No major boost to growth seen from 2019 midterm elections

MANILA, Philippines — The mid-term elections may not boost the country’s economic growth unlike previous elections in 2010, 2013 and 2016, according to Dutch financial giant ING Bank.

Nicholas Mapa, senior economist at ING Bank Manila, said during the 2019 ING Markets Annual Research Roadshow that the ban on government spending ahead of the mid-term elections may offset election-related spending.

Election-related spending boosted the country’s gross domestic product (GDP) growth to 7.6 percent in 2010, 7.1 percent in 2013 and 6.9 percent in 2016.

Mapa said capital formation usually picks up during election years as politicians spend more so voters could remember them. Capital formation reached 4.4 percent in 2010, 4.3 percent in 2013 and 4.9 percent in 2016.

Likewise, he said private consumption rose to two percent in 2010, 3.3 percent in 2013, and 4.1 percent in 2016.

For 2019, Mapa expects 6.3 percent economic growth for the Philippines and 6.4 percent next year after easing to 6.2 percent in 2018 from 6.7 percent in 2017.

He said capital formation is expected to remain steady at 3.3 percent, while consumption may improve to 4.1 percent from 3.2 percent.

Likewise, government spending is seen easing to 0.8 percent this year from 1.1 percent last year.

According to Mapa, government spending is expected to struggle in the first half with an election ban preventing fresh projects and a delay in passing the budget likely to halt last year’s strong growth.

Mapa said Philippine economic growth may fall below six percent at 5.8 percent in the first quarter before improving to 6.1 percent in the second, 6.3 percent in the third, and 6.4 percent in the fourth quarter.

However, the economist could revise its projections if government spending for infrastructure is exempted from the spending ban during the campaign period.