Growth risks to be ‘more locally driven’

RISKS to Philippine economic growth will primarily be driven by domestic issues in 2019, an ING Bank Manila economist warned on Tuesday.

“Of course there will be external factors, which will always come into play, but I think this year risks will be more locally driven,” ING Bank Manila senior economist Nicholas Antonio Mapa told reporters in an interview.

Mapa expects the economy to grow by 6.3 percent, marginally up from last year’s 6.2 percent but below the government’s 7.0-8.0 percent target.

Last year’s expansion, which also fell short of the government’s downwardly revised 6.5- 6.9 percent goal, has been blamed on factors such as higher world oil prices and abovetarget inflation.

Mapa claimed that high interest rates and the delay in the government’s national budget would likely offset election-related spending, which is expected to help boost growth this year.

“Yes we see [an] election boost but it doesn’t come necessarily from consumption but from capital formation,” he said.

“I am pegging the actual contribution to growth of capital formation for full year 2019 at 3.2-3.3 percent. Roughly flat from last year,” the economist continued, noting challenges from central bank rate hikes and the budget approval delay.

The impact of key interest rate hikes — a total of 175 basis points — ordered by the Bangko Sentral ng Pilipinas last year in response to surging inflation is still filtering through the financial system.

Finance Secretary Carlos Dominguez 3rd earlier this year said the government would be unable to spend a programmed P46 billion during the first three months of the year given the delayed passage of the 2019 budget, subsequently weighing on first quarter economic growth.

Congress finally approved the 2019 budget last week but there has been no word from Malacañang as to when it will be signed by President Rodrigo Duterte amid concerns of questionable allocations.