DOF: Growth trajectory to pick up

MANILA, Philippines — The Department of Finance (DOF) has expressed optimism that the economy would be able to regain its momentum, with the government increasing its infrastructure spending and implementing measures to ease inflation and boost investment.

In a statement, Finance Secretary Carlos Dominguez said the country’s economic growth trajectory is expected to pick up in the coming months after slowing down to 6.1 percent in the third quarter.

 “The economy is expected to regain its stride as the government has sustained its accelerated investments in infrastructure and social services on the back of a strong fiscal position – brought about in large part by tax reform and ODA (official development assistance) from our country’s development partners,” Dominguez said.

He said the government also implemented more measures to help ease inflation and pursued more policy reforms to make the country more conducive to investments.

The country’s gross domestic product (GDP) expanded by 6.1 percent in the third quarter, slower than the revised second quarter figure of 6.2 percent.

Dominguez said inflation, which remained elevated in recent months, had impacted economic growth.

However, the finance chief said the latest inflation figures indicate that price pressures have started to ease as a result of the monetary and non-monetary measures that the government has put in place.

Inflation remained steady at 6.7 percent in October, bringing the year-to-date average inflation at 5.1 percent in the first 10 months. Month-on-month, inflation slowed down to 0.3 percent from 0.8 percent in September.

This came after President Duterte issued Administrative Order 13 and Memorandum Orders 26 to 28, which address supply side issues on food and agricultural products.

The Bangko Sentral ng Pilipinas last September also delivered another 50-bases point rate hike to anchor inflationary expectations, bringing to 150 basis points the cumulative increase in interest rates so far this year.

Meanwhile, Dominguez said deeper investor confidence – as reflected by the 52-percent jump in foreign direct investment inflows in the first half and tight spreads fetched by the government’s overseas bond floats – would also induce greater economic activity, create jobs and fuel economic growth.

The DOF earlier said the recent signing of the Ease of Doing Business Act, which reduces bureaucratic red tape, and the release of the 11th Foreign Investment Negative List, which relaxed some restrictions on foreign firms’ participation on certain business sectors and some professions, are also expected to further increase FDI inflows and boost businesses.

“There is no room for complacency, and the Duterte administration would remain focused on boosting medium-term growth by keeping tabs on the supply and prices of critical food items and continue building up the productive capacity of the economy while maintaining fiscal stability,” Dominguez said.