MANILA -- The Philippine economy likely expanded more than 6 percent in the first quarter of the year, driven by heightened infrastructure and renewed consumer spending, amid the absence of an approved fiscal budget, according to analysts of First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P).
In the March 2019 issue of The Market Call released on Thursday, FMIC and UA&P said work on large infrastructure projects have all begun despite the pending approval of the 2019 budget, and should drive investment spending.
They said some of these infrastructure projects are the Metro Manila subway (Japanese-aid funded), Cavite-Laguna Expressway (public-private partnership), Light Rail Transit (LRT) Line 1 extension (PPP), third bridge in Cebu-Mactan (PPP), and the three bridges over the Pasig river (China grants).
Citing the Department of Budget and Management, analysts said the share of infrastructure spending to the country’s gross domestic product (GDP) in 2018 reached a record 5.1 percent, more than the 5-percent benchmark for developing countries.
“The downside risk from yet unapproved fiscal budget could have a negative, albeit minimal impact on infrastructure spending in the first quarter,” the FMIC and UA&P said.
The report further said that consumer spending likewise should benefit from the unabated fall in inflation and pre-election spending.
“Even though exports may not yet contribute in the first quarter, GDP growth for the quarter and the year should accelerate from their 2018 pace,” it said.
Analysts pointed out that the continuing fall of headline inflation to less than 4 percent, within target of the Bangko Sentral ng Pilipinas, has provided the “much-needed good news.”
The delay in the enactment of the 2019 national government budget has also placed a downside risk to GDP growth in the first quarter, they added. (PNA)
