Dominguez expects at least 6% growth in H2

The Department of Finance (DOF) hopes that the country’s economy could hit at least the low-end of the government’s target for the year in the second-semester following the “not an unexpected” growth registered in April to June.

In a statement, Finance Secretary Carlos G. Dominguez III said that the slow 5.5 percent gross domestic product (GDP) in the second quarter was still attributable to the delayed passage of the 2019 general appropriations act (GAA).

Thus, Dominguez admitted that the lower-thanexpected GDP “was not an unexpected result given the residual effects of the four-months-and-a-half delay in the passage of the 2019 national budget by the House of Representatives.”

He explained the budget delay had pernicious impact on the second-quarter growth, therefore, “let this be a stark reminder to our lawmakers as to why they should avoid any delay in the approval of the 2020 GAB (General Appropriations Bill).”

According to the finance chief the delayed budget was also “exacerbated by the ban on infrastructure projects during the election campaign.”

However, Dominguez said he remains hopeful that

economic growth could hit the six percent territory in the second-semester as the Duterte administration’s catch-up spending strategy picks up in the third and fourth quarters.

Dominguez also sees the second-half growth partly driven in the year’s remaining half by stronger domestic consumption amid the continued slowdown in headline inflation, which fell to a 31-month low of 2.4 percent in July.

For 2019, the Duterte administration targets a 6.0 percent to 7.0 percent economic growth expansion.

For 2020, Dominguez is optimistic there would not be a repeat of the 2019 budget delay given the commitment of both Senate and House leaders to pass their consolidated GAB version on time.

On Thursday, the Philippine Statistics Authority (PSA) announced that the country’s economic expansion slowed for the second straight quarter in April to June this year as budget delay further dragged down public spending along with the El Niño phenomenon that worsened the already anemic local farm sector.

The local economy increased by 5.5 percent in the second quarter, slightly slower than 5.6 percent in the first three months of 2019 and way below the 6.2 percent expansion pace a year before.

The latest GDP figure is the Philippines’ lowest expansion pace in more than four year, or 17 quarters.

Following the release of the slower-than-expected GDP, Socioeconomic Planning Secretary Ernesto M. Pernia admitted that there have been “challenging times” in the past that continued taking a toll on the country’s economic growth potentials.

While the government already anticipated the downside risks, like the El Niño phenomenon, escalating US-China trade war and election ban on construction activities, Pernia said these negative factors still greatly affected the local economy.

For El Niño alone, he said it has severely affected water-sensitive crops, like palay and corn, which contracted by 5.5 percent and 8.4 percent, respectively. It also resulted in water crisis in Metro Manila that "adversely affected consumer confidence.”

The growing protectionist stance in the advanced economies, meanwhile, had moderately impacted the ITBPM sector, which grew by merely 1.3 percent from the usual double digits, the chief of the National Economic and Development Authority (NEDA) pointed out.

"Note that the [IT] sector is also being adversely affected by the rise of artificial intelligence. We need to encourage the sector to re-tool and reform in order to service the higher value-added business processes,” President Duterte’s chief ecumenist added.