PH cuts GDP growth target for 2016, 2017

MANILA, Philippines (3rd UPDATE) – The Philippines cut its economic growth target for this year and in 2017, citing tapered election spending, slow agricultural output due to the El Niño phenomenon, and weak external trade.

Budget Secretary Benjamin Diokno announced on Tuesday, July 5, that the country has revised downwards its gross domestic product (GDP) growth target for the year to 6%-7%, from 6.8%-7.8%.

For 2017, the GDP growth target has been cut to 6.5%-7.5% from 6.6%-7.6%.

“This is because effects of election spending is tapering, the slow agricultural output due to El Niño, weak infrastructure due to seasonality, and weak external trade,” Diokno said after the first meeting of the new Development Budget Coordination Committee (DBCC) in Pasay City.

The DBCC consists of Diokno, Socioeconomic Planning Secretary Ernesto Pernia, Finance Secretary Carlos Dominguez III, and Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo.

Pernia told reporters the GDP growth targets were “made conservative” as the term of President Rodrigo Duterte has just begun.

But because of the boost in election spending, Pernia said the government expects the country’s GDP growth in the second quarter of the year to hit “at least 7%.”

Exceeding market expectations, the Philippine economy grew by 6.9% in the first quarter of 2016.

For the rest of Duterte’s term, his economic team expects economic growth to reach 7%-8% annually until 2022. 

24/7 construction

Although the Duterte administration lowered its GDP growth targets, the country’s economic outlook remains one of the highest in the region.

The economic leaders remain optimistic of the growth potential of the domestic economy despite global weak forecast and recent market developments in the US, European Union, and the Association of Southeast Asian Nations (ASEAN).

Asked how the administration will manage to sustain the economic growth, Diokno said one of their plans is to implement 24/7 construction for all major infrastructure projects in Metro Manila, Cebu, and Davao.

“We are considering 24/7 construction for all major Metro Manila projects and maybe projects in Cebu and Davao. Don’t be surprised if constructions are going on in the middle of the night,” Diokno said.

The DBCC members said they are increasing the infrastructure program in 2017 to 5.2% of GDP.

“We’re playing a lot of catch-up here. I think we have to realize that we have to make more roads and fix them and that is going to cost few problems in the meantime. Everybody has to cooperate and there’s no magic wand here,” Dominguez, the country’s finance chief, said.

After the DBCC press con, some Cabinet members are in the other room for an economic meeting. @rapplerdotcom pic.twitter.com/W0IQAzif5e

— Chrisee V. Dela Paz (@chriseedelapaz) July 5, 2016

 

Proposed 2017 budget, other targets

The chief of the Department of Budget and Management said the economic team will submit a proposed 2017 national budget of P3.3 trillion to Congress on August 15 this year.

For the year, Dominguez said the expenditures target of about P3 trillion will be retained, mainly because of the need to sustain spending on public goods and services.

The finance chief added that revenue in 2016 is seen to reach P2.573 trillion.

But for the succeeding years, “the DBCC expects revenue to reach P2.975 trillion and P3 trillion,” he said.

The lower revenue goal is because of the expected drop in Bureau of Customs and Bureau of Internal Revenue collections, Diokno said.

As for poverty reduction, Dominguez said the Duterte administration targets to reduce poverty rate to about 16% of the population by 2022, from the current figure of about 25%. – Rappler.com