DAVAO CITY — Faster economic growth can be expected this year, but will depend on the speedy rollout of projects and the timely spending of agency budgets, an economist said.
University of Asia & the Pacific economics professor Dr. Peter Lee U in an interview with CNN Philippines pegged 2020 growth at 6.5 percent, which would surpass last year’s expansion. If realized, this would also mean that the government’s 6.5-7.5 percent growth goal is doable despite tamer projections made by global institutions like the World Bank.
The Moody’s Investors Service Forecast also said the passage of the Philippines’ 2020 national budget and its signing early this month can support the country to post a strong growth this year. The Moody’s Investors Service forecasts to be around 6.2 percent.
In a report, the debt rater said the country’s PHP4.1-trillion national budget this year, which was signed by President Rodrigo R. Duterte last Monday, is 12 percent higher than last year’s PHP3.7-trillion national budget.
This year’s national budget, it said, “will help sustain the Philippines’ rapid economic growth against an uncertain global backdrop, a credit positive.” Moody’s expects this year’s national budget, along with the extension of the validity of the 2019 budget for infrastructure program, to support fiscal expansion and domestic growth.
“We project the Philippines’ real GDP (gross domestic product) growth will accelerate to 6.2 percent this year from 5.8 percent in 2019, faster than most regional rating peers and bucking the trend of lackluster global economic growth,” it said.
The government’s 2019 GDP target is between 6 percent to 6.5 percent, and 6.5-7.5 percent for 2020-2022. Moody’s also projects further improvement of the country’s fiscal metrics on account of the structural improvement of revenues as a result of the tax reforms. “We expect national government debt to remain stable and debt affordability to improve,” it added.
Professor U however said that the timely implementation of the P4.1-trillion national budget is key to growth. ”What’s key is not so much the size but the implementation (of the budget)… That budget is good, let’s make sure it’s disbursed and implemented on time so that the projects take place and we can get infrastructure built,” he said.
U added that inflation should remain “manageable” this year, but will largely depend on food prices. “Hopefully we’ll get good weather so agricultural production can cope with it,” he said. Crop prices usually rise faster in months following strong rains and flooding which delay or ruin harvests and food supply.
