Economist forecasts higher than 6% GDP in Q3 ‘17

In a research note, ING Bank Manila senior economist Joey Cuyegkeng said he foresees “quite modest” government funding needs in the near term, which is expected to be sufficiently financed as revenue generation continues to improve. (Photo By ING Nederland – http://www.flickr.com/photos/ingnl/7002671255/, CC BY-SA 2.0)

MANILA — An economist of ING Bank Manila forecast that expenditures in September grew between 15 percent and 16 percent, which would help boost domestic expansion to more than 6 percent in the third quarter of the year.

In a research note, ING Bank Manila senior economist Joey Cuyegkeng said he foresees “quite modest” government funding needs in the near term, which is expected to be sufficiently financed as revenue generation continues to improve.

The economist cited recent reports that revenues of the Bureau of Internal Revenue (BIR) increased 21.5 percent year-on-year.

Last week, the Bureau of Customs (BOC) reported an 18.7 percent year-on-year revenue increase last September.

The Bureau of the Treasury (BTr) has yet to report the official September fiscal performance of the government.

“We expect government to post a September headline and core spending growth of around 15 to 16 percent YoY (year-on-year) while revenues could show a 19-percent YoY increase,” Cuyegkeng said, citing the possibility of a budget gap of more than PHP70 billion.

“The needed boost in government spending would support a GDP growth of more than 6 percent in 3Q (third quarter),” he added.

Growth, as measured by gross domestic product (GDP), ticked up to 6.5 percent in the second quarter this year from the previous three month’s 6.4 percent, bringing first-half growth to 6.4 percent, slightly below the government’s full-year target of between 6.5 percent and 7.5 percent.

BTr data showed that government spending last August rose 14 percent year-on-year to PHP201.6 billion while revenues went up 10 percent to PHP230.4 billion.

This resulted in a budget surplus of PHP28.8 billion, 12 percent lower than the PHP32.6 billion in August 2016.

As of end-August this year, the budget gap stood at PHP176.2 billion, 27 percent higher than the PHP138.4 billion in the first eight months in 2016.

Revenues to date rose 8 percent year-on-year to PHP1.601 trillion while expenditures increased 10 percent to PHP1.777 trillion.