by: Sarah Joson
Thursday, June 18, 2015 |
The Philippines could get a lower growth forecast from debt watcher Standar&Poor’s if the government fails to solve issues that hinder spending.
According to S&P Economist Vincent Conti, the Philippines is predicted to become one of the bright spots amongst emerging Asian countries, backed by strong consumption due to rising incomes and expanding middle class. He explained that local demand is driving growth, and that consumption and investment are sustained expansion in the first quarter. But, he noted that the poor performance of this year’s first quarter could strain S&P’s 6.2% gross domestic product (GDP) growth projection for this year, more so if public consumption doesn’t improve and government officials keep on restricting spending particularly on infrastructure investment.
The Philippine economy posted the slowest growth over the last three years during this year’s first quarter at 5.2%. The government, on the other hand, expects the economy to grow by 7-8% this year.
According to Socioeconomic Planning Secretary Arsenio M. Balisacan, it is too early to disregard the government’s growth target for 2015 and government spending will gain traction in the remaining quarters of 2015.
A 4%-increase was seen in government expenditures from the P482.53 billion recorded in 2014 to P504.05 billion last quarter. It also missed the P582.2-billion target for the first three months of 2015.
Government spending became a key driver for economic growth as it has been contributing to about a tenth of the nation’s GDP before failing to reach the program last year. Low agricultural output and minimal state spending had strained almost all of 2014.
We can help you understand the possibilities. Reach out to us today.