Sustaining growth

DESPITE efforts from the current administration to maintain the Philippine economic growth, this year’s 3rd quarter Gross Domestic product (GDP) have decelerated from the previous quarter’s 6.4 percent gain and 7 percent growth posted the same period last year, Moody’s Analytics reported.
The financial service company predicts that there would be a 5.9 percent growth. It said that this is a clear slowdown in the growth for the 3rd quarter due to the delays in government infrastructure projects and a stagnant industrial production.
Additionally, Moody’s Investors Services said that the Philippines is expected to grow below the government’s 2014 target of 6.3 percent by the end of 2014 and 6.5 percent in 2015.
Analysts in the country still believe that the government can still reach an increase GDP by around 6 percent, if not lower, this year.
Former Budget Secretary Benjamin Diokno pointed out that the government’s under-spending is one of the main causes of the disappointing figures for the 3rd quarter.
“[Under-spending] is because of poor budget planning and incompetence,” Diokno said.
He revealed that the difference between the supposed actual spending has been estimated at P594 billion ($13.22 billion). For this year alone, under-spending as of end-September was at P274 billion ($6.1 billion).
Even ING Bank Manila Senior Economist Joey Cuyegkeng is not optimistic that the government’s spending will rebound in the fourth quarter.
“Optimism of a rebound in government spending is fading. I am not as optimistic about a surge in government spending but I would wait for the October fiscal performance,” he said insisting that he projects the growth for the whole year to reach 5.8 percent only.
On the other hand, Socioeconomic Secretary Arsenio Balisacan remains optimistic about the country’s economic goals. He said a 6.6 percent to 6.8 percent growth in the fourth quarter is “very doable” but this would allow full-year growth to settle at only 6 percent, which is a “more realistic” estimate.
“To hit 6.5 percent, you need to grow by more than 8 percent or 9 percent in the fourth quarter. Of course that’s still possible but I look at the previous quarters, there was only one time in the last 10 years that we posted an 8-percent growth,” Balisacan said.
Economist Victor Abola attributed the disappointment in the port congestion. Export growth, according to him, slowed to 9.8 percent in the third quarter from 12.4 percent recorded a year ago.
Moody’s Analytics, however, noted that the economy remains strong partly because of the improved exports and imports.
“Production has fully recovered from last year’s typhoon and business sentiment remains upbeat… The flow of new government infrastructure projects slowed, which may weigh on GDP growth. The Moody’s Analytics tracking model suggests a modest third quarter slowdown,” it said.
This is only a hiccup considering where the Philippine economy has been from. It is not too long ago when the economy was shrinking and many feared that the would be next to experience recession. But the country has made progress and there’s still plenty of progress to be made.
Signposts for the economic growth outlook could be better, and plenty of risks remain that could undermine the country’s momentum. The pace of growth could still be accelerated in the final months of this year through a continued wave of government efforts.
(AJPress)