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Philippines
Thursday, March 28, 2024

GDP likely grew 7% in 2nd quarter

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The economy likely grew 7 percent in the second quarter, faster than the 6.9-percent expansion in the first quarter, driven by infrastructure and election-related spending, Economic Planning Secretary Ernesto Pernia said in an interview.

“Probably [around] 7 percent. The second quarter was still driven by election spending and infrastructure. A lot of money was released already, by the time we [the new administration] came in. They said 87 percent of the budget was already released,” Pernia told reporters.

Pernia said he expected growth to be sustained in the second half. He said growth might not be too far from 7 percent.  The Philippine Statistics Authority will release the official second-quarter growth figure on Aug. 18.

Economic Planning Secretary Ernesto Pernia

“There’ll be more infra spending. And even PPP projects are going to be rolled out. Consumption spending is going to remain bullish because of the confidence and I think investors are also encouraged,” Pernia said.

Pernia said consumers and businessmen became more optimistic and confident of the economic outlook under the Duterte administration. He said most businessmen who were against President Duterte before were now on the Duterte side.

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DBS Bank of Singapore earlier said economic growth in the Philippines this year could be higher than its earlier forecast of 6.3 percent, because of the planned higher fiscal spending of the Duterte administration.

Duterte promised to increase fiscal expenditures, particularly on infrastructure projects, to boost economic growth.

The Duterte administration will increase annual infrastructure spending to P1 trillion beginning 2017 to spread development to other parts of the country. The plan is to raise infrastructure spending to as much as 6 percent of gross domestic product.

Budget Secretary Benjamin Diokno said earlier that while agriculture would be the main priority in the 2017 budget proposal, infrastructure spending would account for the largest part at a range of P800 billion to P1 trillion. 

Higher infrastructure spending is in line with the Duterte administration’s target to raise the budget deficit ceiling to 3 percent of GDP in 2017 from the current target of 2 percent.

GDP grew 5.9 percent in 2015, missing the target of 7 percent to 8 percent. The Duterte administration is eyeing a 6 percent to 7 percent GDP growth this year, lower compared to the 6.8 percent to 7.8 percent estimate by the Aquino administration.

Diokno said the effects of election-related spending were expected to taper in the second half.

The International Monetary Fund maintained its growth forecast for the Philippines at 6 percent this year and 6.2 percent in 2017.

IMF mission head Chikahisa Sumi said growth could be stronger, reaching 7 percent to 8 percent over the medium term, if the government successfully implemented its 10-point reform agenda.

“This additional effort scenario would make the Philippines one of the fastest growing [if not the fastest] economies in the world and help reduce poverty towards the government’s ambitious target,” Sumi said.

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