The country's economic growth this year may not be as robust as many expect it to be because of at least three major factors. Government and private economists agree that the delay in the approval of the 2019 budget, the slowdown in global trade and the El Niño phenomenon will make a dent on the gross domestic product.
The inter-agency Development Budget Coordination Committee was the first to make the adjustment on the economic growth target. It reduced its growth forecast for the Philippines this year to a range of 6 percent to 7 percent from the previous target of 7 percent to 8 percent, taking into account the delay in the approval of the national budget and external risks, including the lingering trade war between the US and China.
Finance Secretary Carlos Dominguez III has noted that the budget impasse will affect the creation of more jobs from the Build, Build Build infrastructure program of the Duterte administration. Estimates by the National Economic and Development Authority showed that a reenacted budget until April would bring down full-year GDP growth to 6.1 percent to 6.3 percent. The Neda said if the budget was passed in August, growth could be expected at 4.9 percent to 5.1 percent. It said that with a full-year reenacted budget, the growth could go as low as 4.2 percent to 4.9 percent.
The current El Niño, meanwhile, is already wreaking havoc on farm production. The Department of Agriculture department is now assisting some 138,000 farmers grappling with the lack of rain. El Niño, according to Agriculture Secretary Emmanuel Piñol, had caused some P5 billion in agricultural losses in about 149,000 hectares of farmland. The worst-hit areas included Cagayan Valley, Bicol, Northern Mindanao and Occidental Mindoro.
Both the World Bank and the Asian Development Bank made their respective downward adjustments on the country's growth forecast, citing the weaker global growth and the budget delay.
A lower economic growth simply means lesser creation of jobs than what the government originally projected. Lower employment opportunities, in turn, will worsen the poverty incidence in the Philippines.