The economy could grow below five percent in 2020 if the proposed budget for next year is not approved into law and a reenacted budget will be implemented instead, according to Ernesto Pernia, socioeconomic planning secretary.
If such happens, the Philippines will likely post the slowest growth rate since the 3.7 percent gross domestic product recorded in 2011, and the first time since 2012 that the growth rate will fall below six percent. This does not take into account the growth of the economy for this year.
“We will have regressing economic growth performance, probably below five percent or something on that border,” Pernia said at the Development Budget Coordination Committee’s briefing at the Lower House, when he was asked how a reenacted budget in 2020 will impact the economy.
The economy posted a lower-than-expected growth in the first half of 2019 at 5.5 percent, amid the continuing effect of the delayed passage of the 2019 budget, coupled with the election ban.
The economy will have to grow by an average of at least 6.4 percent in the second half to reach the low-end of the full-year growth target of six to seven percent.
“Our growth regressed. We could have achieved 6.5 percent. But we only did
5.5 percent. That’s a full one percentage point regression in the economic growth,” Pernia said.
During the briefing, it was pointed out that during the term of former President Arroyo, the budget was reenacted three times, but the economy still grew. However, Pernia responded the economy during the Arroyo administration averaged only 4.6 percent.
“(A reenacted budget is) not going to be good because our population is growing fast.
While population growth is lower now, but in terms of absolute increases in population, it is still quite substantial, about two million a year,” Pernia said.
“We have many needs in infrastructure, therefore, government spending and even private spending on fixed capital formation will be hampered by the reenacted budget as well.
We’re praying, we’re hoping that it’s not going to happen again,” he added.