TRAIN.

 “There will be a lot of projects breaking ground so a lot of spending on projects,” he added.

 The government will break ground this year 34 more infrastructure projects of 75 flagship projects under the Duterte administration’s “Build, Build, Build” program.

Sixteen projects had already broken ground.

Meanwhile, Pernia said he was “happy enough” about the performance of the Philippine economy for the last quarter of 2017.

The government will announce the fourth-quarter economic performance on Tuesday.

“Any number we have to be optimistic for 2018,” he said.  

The economy grew by an average of 6.63 percent in the first three quarters of last year, well within the government’s 6.5 to 7.5 percent full-year target.  (PNA)