The Philippine economy grew 5.5% in the second quarter of 2019, its lowest growth in 17 quarters, and softer than the 5.6% growth recorded in the first quarter of 2019, according to the Philippine Statistics Authority.
The weak performance is due to the continuing effect of delay in the passage of the 2019 budget coupled with the election ban on new projects, Socioeconomic Planning Secretary Ernesto Pernia said in a statement.
The second-quarter gross domestic product was also below the government’s target of 6% to 7% and less than the 6.2% growth in the second quarter of 2018.
GDP will have to grow by at least 6.4% in the second half of the year to reach the government’s low-end full-year growth target of 6% to 7% in 2019, said Pernia, who is also the director general of the National Economic and Development Authority (NEDA).
Government consumption spending during the second quarter also slowed; capital formation declined sharply, particularly on the government side; and public construction dropped by 27.2% for the second consecutive quarter, which offset the growth brought in by private construction.
With the weak performance, Pernia called for the timely passage of the national budget for 2020, “so as not to derail next year’s economic growth.”
For the remainder of the year, the Cabinet official said government must continue to push forward and fast track implementation of infrastructure projects under the Build, Build, Build program. Only 11 of 38 NEDA Board-approved project proposals–out of the total 75 infrastructure flagship projects–are in the construction phase.
To ensure sustained construction activity, Pernia said expediting approval of permits and requirements for construction-related projects is important for agencies to attain target disbursements.
He called on the 18th Congress to prioritize passage of the Tax Reform for Attracting Better and High-Quality Opportunities bill, as well as amendments to the Foreign Investment Act, Public Service Act, and Retail Trade Liberalization Act, to address the impact of policy uncertainty on investments.
On the external front, Pernia said it is essential for the country to diversify its products and markets through the establishment or improvement of new and existing trade relations with strategic partners.
“This would help the country withstand external shocks and promote growth over the medium term. We should also think beyond traditional export products and markets,” Pernia noted.
Strategic and sustained efforts to ramp up the tourist sector will greatly help compensate for the moderation of the goods exports, he added.