MANILA — An economist of ING Bank Manila revised his growth projection upwards for the Philippine economy both for the first quarter of 2018 and the full year on back of robust increase in government spending to date.
In a research note, ING Bank senior economist Joey Cuyegkeng modestly upped his growth forecast for the domestic economy for the first quarter to 6.9 percent from 6.5 percent and the full-year projection to 6.8 percent from 6.7 percent.
Citing data released by the Department of Budget and Management (DBM) Wednesday, Cuyegkeng said government expenditures rose by 37 percent year-on-year in February 2018 to Php240.3 billion.
Core spending, he said, improved by 35 percent during the same period.
He said these growth rates “are not just a result of base effects with February 2017 spending of near flat year-on-year”, referring to the one percent growth of expenditures in February 2017.
He pointed out that “government policies of a “cash-based budget” and a one-year effectivity of the approved budget procurement program push government agencies to improve spending performance.”
As of end-February this year, government spending grew by 26 percent, DBM data show.
Cuyegkeng said core spending for the same two-month period went up by 27 percent.
He said these figures bring “spending growth on track to a 31 percent growth for 1Q which would be around 15x faster than 1Q 2017 growth of only two percent.”
He said expenditures for March “should continue at an accelerated pace of 39 percent annual gain.”
“The strong fiscal stimulus would offset the drag that higher inflation may have on household spending and moderate business and investment spending,” Cuyegkeng explained.
“The fiscal stimulus would likely bring 1Q GDP growth closer to government’s 2018 target growth of seven to eight percent. We have revised higher our 1Q GDP growth forecast from 6.5 percent to 6.9 percent and full year growth to 6.8 percent from 6.7 percent,” he added. (PNA)
