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Friday, March 29, 2024

Weak govt expenditures seen to drag ’17 economic growth

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Sluggish government expenditures may result in slower economic growth this year, an official of ING Bank said in a report Wednesday.

Rob Carnell, chief economist of ING Bank in Asia, said government spending in the first five months grew 6 percent, slower than the 19-percent rise recorded in the same period last year.

“We think it puts at risk the official 6.5 to 7.0 percent growth forecast for 2017 [ING and consensus 6.5 percent],” Carnell said.

The Duterte administration expects the economy to grow between 6.5 percent and 7.5 percent this year, driven mainly by higher fiscal spending, robust domestic demand and investments.

Government data showed that the P33.4-billion budget deficit in May put the year-to-date deficit at P63.6 billion or P11.5 billion lower than a year ago. Year-to-date revenue growth was 7.7 percent and spending growth was 6 percent.

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“If sustained for the rest of the year, this would produce a slightly smaller full-year budget deficit than last year’s P353 billion [2.45 percent of GDP],” Carnell said.

He said against a backdrop of military tensions in Mindanao, ING was expecting the fiscal policy priority to shift to supporting growth from fiscal consolidation. 

The Bureau of the Treasury said earlier revenue collections in May increased 14 percent to P228.3 billion from P199.8 billion a year ago. This brought revenue collections in the first five months to P996.5 billion, up 8 percent from the P925.4 billion a year ago.

Meanwhile, national government’s expenditures in May grew 20 percent or P44.3 billion to P261.7 billion. Interest payments for the month amounted to P21.0 billion, up 12 percent year-on-year due to the timing of payment for treasury bonds scheduled in April but paid in May.  

Expenditures in the first five months grew 6 percent to P1.06 trillion from P1 trillion a year ago.

The economy grew 6.9 percent in 2016, near the upper bound of the government’s target range of 6 percent to 7 percent in 2016.

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