7% GDP growth attainable this year — Diokno

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) expects the economy to grow by seven percent this year due to the timely passage of the national budget as well as the  expected growth in government revenues, domestic consumption and farm production.

BSP Governor Benjamin Diokno said in a text message the timely passage of the 2020 budget as well as the construction, government spending, and the agriculture sector would fuel the strong recovery in the country’s gross domestic product (GDP) growth this year.

“A GDP growth of seven percent looks attainable this year,” Diokno said.

Economic managers through the Development Budget Coordination Committee (DBCC) see the economy growing between 6.5 and 7.5 percent  this year.

The country’s GDP growth slumped to an eight-year low of 5.9 percent last year from 6.2 percent in 2018 on the back of the delayed passage of the 2019 budget, the effects of the African swine fever (ASF) outbreak on the agriculture sector as well as the election ban on infrastructure spending.

“The full year GDP growth of 5.9 percent amid a slowing global economy is still impressive. The Philippines is still one of the fastest growing economies in Asia and in the world,” the BSP chief said.

Diokno said the  construction and government spending grew  by 11.8 percent and 18.7 percent, respectively, while the agriculture sector showed some bounce

“With the timely approval of the 2020 budget, imagine how these sectors would look like this year,” he said.

Jun Neri, lead economist at Ayala-led Bank of the Philippine Islands (BPI), said the bank is sticking to its 2020 GDP growth forecast of 6.2 percent for now.

Neri said last year’s GDP expansion of 5.9 percent is the first sub six percent full year growth since 2011.

 “Build Build Build could still be on hold hold hold in 2020. Massive budget allocation won’t do much if absorptive capacity of line agencies remain low,” Neri said.

Neri said the government needs to rethink existing strategies to reverse the slowing trend.

 “Manufacturing and construction needs to regain momentum, while agriculture needs a massive turnaround.

 “We cannot rest on our laurels and rely on consumption to pull us through,” Neri said.

The Department of Finance  is also optimistic, saying the economy is likely to perform better this year compared to last year.

In a statement, Finance Secretary Carlos Dominguez said the economy may grow at a faster pace this year  after slowing down to 5.9 percent last year.

Dominguez said growth could be driven mainly by the government’s fiscal expansion, brought about by the expected recovery in government  spending and increased revenues with the continued implementation of the Comprehensive Tax Reform Program (CTRP).

He said public spending is seen to accelerate as agencies sustain their momentum from the implementation of a catch up spending plan, which brought GDP growth to 6.4 percent in the last quarter of 2019.

“The pickup in growth in the fourth quarter of 2019 resulting in part from the government’s catch-up spending following anemic expansion in the year’s first semester will gain speed in 2020, with the domestic economy firing on all cylinders as a result of even more vigorous investments in infrastructure and human capital development for the entire year ahead,” Dominguez said.