MANILA, Philippines - The government will not budge from its full-year economic growth forecast of 6.5 percent to 7.5 percent on the back of increased spending, one of the country’s top economic managers said.
“We’re sticking to our GDP (gross domestic product) projection of 6.5-7.5 percent for this year,” Finance Secretary Cesar Purisima said on the sidelines of the Bureau of Internal Revenue’s 100th anniversary celebration yesterday.
Purisima said it was not prudent to change the forecast based on one quarter’s performance especially as the government makes adjustments to spur the economy to faster growth.
The economy expanded 5.7 percent in the first three months of the year, its slowest pace since the fourth quarter of 2011, hurt by the impact of last year’s devastating super typhoon. The disappointing GDP number fell below expectations for a 6.4 percent rise.
The Philippines was the fastest-growing economy in Southeast Asia last year.
Purisima said the government is making up for lost time by stepping up spending to boost activity and the economy.
“We’re hoping for a stronger second half as we continue to accelerate disbursement of budget so government projects will get off the ground,” Purisima said.
“We will work hard to make sure we continue to increase spending through 2016,” he added.
Purisima is confident the country would bounce back from a weaker first quarter as reconstruction efforts are gaining momentum which would ensure the Philippines remains one of the region’s strongest performers. The government’s strong focus to invest more in infrastructure is also seen to fuel the economy.
Economists likewise share the government’s view that the first quarter GDP was just a temporary setback given the Philippines’ strong macroeconomic fundamentals and fiscal position.
The International Monetary Fund recently trimmed its 2014 economic growth prediction for the Philippines to 6.2 percent from 6.5 percent due to a sluggish first quarter performance.
State spending picked up steam in June this year, rising nearly half to P201.13 billion. This brings government’s total expenditures to P987.71 bilion in the first semester.
This resulted in a budget shortfall of P62.5 billion in June.
For this year, the government expects the budget deficit to hit P266.2 billion or two percent of GDP. Last year, the budget shortfall amounted to P164.1 billion or below the official ceiling of P238 billion.