DOF: Over 7% GDP possible in Q1 if budget approved on time

MANILA — The Philippine economy would have expanded by 7.2 percent instead of 5.6 percent in the first quarter of 2019 if the approval of the proposed 2019 national budget was not delayed.

This was stressed by Finance Undersecretary Gil Beltran following the below-projected output of the domestic economy in the first three months of the year.

In an economic bulletin, Beltran said growth, as measured by gross domestic product (GDP) would not have fallen below year-ago’s 6.5 percent and quarter-ago’s 6.3 percent if government spending programmed for the first quarter of the year was met.

He said government expenditure declined by 0.08 percent in nominal terms compared to its 25.4 percent rise same period last year.

The government operated on a re-enacted budget until this year’s budget was signed into law last April.

Beltran explained that government consumption in the first quarter this year grew by 7.4 percent and capital formation by 6.8 percent.

These are both lower than the 13.6 expansion of government consumption and 10.3 percent rise of capital formation in the same period last year.

The DOF executive traced the lower growth of capital formation to the decline in public construction by 8.6 percent against the 22.6 percent growth from January to March 2018.

He, however, noted that the lower growth of capital formation was “slightly tempered by 8.6 percent growth in private construction compared to the 8.1 percent in the same quarter of 2018.”

Meanwhile, the impact of the El Niño phenomenon was noticed in the slower growth of the agriculture sector at 0.8 percent from year-ago’s 1.1 percent and quarter-ago’s 1.8 percent.

These factors hampered the growth of the economy but major factor is the delay in the budget approval, he said.

“If the budget was approved as scheduled and disbursements were made promptly, GDP growth in the first quarter would have risen by 7.2 percent,” he added.

Meanwhile, IHS Markit Asia Pacific Chief Economist Rajiv Biswas expects better output for the Philippine economy in the next quarters since this year’s national budget has been signed into law.

He said that since the national government is now in place the government can now spend according to plan.

“Overall GDP growth for calendar 2019 is expected to be 6.1 percent year-on-year, moderating only slightly from the 6.2 percent pace recorded in 2018,” he added.