By Louella Desiderio, August 16, 2023; The Philippine Star
Manila, Philippines — The government’s economic growth target for the year remains achievable, with the continued downtrend in inflation and state agencies’ catch-up spending expected to pull up gross domestic product (GDP) growth in the second half, the National Economic and Development Authority (NEDA) said.
During the Development Budget Coordination Committee’s budget briefing at the Senate yesterday, NEDA Secretary Arsenio Balisacan said he believes the GDP growth target of six to seven percent for this year is still within reach.
“We need to grow by 6.6 percent in the second half to achieve the lower projection target of six percent for the entire year. We believe that is very achievable,” he said.
The Philippine economy grew at a slower pace of 4.3 percent in the second quarter compared to the 6.4 percent expansion in the first quarter this year, and 7.5 percent in the second quarter last year.
This brought the average growth in the first half to 5.3 percent.
Balisacan said the continued deceleration in inflation, or the rate of increase in prices of goods and services, would buoy consumer demand, investments, and the rest of the economy in the second semester.
“If inflation can be lowered further to three percent in the second semester, we can pull up growth by an additional 0.1 percentage point for the period,” he said.
Headline inflation eased for the sixth straight month to 4.7 percent in July, amid slower food and utility price increases.
The average inflation of 6.8 percent in the January to July period, however, remains above the government’s two to four percent target range.
To see a sustained deceleration in inflation, Balisacan said the government would need to intensify supply-side interventions and demand-side management.
He said the government’s catch-up spending would also have an impact on GDP growth in the second half of the year.
“We estimate that the catch-up spending for public construction activities may add up to 0.3 percentage point in our economic growth in the second semester,” he said.
“Meanwhile, implementing the catch-up plan on maintenance and other operating expenses and personnel services will increase our growth by 0.5 percentage point in the second semester,” Balisacan said.
Despite risks to growth, including high prices due to inadequate food supplies and typhoons and natural disasters, the El Niño weather phenomenon expected to last until the first quarter of 2024, the spread of highly infectious animal diseases, slower global economic growth and geopolitical and trade tensions, he is optimistic the growth target for this year, as well as the 6.5 to eight percent growth goal in 2024 to 2028, could be attained.