Hurdles to growth addressed in 2nd half

STATE underspending and a faster rise of prices of widely used goods are “stumbling blocks” to the country’s economic growth, but these constraints will likely be addressed this semester, the University of Asia and the Pacific (UA&P) and the First Metro Investment Corp. (FMIC) said in their latest joint monthly report.

“It would appear that the remaining stumbling blocks for an even stronger rebound in H2 are relatively high inflation rate and NG (national government) underspending,” FMIC and UA&P said in the September issue of The Market Call.

“We, however, see these two main concerns addressed in H2.”

Inflation is expected to have already peaked at July and August’s 4.9% — which brought year-to-date inflation to 4.4%, against a 4.5% revised full-year official forecast — with start of palay harvest last month and additional supply of rice to arrive from abroad this month.

Public spending, the report said, should rise this semester, citing President Benigno S.C Aquino III’s request to Congress for a supplemental budget “that would offset the cutting off of DAP (Disbursement Acceleration Program) funds”, a stimulus package that was disallowed in July by the Supreme Court for being unconstitutional.

State spending rose 6% to P1.296 trillion in the eight months to August from the past year’s P1.222 trillion. In the first half, spending on infrastructure alone hit P136.6 billion, 10.8% up from a year ago but 30% short of a P195.3-billion target for January-June. –Businessworld