Home » Customs & Trade » Budget deadlock reins in PH growth to 5.6%

The Philippine economy grew 5.6% in the first quarter of 2019, the slowest growth rate recorded in 16 quarters as the delay in the enactment of this year’s national budget pulled down economic performance.

The first-quarter growth of gross domestic product (GDP) is the slowest since the 5% recorded in the first quarter of 2015, and is lower than the 6.5% growth in the first quarter of 2018. It is also below the revised 6% to 7% target range of the government.

Trade and repair of motor vehicles, motorcycles, personal and household goods; manufacturing; and financial intermediation were the main drivers of growth for the quarter, according to the Philippine Statistics Authority.

Among the major economic sectors, services had the fastest growth with 7%, followed by industry with 4.4%. Agriculture, hunting, forestry and fishing expanded 0.8%.

Finance secretary Carlos Dominguez III and Socioeconomic Planning secretary Ernesto Pernia in separate statements attributed the slowdown to the delay in enacting the 2019 General Appropriations Bill (GAB), which was signed into law only last April.

“The budget impasse in the Congress during the year’s first three months had set off a spending cutback, which, in turn, stifled economic activity,” Dominguez said.

“Were it not for the Senate-House deadlock over the 2019 GAB (General Appropriations Bill), which forced the government to operate on a re-enacted 2018 budget for the entire first quarter, the economy could have received a tremendous boost from what should have been much higher state spending on infrastructure modernization and human capital formation at the onset of 2019,” he added.

Dominguez, however, pointed out that state economic managers have anticipated the adverse impact on the economy of the Congress’ budget deadlock and the public spending cutback that it subsequently touched off.

Pernia said GDP should have grown by as much as an estimated 6.6% in the first quarter “if we were operating under the 2019 fiscal program.”

To reach the full-year growth target of 6% to 7%, Pernia said the economy will need to expand by an average of 6.1% over the next three quarters.

“This is still achievable 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 said.

Dominguez is also optimistic, stating that economic growth is expected to finish stronger over the April-June period and for the rest of 2019 “as the government puts ‘Build, Build, Build’ on the fast lane following the passage of the 2019 GAA and domestic consumption picks up amid cooling inflation.”

In implementing a catch-up plan to accelerate state investments, Dominguez said the government “aims to offset the lower spending at the outset of 2019 resulting from the budget delay and the construction ban during the election season.”

No comments yet... Be the first to leave a reply!

Leave a Reply

Your email address will not be published. Required fields are marked *

one × 5 =