Stronger investments to boost economic growth: DOF exec

MANILA — An official of the Department of Finance (DOF) said Monday he believes that the domestic economy could regain its footing after a growth slowdown in the second quarter of 2018 with the help of stronger investments, both by the public and private sectors.

Finance Undersecretary Gil Beltran said there remains a silver lining because of a strong rise of capital formation.

Beltran said since public construction remains robust with a growth of more than 20 percent, “we believe that in the future quarters, we will be able to perform better because the machines that were purchased in the second quarter will be operational.”

“We expect that the growth will accelerate in the future quarters,” he said.

The economy, as measured by the gross domestic product (GDP), accelerated by 6 percent in April to June, slower than the 6.6 percent in the previous quarter, due in part to the low contribution of the agriculture sector.

Philippine Statistics Authority (PSA) data show a 20.7-percent jump in investment in the second quarter this year from quarter-ago’s 12.4 percent and year-ago’s 7.6 percent.

In particular, construction in the second quarter this year rose by 12.9 percent, up from 10 percent from January to March this year, and 4.7 percent in the second quarter of 2017.

Public construction posted a higher figure of 21 percent against the private sector’s 7.9 percent, but growth of public construction slowed from the first quarter’s 24.

9 percent while that of the private sector rose from quarter-ago’s 6.7 percent.

Meanwhile, Beltran said a 7-percent growth is not an impossible goal, noting the economy was able to hit such level in the past “except that we have to push capital formation further.”

He explained that when the country’s GDP grew at 7 percent levels, capital formation in those periods rose by about 30 percent to 40 percent.

“Right now, we are about 20 percent, so we will need to work harder,” he said.

Beltran acknowledged that achieving a 30 percent to 40 percent growth in capital formation is “still possible but difficult” but also pointed out that “there’s nothing easy in this world anyway.”

Earlier, Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) Director General Ernesto Pernia said the domestic economy needs to churn in at least 7.7 percent growth in the second half of the year to be able to hit the lower end of the government’s 7 percent to 8 percent GDP target this year.