MANILA – Improvement in government expenditures is expected to boost domestic growth to the six percent level starting in the third quarter of 2019 after the slowdown in the first half, according to an economist of a local bank.
In a reply to e-mailed questions, Michael Ricafort of Rizal Commercial Banking Corporation (RCBC) said the hike in government expenditures “could already reflect government’s catch up spending, especially on major infrastructure projects finally taking effect.”
Following the delay in the approval of this year’s national budget, which was only signed into law mid-April, domestic growth, as measured by gross domestic product (GPD), decelerated to 5.6 percent in the first quarter of the year from 6.3 percent in the last quarter of 2018.
Growth further slowed to 5.5 percent in the second quarter, bringing the first half output to 5.5 percent, lower than the government’s six-seven percent target band.
The government thus implemented a catch-up spending program, which tasked both the Department of Public Works and Highways and the Department of Transportation particularly to hasten the implementation of their respective infrastructure projects.
Economic managers believe that this catch-up spending program would allow the domestic economy to post better results in the second half of this year and meet the full-year growth target.
With government spending growth posting an upsurge last September, Ricafort forecasts some pickup in growth in both the third and fourth quarters “possibly above +6 percent.”
“Thus, the GDP growth target of at least six percent for 2019 remains achievable, provided that the rapid increase in government spending, especially the catch up spending on major infrastructure projects, is sustained for the rest of the year,” he said. (PNA)
