MANILA, Philippines — Robust public spending, strong domestic consumption and a revitalized agricultural sector would likely drive economic growth this year despite the presence of domestic and external headwinds, according to economic managers.
The government expects the economy to grow between 6.5 percent and 7.5 percent this year.
In a press briefing following the Economic Development Cluster’s meeting last Thursday, Finance Secretary Carlos Dominguez said growth in 2020 would be driven by faster government spending following the timely enactment of the 2020 national budget and the extension of the 2019 General Appropriations Act.
“With the enactment of the 2020 national budget on time and the extension of the validity of certain portions of the 2019 budget until the year-end, we expect public spending to spur robust economic activity this year,” Dominguez said.
In addition to this, the economic team said a benign inflation environment, which would then boost domestic consumption, as well as a revitalized agricultural sector, would also become major growth drivers this year.
The inter-agency Development Budget Coordination Committee (DBCC) expects a growth of between 6.5 percent and 7.5 percent for the economy in the next three years.
Dominguez said the implementation of the Ease of Doing Business Law, as well as the expected passage of the Corporate Income Tax and Incentives Rationalization Act (CITIRA) would encourage more investments, and therefore spur economic activity.
“The full implementation of the Philippine Export Development Plan and a more aggressive tourism campaign will further rev up the economy this year,” he said.
On the other hand, the EDC also flagged possible downside risks to growth, including developments both in the domestic and international landscape.
Domestically, Dominguez said risks could emanate from natural hazards, such as the possible eruption of the Taal Volcano and the continued presence of the African swine fever in the country.
He also mentioned water supply disruptions, slow implementation of infrastructure projects and policy uncertainties, such as the delay in the passage of tax reform packages, as possible risks to growth.
“Externally, the primary downside risks include the slowdown in global growth, a lackluster recovery in trade, protectionist policies and other disruptions to the trade and supply chains, the volatility in global oil prices, disruptive technologies, and the global spread of communicable diseases such as the novel coronavirus,” he said.
To reach the government’s GDP growth target, the EDC has urged infrastructure agencies to accelerate the construction of projects and efficiently disburse bigger outlays for better absorptive capacity.
The economic team also called on the Department of Agriculture (DA) to implement programs under the Rice Competitiveness Enhancement Fund (RCEF) to support at least a two-percent growth in the agriculture sector.