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Positive Outlook Seen for PH Economy on DAP Ruling

by: Sarah Joson

Monday, February 9, 2015 |

According to Trinh D. Nguyen, an economist from Hongkong and Shanghai Banking Corp. Ltd. (HSBC), the growth of the Philippines could surpass initial predictions this year. The economist’s research note stated that since the Supreme Court revised an earlier ruling which eliminates the multi-billion peso stimulus package, growth could pick up pace if the government increases spending.

Nguyen explained in the report that the partial cancellation of the Disbursement Acceleration Program (DAP) by the Supreme Court could make way for increased fiscal spending, and because of this, they have raised their fiscal spending assumption from 7.8% to 12.2% for this year.
She added that an increase in government-led spending is seen to boost gross domestic product (GDP) growth by 0.5% - thus driving economic growth from initial assumption of 5.4% to 5.9%. On the other hand, the economist’s prediction is still far from the 7-8% growth target set by the Philippine government.
She pointed out that if the P2.6 trillion budget is spent by the government, fiscal expenditure could grow by 30%.


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