NEDA sees higher GDP growth in Q3

HIGHER GOV’T SPENDING. NEDA Secretary Arsenio Balisacan. Balisacan said on Wednesday (Sept. 27, 2023) that he is optimistic that government spending would rebound in the third quarter of the year as underspending agencies have been mandated to come up with their respective catch-up spending plans. (PCO file Photo)

MANILA – Economic growth is expected to rebound in the third quarter of the year mainly driven by higher government spending, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said.

“I think that’s what we are expecting because of the underspending that we had that affected the second-quarter growth. If we succeed in addressing that, that underspending is not completely lost, it could be recovered in the Q3 to Q4 (third quarter to fourth quarter),” Balisacan told reporters in an interview on Wednesday.

The country’s gross domestic product (GDP) grew by 4.3 percent in the second quarter of the year, slower than the 6.4 percent expansion in the first quarter.

Year to date, Philippine economic growth settled at 5.3 percent.

The slowdown in growth was mainly due to the contraction in government spending.

The Department of Budget and Management (DBM) earlier mandated government agencies to come up with a catch-up spending plan.

“We have been meeting with those underspending agencies… DBM has asked them to submit catch-up plans and we are reporting to the President on the state of these catch-up plans and hopefully we can (make up for it),” Balisacan said.

“What I’m saying is the contribution that we expect from government spending, its contribution to the economy that did not fully materialize (in) the second quarter can be recovered in the third or fourth quarter. That’s not completely lost.”

He added that the economic team is closely monitoring the headline inflation.

Headline inflation picked up to 5.3 percent in August from 4.7 percent in July, which is still way above the government’s 2 percent to 4 percent target for this year.

“That’s why we are so focused, the economic team, in addressing the inflation issue. Because that high inflation, as we all know, reduces domestic demand. So, we are incessantly monitoring the situation, and advise the President on (it),” he said.

Sought to comment if there’s a need to adjust the 5 percent to 6 percent economic growth target for this year after the multilaterals’ recent downgrade on growth forecast, Balisacan said they are still waiting for the official third-quarter growth data.

“Let me just put in context that the reduction in growth forecast by the ADB (Asian Development Bank) and other institutions is true for almost every country because they are saying in the global market there are still quite upside risks there, so it’s not just us,” he said.

Earlier this month, the ADB slashed its 2023 Philippine economic growth forecast to 5.7 percent from the earlier 6 percent.

“But still, if you look at the first half of growth of the country, (it is) still better than most countries in Asia, particularly in our ASEAN region. Our first half is very respectable. So, I think that if we come close to that first half, we should be okay,” Balisacan said.