DTI: Public spending to put PH back on ‘high growth path’

DTI: Public spending to put PH back on ‘high growth path’
Economists, however, do not share Trade Secretary Gregory Domingo’s optimism of over 7% growth for 2015, as they lower expectations for the country’s growth

MANILA, Philippines – While Trade Secretary Gregory Domingo conceded that growth for 2014 will be tempered to 5.5% to 6% – as issues over the Disbursement Acceleration Program (DAP) inhibited government agencies from pursuing public-private partnership (PPP) projects – he is optimistic the country will be back on a “high growth path” of over 7% in 2015.

What will boost that growth? The resumption of public spending, Domingo said.

Domingo noted the positive impact of declining oil prices on the competitiveness of local industries here and abroad, fuelling growth as well.

A “blip” – or a correction from a surge in growth since 2011 – slowed down the economic progress for this year to 5.3% in the 3rd quarter.

“Growth is never a straight line, it has to breathe somehow not because it would reverse but would pause and then go back to (speed),” Domingo said.

Domingo added that port congestion indeed shaved the economic growth for the 9-month period by .2%, but stressed that the situation would improve by 2015.

Another factor in this year’s slow growth was the aftermath of Super Typhoon Yolanda (Haiyan), which struck November 2013, with production in several regions cut back.

But 2015 should be better, Domingo said. “I see very strong interest in the Philippines, lower oil prices, services will remain strong, no slowdown in remittances, and agriculture should be better.”

Election spending, particularly in the second half of 2015, would also fuel growth next year, Domingo said.

The decline in global oil prices would keep Philippine inflation in check, he added.

In a best case scenario, no power shortage would happen next year, but the breakdown of old plants could cause disruptions, Domingo said.

But from 2016 to 2019, the Philippine will see additional power capacities going on stream from plants that would operate beginning end of 2015, 2016, and 2017.

“Mindanao will have a surplus next year,” Domingo said.

Economists though are not sharing Domingo’s “high growth” optimism of over 7% for 2015, as they lowered their expectations for the country’s growth.

 “A growth of greater than 7% is difficult to sustain in the Philippines without reforms to address supply-side constraints,” the Hongkong and Shanghai Banking Corporation Limited’s (HSBC) Global Research said in a report.

HSBC’s forecast for 2014 full-year growth is 5.9%, while 2015 expansion is set at 6.1%.

Maybank Kim Eng Economic Research also set the same – down from its previous forecast of 6.7%.

For 2015, Maybank also lowered its GDP growth forecast to 7% from 7.5%. – Rappler.com

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