The economy is still expected to grow above 6 percent this year, getting support from further monetary policy easing and higher government spending on infrastructure projects in the second half, British financial giant Standard Chartered Bank said Friday.
In its Global Focus—Economic Outlook Q3 2019 report, bank economist for Asia Chidu Narayanan said a steady growth of 6.1 percent in 2019 could be expected “as a better second half offsets a weak first half.”
“Support for the second half growth is likely to come from further monetary policy easing and a pick-up in government infrastructure investment following the first-quarter budget impasse,” said Narayanan.
“We expect inflation to fall below 2 percent in the second half, giving Bangko Sentral ng Pilipinas room to cut policy rates further. We see another 75bps of rate cuts this year, following an initial cut in May,” Narayanan said.
The economy grew by a lackluster 5.6 percent in the first quarter, lower than what most economists expected for the period, due mainly to the delay in the approval of the national budget for 2019.
The first-quarter print was slower than the 6.5 percent a year ago and 6.3 percent a quarter ago. As a result, the government operated on a reenacted budget in the full first quarter.
President Rodrigo Duterte signed the P3.7-trillion national budget for 2019 only in April after a couple of months of impasse between the two houses of Congress.
Finance Secretary Carlos Dominguez III earlier said the government needed to increase expenditures in the months ahead to achieve an economic growth of more than 6 percent this year.
National government disbursements in 2019 are targeted to reach P3.774 trillion, or equivalent to 19.6 percent of the gross domestic product. The amount is 10.7 percent higher than the actual disbursements in 2019.
Dominguez said to achieve this year’s disbursement target, the government must spend a total of around P2.996 trillion from the second to fourth quarter of the year.
Infrastructure spending accounts for almost one-third of the amount of disbursements programmed for the said quarters. Actual infra spending in the first quarter amounted to just P207.2 billion.