‘Private spending, soft infrastructure to sustain growth momentum’

MANILA, Philippines — The recent slowdown in the government’s infrastructure spending is unlikely to drag down the country’s gross domestic product target, as catch-up measures including post-election spending and soft infrastructure are expected to sustain momentum, the Department of Budget and Management (DBM) said.

Retaining an optimistic view in reaching the expansionary targets, DBM Undersecretary Joselito Basilio said that increased private consumption, driven by lower interest rates along with the agriculture sector, are considered as drivers for growth in the third quarter of this year.

”Even if flood control projects are reduced, the funds will be redirected to soft infrastructures such as hospitals and regional health centers,” he told reporters on the sidelines of the 2025 Fiscal Policy Conference.

The Philippine Statistics Authority reported that inflation quickened to 1.7 percent in September from 1.5 percent in August. It was also the fastest since it hit 1.8 percent in March.

Further, the Bangko Sentral ng Pilipinas has reduced its benchmark interest rate by 25 basis points to 4.75 percent, which represents the lowest since September 2022.

Basilio said that redirecting the funds toward other projects will actually improve the attainment of the administration’s growth targets by promoting greater efficiency in spending.

The Cabinet-level Development Budget Coordination Committee (DBCC) lowered this year’s economic growth target to 5.5 to 6.5 percent from the earlier projection of six to eight percent.

For Basilio, he said that the private sector remains the key driver, particularly in capital outlays, which are expected to continue despite lower infrastructure spending on the national government.

“Current infrastructure spending is just continuing existing projects, so only those that have yet to begin will be put on hold,” the DBM’s principal economist noted.

From January to August, the government’s spending on infrastructure remained behind by 5.6 percent to P798.4 billion. Which is a reduction of P46.9 billion from P845.3 billion in the same period last year.

Finance Secretary Ralph Recto earlier mentioned that the Philippine economy might fall short of meeting its full-year growth target, as slower revenue collection and dampened government spending weighed on the country’s expansion projects.