GDP growth slower than 6.7% in 2018, says Pernia

MANILA, Philippines — The Philippine economy is headed for a second straight year of slowdown as a “challenging” 2018 appears to be less robust than the prior year, the country’s chief economic planner said.

“We started 2016 with a 6.9 percent GDP(gross domestic product) growth and it went down to 6.7 percent in 2017. This year, we are going to have something lower than 6.7 percent,” Socioeconomic Planning Secretary Ernesto Pernia said in a CNN Philippines television interview.

Based on latest data, GDP growth averaged 6.3 percent in the first three quarters of 2018, lower than the government’s target of 6.5 to 6.9 percent growth for the year.

“2018 was a challenging year because of high oil prices which affected our imports, including food and crude, of course. Not only that, we were battered by calamities…agriculture did not perform well,” Pernia, who heads the National Economic and Development Authority (NEDA), said.

This year, the government is targeting a GDP growth of seven to eight percent.

Department of Budget and Management (DBM) Secretary Benjamin Diokno expressed optimism for the target. 

“I think that’s doable despite the looming economic slowdown, because our economy is driven by internal demand like Build Build Build and investment in human capital,” Diokno said.

Pernia earlier said he expects GDP growth in 2019 to be better, but closer to the seven percent level.

He said monetary tightening in some countries, including the US, and the trade war between China and the US are among the factors that could affect the domestic economy this year.

“So that will slow down our exports, but as mentioned by Secretary Diokno, we are really more internally driven,” he added.

Pernia also expressed confidence in President Duterte’s political will, noting this would help push the implementation of policies.

“The President, with his political will, has been able to institute policy reforms like liberalizing some areas from farm restriction. And we are also implementing very soon the ease of doing business, anti-red tape act, rice tariffication, of course, and the national ID system,” Pernia said.

Asked if the country has already experienced the worst when it comes to inflation, Pernia answered in the affirmative.

“When we talk about inflation rate, it is clearly on a downtrend and it will continue to go down to our target of two to four percent range in 2019 and subsequently,” Pernia said.

Inflation in December 2018 hit a seven-month low as it slowed down to 5.1 percent from six percent in November. This brought annual inflation rate for 2018 to 5.2 percent – the highest in a decade.