WB rules out 6% Phl growth this year

Promoting competition to generate quality jobs will enhance the impact of growth on poverty reduction in the Philippines

Although the government committed to a catch-up spending plan to boost local output, measured as the gross domestic product (GDP), such growth should prove lower than 6 percent this year.

This was learned from the World Bank (WB) in Manila where it said while the economy should continue to expand, the GDP expansion in the Philippines this year will likely average 5.8 percent, significantly lower than an earlier forecast averaging 6.4 percent bared in April.

Government planners previously worked on a budget and crafted an implementation plan where growth should average from 6 percent to 7 percent this year.

According to WB senior economist Rong Qian, “implementing challenges” were to pull down the government’s catch-up plan on spending.

Among the challenges the WB cited include the rather long procurement process prevalent in the bureaucracy.

“The downward projection considers the impact of the recent global developments in the Philippine economy as well as the sharp slowdown in investment growth in the first half of 2019,” Qian told reporters.

“While the government is trying to accelerate public investment, there are implementation challenges that might prevent a full catch up. Government spending hasn’t picked up in July yet,” she quickly added.

Nevertheless, the WB economist forecast an economic reacceleration that would allow growth to recover in the medium-term.

“Growth outlook is expected to recover in the medium term despite extremely challenging external environment and domestic constraints,” the WB economist said.

“Fiscal policy is expected to remain supportive of growth as public investment recovers, getting back on track to close the country’s infrastructure gap,” she added.

Earlier, Socioeconomic Planning Secretary Ernesto Pernia said the economy needs to grow by at least 6.4 percent in the second half to compensate for the 5.5 percent growth print in the first half to enable the economy to hit the low end growth target of 6 percent up to 7 percent.

WB Country Director for the Philippines Mara Warwick said improving competition in the Philippines will allow for greater economic activities and help government achieve significantly lower incidence of poverty among Filipinos.

“Promoting competition to generate quality jobs will enhance the impact of growth on poverty reduction in the Philippines,” Warwick said.

“Measures like streamlining burdensome administrative procedures for businesses to make it easier to start a business; eliminating restrictions on foreign as well as domestic investors to level the playfield,” she added.