Low gov’t spending blamed for Q1 growth skid to 4.9%

Published by rudy Date posted on May 31, 2011

Massive government underspending in the first quarter constricted economic growth to 4.9 percent against a record-setting 8.4 percent expansion in the gross domestic product (GDP) a year ago.

Economic officials also cited the still weak global trade for the growth slowdown during the period.

The low disbursements continued until April when the latest government figures showed the budget managed to post a P26.258 billion surplus, which was the highest in 25 years but this was achieved at the expense of disbursements on basic services as spendings totalled a mere P112.077 billion or eight percent lower than the P121.9 billion spent in April 2010 and 14 percent lower than the program of P130.1 billion.

Disbursements in the first four months of the year amounted to P461.4 billion, lower by P60.5 billion or 11.6 percent compared to P521.9 billion year-on-year, Abad said.

Economic Planning Secretary Cayetano Paderanga said the growth rate was within the government’s forecast of an expansion of 4.8 to 5.8 percent during the period with the agriculture and industry sectors as the main drivers.

Paderanga said the growth rate in the first quarter was higher than that of Thailand’s three percent, Republic of Korea’s 4.2 percent and Malaysia’s 4.6 percent.

It was, however, lower than Vietnam’s 5.4 percent, Indonesia’s 6.5 percent, Singapore’s 8.3 percent and China’s 9.7 percent.

He called the figure “respectable” amid the political tensions in the Middle East and North Africa, the rising oil prices, and the contraction in public spending.

Agriculture, hunting, forestry and fishing rebounded by 4.2 percent from a contraction in the same period last year mainly due to increased yield, expansion in harvest areas and full milling operations in major producing areas of palay, sugarcane and corn. Meanwhile, the high demand for chicken meat both from households and fast food chains helped push poultry production.

The industry sector’s 7.2 percent growth was supported by the expansion in manufacturing, construction, and mining and quarrying.

Manufacturing continued to strengthen, benefitting from the good performance of both food manufactures and electronics-related industries.

Paderanga, however, said public investment on infrastructure contracted as departments and agencies of the government became “more careful or thoughtful” in executing their budgets, assessing cost assumptions of programs and projects, as well as in streamlining their systems and processes to improve fund absorption.

The services sector, which remains as the largest contributor to GDP with 55 percent share, grew by 3.7 percent on account of other services, real estate, transport, storage and communication, and finance. On the demand side, the recovery of household spending to pre-crisis trend and the surge in investments supported growth.

The observed slower growth rate of per capita real GDP at 2.9 percent compared to 6.4 percent in the same period last year indicates the improvement in household material welfare.

To have a stronger growth in the coming quarters in spite of the risks and uncertainties surrounding the country, the timely and effective implementation of appropriate policies and reforms will be undertaken, he said.

These include measures such as addressing corruption and making the bureaucracy more efficient by streamlining processes to lower the cost of doing business for the private sector as well as expediting the release and utilization of budget for a more efficient timely implementation of programs and projects, Paderanga said.

Albay Gov. Joey Salceda said with the low growth rate in the first quarter, it would now be difficult to meet a government target of growth between seven to eight percent. –Daily Tribune

Month – Workers’ month

“Hot for workers rights!”


Solidarity with CTU Myanmar,
trade unions around the world,
for democracy in Myanmar,
with the daily protests of
people in Myanmar against
the military coup and
continuing oppression.


Accept National Unity Government
(NUG) of Myanmar.
Reject Military!

#WearMask #WashHands

Time to support & empower survivors.
Time to spark a global conversation.
Time for #GenerationEquality to #orangetheworld!
Trade Union Solidarity Campaigns
Get Email from NTUC
Article Categories