Spending data point to 6.5% GDP growth in Q3, ING says
GROWTH likely hit 6.5% during the third quarter, an analyst at a global bank said, citing the milder-than-expected pickup in government spending observed in August which is thought to be unlikely to provide an even bigger boost to growth.
ING Bank N.V. Manila senior economist Jose Mario I. Cuyegkeng said in a recent report that the latest fiscal spending figures point to steady growth in gross domestic product (GDP) during the third quarter, which if realized will match the pace logged between April-June.
“A strong fiscal performance is needed to keep GDP growth at around 6.5% in 3Q. August did not disappoint but the acceleration in spending was milder than we expected,” Mr. Cuyegkeng said in a market report.
The Bureau of the Treasury reported a P28.8-billion budget surplus in August, following a seasonal trend as revenue collected went beyond the amount disbursed by the national government. Spending jumped by 14% last month to hit P201.6 billion, while revenue grew by a tenth from a year earlier to P230.4 billion.
This compares to the P50.5billion fiscal deficit logged in July and the P32.6- billion surplus posted in August 2016, according to the Bureau of the Treasury.
“August’s fiscal surplus may have something to do with not just improvement in collections but also with one- off revenue gains likely to be related to tax settlement inflows. The result of the strong revenue collections was a fiscal surplus of P29 billion, which is more or less in line with the previous year’s outcome,” the bank analyst added.
The August tally brought the year-to-date budget balance at a P176.2-billion shortfall, narrower than the P205- billion deficit logged as of end-July. Still, the fiscal gap is wider than the P138.4billion deficit recorded during the first eight months of 2016.
“The higher deficit is likely a reflection of better utilization of the programmed spending,” Mr. Cuyegkeng said.
Economic managers have said that they expect government spending to significantly pick up during the third quarter as more infrastructure projects are rolled on the second year of the Duterte administration. For this year alone, the state is looking to spend P847.22 billion on public infrastructure projects, which will account for 5.3% of GDP. This forms part of the P8.44- trillion program over the next six years to 2022.
GDP rose 6.4% during the first six months of the year, below the government’s 6.5-7.5% growth goal.
Socioeconomic Planning Secretary Ernesto M. Pernia said last week full-year growth will likely settle around the midpoint of the target range, noting that it would take a “miracle” to hit 7.5% as it would mean expanding by 8.6% during the second semester.
The economy expanded by 7% between July- September 2016, enjoying a boost from sustained household consumption combined with double-digit capital- spending let by robust construction activity from both government and private sector.
The Philippine Statistics Authority will report off icial thirdquarter growth data in November.