GDP growth likely hit 7%

MANILA, Philippines – Economic growth may hit at least seven percent this quarter on the back of higher government spending boosted by election-related disbursements, Budget Secretary Florencio Abad said yesterday.

“We expect an even better performance in the second quarter,” Abad said.

Growth, as measured by gross domestic product (GDP), rose 6.9 percent in the first three months, the fastest quarterly expansion since 2014.

If realized, a GDP expansion of seven percent or more will be the fastest since the 7.7-percent growth in the first quarter of 2013.

From April to June, Abad said economic expansion could be supported by faster procurement of state services and “more heightened” spending for the presidential elections last May 9.

“I think those things combined give us optimism that the second quarter may even be better than the first,” he said on the sidelines of a public finance conference in Pasay City.

Abad said the DBM had already improved agencies’ capacity to absorb big outlays, which he blamed for succeeding years of underspending that impact on growth.

“Many of the agencies are more oriented toward how they can control spending than it being more expansionary so that when the situation suddenly changed, adjustments have been slowed,” Abad said.

“But (they were) able to benefit from our public financial management programs already... and their response to these changes have been remarkably well,” he said.

Abad’s comments followed statements from the incoming Duterte administration that current macroeconomic targets will be reviewed this month.

Specifically, Abad’s successor, Benjamin Diokno, has said this year’s 6.8 to 7.8-percent target is “on the high side” considering an expected slowdown in the second half.

Abad, for his part, said there could be “better performance” if the new administration will put efforts to attract investments, support tourism and bid out more infrastructure projects.

“I think we are turning over to the next administration an economy that is in great shape,” he said.