THE INTERNATIONAL MONETARY FUND (IMF), which on Tuesday slashed its Philippine economic growth projections further to 5.7% for this year and to 6.2% for 2020, nevertheless sees gross domestic product (GDP) expansion picking up this semester on the back of improved government spending, Yongzheng Yang, IMF resident representative to the Philippines, said in an e-mail on Wednesday.
“The latest growth forecast takes into account the slower-than-expected growth outcome in the second quarter of 2019, which was partly due to the budget delay. In addition, the forecast reflects a worsening external environment,” Mr. Yang said when asked for an explanation on the downgrade in Philippine forecasts that were nevertheless in tandem with cuts for much of the world, partly due to nagging uncertainties from the Sino-US trade war.
At the same time, Mr. Yang said: “We expect growth to pick up in the second half of the year as the government accelerates public investment.”
Philippine GDP growth clocked in by a disappointing 5.6% and 5.5% in the first and second quarters, respectively, and averaged 5.5% last semester against the government’s 6-7% target for full-year 2019. Muted growth was widely blamed on the three-and-a-half month delay in national budget enactment that left new projects unfunded, and a 45-day ban on public works ahead of the May 13 midterm elections — meaning there was not much infrastructure work in the first half. Economic managers have said GDP growth needs to clock in at least 6.4% this semester to hit the lower end of the official target.
The government also has a 6.5-7.5% GDP expansion target for 2020, hence, the IMF’s latest growth projections for the Philippines fall short of official goals until next year.
“Continued structural reforms to ease the burden of doing business, make the tax system more efficient and equitable, and relax restrictions on foreign investment will also be important for growth over time,” Mr. Yang added. — Luz Wendy T. Noble