THE “optimistic” scenario for economic growth is over 7% in the second half amid expectations of sustained consumer and government spending, according to the National Economic and Development Authority.
Socioeconomic Planning Secretary Ernesto M. Pernia told reporters after the Development Budget Coordination Committee budget briefing at the House of Representatives last week that it remains possible for gross domestic product (GDP) growth in the third and fourth quarter to hit the higher end of its 6.5-7.5% target for the year, supported by the momentum in spending.
Mr. Pernia, who presented the macroeconomic state of the country to the legislators, said that the economy needs to grow by an average of 7.9% for the rest of the three quarters to meet the upper end of the target band for the year.
To reach the 7% midpoint of the target band by year’s end, Mr. Pernia said the economy will require growth of 7.2% in each of the last two quarters.
Asked whether such pace can be attained in the succeeding quarters, Mr. Pernia said: “I think it’s still possible. If there’s a peak in spending, it’s possible [in the] third quarter and the fourth,” he said.
“I want to be more optimistic because we want to incentivize them,” he said.
If the optimistic scenario bears out, it would be faster than the scaled-down 7% GDP recorded in the third quarter of 2016, as well as fourth quarter 2016’s 6.6% expansion. The Philippine Statistics Authority is expected to release second-quarter GDP on August 17.
Mr. Pernia forecast GDP growth in the second quarter to be better that the 6.4% posted in the first quarter, but slower than the 7% in the second quarter last year, as government spending picked up.
The first quarter’s slower-than-expected GDP expansion was blamed on base effects from the election-related spending in 2016, and the public works ban that ran from March 25 to May 8 last year.
The Bureau of the Treasury earlier reported that government expenditure in June grew 23% year on year to P270.7 billion — sustaining May’s pace of 20% — to exceed its P210.9-billion program that month by 28%.
June took the six-month fiscal balance to a P154.5-billion deficit, 7% more than the P143.8-billion program and 28% bigger than the year-earlier P120.3 billion.
Budget Secretary Benjamin E. Diokno said earlier that such pace in public disbursements would be maintained in the third quarter, given its tight monitoring of government agencies.
Private consumption and government spending — where the official target is P8.4 trillion on infrastructure and capital outlays over the medium term — is one of the country’s key growth drivers, and is expected to spur economic growth to an annual average of 7-8% from 2018 to 2022.
The government believes such a pace of economic expansion is needed to slash unemployment to 3-5% by 2022 from 5.5% last year and achieve its goal of cutting the national poverty rate to 14% also by then from 21.6% in 2015. — Elijah Joseph C. Tubayan
