By Beting Laygo Dolor | Contributing Editor
The Philippines will likely fail to hit its economic goals this year, owing to yet another quarter of below-target gross domestic product (GDP or the sum total of goods and services produced by a country in a given period, less remittances from overseas-based workers) growth of 5.5 percent for the second quarter of the year.
The percentage is a shade less than the 5.6 percent GDP growth experienced in the first quarter of 2019.
The 5.5 percent second quarter 2019 growth pales in comparison to the 6.2 percent growth attained in the same period last year.
The dismal figures are the lowest in four years and indicate that the government’s target of between six percent to seven percent growth for the year will be difficult to attain.
Socio-economic Planning Sec. Ernesto Pernia recently described the first two quarters of the year. thus: “These have been challenging times.”
If the Duterte administration still hopes to hit its six to seven percent GDP target for 2019, its economic managers must now work double time and aim for a minimum 6.4 percent GDP for the current third quarter as well as the final quarter of the year.
As Finance Sec. Carlos Dominguez III pointed out, one huge factor in the lower-than-expected GDP growth for the first half of the year was the delayed passing of the national budget.
That delay, as well as the ban on public works projects in the run up to the March elections caused government spending to slow down.
According to Dominguez, “Second quarter growth was not an unexpected result given the apparent lingering impact on the government’s accelerated spending program of the four-and-a-half month delay in the passage of the 2019 budget in the House of Representatives.”
He added that the delay “was further exacerbated by the ban on infrastructure projects during the election campaign.”
National Economic and Development Authority Undersec. Rosemarie Edillon said that GDP growth could have been a full percentage point higher had it not been for the delayed budget.
It should be noted that when Rodrigo Duterte assumed the Philippine presidency in 2016, the country’s GDP was pegged at 7.1 percent.
Under his predecessor Benigno Aquino III, the Philippines became one of the fastest growing countries in the world in terms of economic growth.
Even the usual boost experienced every time elections are held and spending by candidates goes into overdrive was nowhere to be found this year. Mid-term elections were held in March 2019 and were generally peaceful. Few losers contested the results.
Singapore-based think tank Fitch Solutions predicted that the Philippines growth for 2019 will slow down to 5.7 percent and 6.1 percent in 2020.
While also citing the delayed budget as a major factor in the cooling down of the Philippine economy, Fitch added that weaker external demand and tighter monetary conditions will also play a role in the slowdown.
That weaker external demand will cause a drying up of business investment and employment growth, although government spending can be a mitigating factor.
For the second semester of 2019, the government has to play catch up on infrastructure spending, releasing as much as PHP1 trillion to make up for the shortfall.
Not surprisingly, the current trade impasse between the US and China is expected to cause a global economic slowdown, and the Philippines will not be exempt from the fallout.
As last week drew to a close, the uncertainty was reflected in the sudden fall of the peso vis-à-vis the dollar, with the local currency again trading at the PHP52 to US$1 level.