6.4% gross domestic product growth still possible

March 25, 2019
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A 6 percent level growth can still be achieved by the Philippine economy this year despite the anticipated impact of the budget impasse in Congress, an official of Security Bank Corporation (Security Bank) said.

In a briefing before the bank’s economic forum in Mandaluyong City Thursday, Security Bank Assistant Vice President and chief economist Robert Dan J. Roces said they are considering a 6.4 percent growth for the domestic economy, as measured by gross domestic product (GDP), this year.

“But it can really go to as low as 6 percent. This is the forecast range we have right now assuming that the budget gets passed around after April,” he said.

Roces, however, stressed the need for continued monitoring “because we have yet to really feel where the budget impasse issues are headed.”

The government is currently operating on a reenacted budget, and if this will continue for the rest of the year, Roces said domestic output can possibly slide to a range of between 5.5 percent and 6 percent.

“We don’t think it will go down to 4 to 5 percent,” he said.

In 2018, the domestic economy grew by 6.2 percent.

Economic managers cut growth targets for this year to 6-7 percent and next year to 6.5-7.5 percent. These were previously at 7 to 8 percent, which is still the target for 2020-22.

Roces explained that growth in the first six months of the year will be slower “because there’s no movement in terms of infrastructure spending” due to the impact of the budget impasse and the election ban.

Amid the impact of the deadlock on the PHP3.757trillion national budget, which the Bicameral Conference Committee approved and ratified last February, Roces said they remain optimistic on the economy.

“We are still bullish about economic growth because there are factors at play now that’s positive for us,” he said, citing as example the government’s measure to ensure adequate rice supply through the adoption of rice tariffication.

Last year, issues on rice supply, along with other agricultural products and other issues, resulted in upticks in domestic inflation rate, which peaked at 6.7 percent in September and October.

Roces projects inflation to average at 3.5 percent this year, at the upper half of the government’s 2 to 4 percent target until 2022.

“Around 2.5 to 3.5 percent barring some very bad headwinds coming into the second quarter,” he added.