Growth seen leveling off at 6% in 2020

MANILA, Philippines —Growth is expected to settle at an average of six percent in 2020 despite an expected gain in momentum in the third quarter this year because of a challenging external environment that can weigh down on exports,  London-based Capital Economics said over the weekend.

In a new research brief issued late Friday, the macroeconomy research firm said the government’s pronouncement of keeping the budget deficit constant next year would also have a neutral effect on growth.

“A strong Q3 figure is unlikely to mark the start of a sustained rebound. Growth next year is likely to level off at around six percent. The government is aiming to keep the budget deficit constant next year, so the 2020 budget will have a roughly neutral effect on growth,” said Capital Economics. 

“Meanwhile, the tough external environment is set to continue, which will weigh on the export sector,”  it said.

In a brief issued late Wednesday, Capital Economic sees growth accelerating to 6.2 percent in the third quarter from just 5.5 percent in the second quarter as government spending picks up.

Economic growth slowed down in the second quarter, falling way short of forecasts, due to the spillover effects of the budget delay and the election ban on infrastructure projects.

The domestic economy, as measured by gross domestic product (GDP), grew at a slower pace of 5.5 percent in the second quarter, as against the 5.6 percent growth in the first quarter and the 6.2 percent expansion in the second quarter of 2018.

The second quarter growth figure was the lowest in over four years, or since the 5.1 percent pace in the first quarter of 2015.

The Philippine Statistics Authority (PSA) will announce the third quarter economic growth figures on Nov. 7.