MANILA -- The country’s chief economist on Thursday expressed optimism that the Philippine economy will continue to grow aggressively in the remainder of the year, even after the re-enacted budget slowed growth in January to March.
Socioeconomic Planning Secretary Ernesto Pernia said gross domestic product (GDP) expanded by 5.6 percent in the first quarter of 2019, its slowest growth rate recorded in 16 quarters since the first quarter of 2015’s 5.1-percent growth.
“As we have forewarned repeatedly, the re-enacted budget would sharply slow the pace of our economic growth. We estimate that we should have grown by as much as 6.6 percent this first quarter, if we were operating under the 2019 fiscal program,” he said in a press briefing.
Pernia pointed out the four-month delay in the approval of the 2019 budget has weakened down domestic demand.
“What is needed is for government to quickly implement and disburse the fiscal program as indicated in the 2019 GAA (General Appropriations Act),” he said.
Nevertheless, Pernia remains hopeful about achieving the full-year growth target of 6 to 7 percent given the current performance of the private sector and if the government sector is able to jumpstart and speed up the implementation of its new programs and projects.
He noted the economy will need to expand by an average of 6.1 percent over the next three quarters to attain this year’s target growth.
“Private sector construction was slowed in the first quarter of this year. We expect it to pick up steam in the coming quarters first because they are not included in the election ban so they can continue their activity despite the elections. And also the ease of doing business (law) should be already in operation soon,” he said.
He added the uptick in private construction may happen even sooner if the country is able to quickly implement the reforms that reduce the cost of doing business.
Pernia, also Director-General of the National Economic and Development Authority (NEDA), further said the country’s credit ratings upgrade will also encourage more foreign investments.
He was referring to global debt watcher Standard & Poor’s upgrade of the Philippine credit rating to "BBB plus" with a positive outlook on the back of the strengths of the economy.
“And also the moderation in inflation will help the private sector. Not only households but also businesses will be helped by lower inflation rate, which I think will continue to slow in further,” he added.
Among the major economic sectors, the Philippine Statistics Authority (PSA) said services had the fastest growth with 7 percent in the first quarter.
Industry followed with a growth of 4.4 percent; while agriculture, hunting, forestry and fishing had a growth of 0.8 percent.
Services contributed 4 percent to the first-quarter GDP, followed by industry at 1.5 percent, and agriculture, 0.1 percent.
On the supply side, both industry and agriculture sectors posted slower growth.
Pernia attributed the slower growth of the agriculture sector to the El Niño phenomenon, which is projected to continue until August of this year.
“With this, the Department of Agriculture should extend its production support programs to adapt to a protracted El Niño occurrence. There is also a need for a more robust El Niño Mitigation and Adaptation Plan to address water, food, and energy security, as well as health and public safety in a more sustained manner,” he said. (PNA)
