MANILA, Philippines – Economists are doubting if the surprisingly strong 6.4% first quarter growth could be sustained throughout the rest of the year, but National Economic and Development Authority (NEDA) officials say early election spending will boost full-year growth.
The mid-term polls is scheduled for May 2013, but election spending is expected to start at the end of 2012. Election-related spending traditionally benefit advertising, transportation and giveaways.
“Elections in this country have a way of increasing GDP (gross domestic product) growth rates during the election year as well as the previous semester before that,” said NEDA Assistant Director-General Ruperto Majuca at a press briefing on May 31.
The country’s 3 highest growth rates in the past decade have been during presidential or mid-term election years – 2004, 2007 and 2010.
But with the exception of 2009, the next highest growth rates have been in years before election years – 2003 and 2006.
“When the politicians start posturing and positioning themselves, they start to go around the entire country,” said Majuca. He noted they spend for “transportation expenses, the food that they give around when they campaign, hotels that they stay in and the advertisements and other related services.”
“This economic activity starts to pick up at the latter part of the year up to the first semester of next year when there will be an actual election,” he added.
But this spending won’t help until the end of the year, meaning growth will have to be sustained in the middle of the year even though the majority, or 69.2%, of the P1.816 trillion 2012 national budget was released by April.
Sustainability is a big question. Socioeconomic Planning Secretary Arsenio Balisacan however is confident that the Philippines can ride the wave of the first-quarter momentum.
“Given the preliminary first quarter 2012 estimate, we expect that the full year 2012 real GDP growth rate projection of 5% to 6% is well within reach, or may even exceed it,” he said, “The first quarter performance serves as a springboard for the next 3 quarters.”
If historical trends hold, the last quarter of 2012 will help the Philippines achieve its growth targets. The real challenge will be maintaining growth until then. – Rappler.com