Security Bank sees 2019 GDP growth at 6-6.4%

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Security Bank

SECURITY BANK Corp. expects the Philippine economy to grow 6-6.4% this year, flagging concerns about the 2019 national budget.

In a news conference on Thursday, Security Bank chief economist Robert Dan J. Roces said GDP will likely grow between 6% and 6.4% in 2019, although the estimate still represents a “wait and see” forecast.

“We have yet to really [see] where the Budget impasse issues are headed. But it can really go to as low as 6%. This is the forecast range we have right now assuming that the Budget gets passed around after April. Mr. Roces told reporters yesterday.

Mr. Roces added that GDP growth can fall to as low as 5-5.6% under a full-year reenacted budget, although he noted that it will not go down to 4-4.5%.

“We hope Budget gets passed because a lot of stuff depends on that — spending, workers, consumption spending.”

The inter-agency Development Budget Coordination Committee last week slashed its 2019 GDP growth forecast to 6-7% from 7-8% originally as the government operates on a reenacted budget.

Socioeconomic Planning Secretary Ernesto M. Pernia said a reenacted budget until April could drag full-year growth to 6.1-6.3%, far from the government’s original target, likely matching 2018’s 6.2% pace.

Mr. Roces also noted that the economy will slow down in the first half of the year “because there’s no movement in terms of infrastructure spending” due to the election ban, although he said that this may have been factored in by the economic managers.

Last month, the Commission on Elections said it is reviewing the request of state economic managers to exempt 145 infrastructure projects from the 45-day ban on public works ahead of the May 13 mid-term polls.

Mr. Rocves remains optimistic about economic growth overall.

“We are still bullish about economic growth because there are factors at play now that are positive for us. For example, we have (more) rice imports. Rice was one of the biggest primary drivers of inflation last year,” he said.

President Rodrigo R. Duterte signed on Feb. 14 the Rice Tariffication Law. The measure seeks to liberalize imports of the staple, while charging tariffs on the imports.

The relaxed rules for rice imports, which took effect on March 5, are expected to cut retail prices of the staple by up to P7 per kilogram and inflation by 0.7-0.8 percentage point.

Finance Secretary Carlos G. Dominguez III said the Philippines is banking on infrastructure to support continued economic growth, which he said will offset any downside from a global slump.

“Our government expects to invest about $170 billion in this program over the next five years. This is our secret weapon to offset the effects of the expected global economic slowdown,” Mr. Dominguez said in his speech during the Philippine Economic Briefing in Beijing. — Karl Angelo N. Vidal