By JOCELYN MONTEMAYOR and RUELLE CASTRO
Finance Secretary Carlos Dominguez III expressed confidence the country’s economic growth in the third quarter would be better than the last two quarters of the year following the improved spending by government in the last three months.
Dominguez, in a briefing at the sidelines of the Association of Southeast Asian Nation (Asean) Summit and Related Summit in Bangkok, declined to reveal the latest figure.
Official figures will be announced on Thursday. GDP growth stood at 5.6 percent in the first quarter and 5.5 percent in the second quarter.
Meanwhile, First Metro Investments Corp. (FMIC) in its regular Market Call publication released yesterday said third quarter GDP growth could have reached 6 percent, with a chance for a “faster” growth in the last three months of the year on a revitalized domestic consumption.
This echoes Planning Secretary Ernesto Pernia’s estimate of 6 percent GDP expansion in the period.
In Bangkok, Dominguez said government had not completely spent the appropriation but is “getting there,” with only about 5 percent short of completely spending the entire allocation for 2019.
He said government spending, especially in infrastructure, is “very, very critical” as it stimulates the economy, it creates jobs and provides infrastructure and connectivity.
Dominguez also expressed confidence the country would be able to reach the low- end of the annual GDP target for 2019 by the end of the year. The annual growth target is between 6 percent to 7 percent.
Dominguez said the delay in the passage of the 2019 budget by almost five months and the mid-term election that prevented government from starting the infrastructure projects during the poll period had resulted in underspending of close to P1 billion a day and eventually delaying the infrastructure program of the government.
“(But) we are certainly in a very good position to hit the lower end of the target of six to seven percent this year,” he said.
FMIC in its Market Call said with inflation holding below the 2 percent floor target of the Bangko Sentral ng Pilipinas (BSP) in the second half and huge employment gains supported by the second lowest self-rated poverty rate of 42 percent in the third quarter as estimated by the Social Weather Station, consumer spending shall show even more robust growth.
“Significantly lower interest rates from last year and (the) national government catching up on infrastructure spending in (the second half) should drive investment spending higher.
The two together and a neutral external account support our view,” FMIC added.
First Metro said the continued fall in inflation and the BSPs policy rate and reserve requirement ratio (RRR) cuts in September support the fixed-income market’s renewed attractiveness.
“This may not vanish if money supply growth remains tepid and the cuts don’t improve bank liquidity significantly,” it said.
Annual inflation likely eased for a fifth straight month in October due to high base effects from the previous year as well as lower fuel and rice prices, a Reuters poll showed.
The median forecast in a poll of 10 economists was for the consumer price index to have risen 0.8 percent in October from a year earlier, rising at its slowest annual pace in more than three years, and slowing from the previous month’s 0.9 percent.
If the forecast proves to be accurate, it would be the third month in a row that inflation has fallen below the central bank’s 2 percent-4 percent target for the year.