PHL GDP growth slows to four-year low in Q1

By JON VIKTOR D. CABUENAS, GMA News, May 9, 2019

Philippine economic growth decelerated to 5.6% in the first quarter of 2019, the slowest in four years, data released by the Philippine Statistics Authority (PSA) on Thursday revealed.

The latest figure compares with the 6.5% in the first quarter of 2018, and the 6.3% in the fourth quarter last year.

This is also the slowest growth recorded by the Philippines in 16 quarters since the gross domestic product (GDP) growth was recorded at 5.1% in the first quarter of 2015.

In terms of sectors, only services registered positive growth during the quarter with 1.8%, while agriculture dropped by 0.6% and industry fell by 0.1%.

For his part, Socioeconomic Planning Secretary Ernesto Pernia attributed the slowdown to the failure of Congress to pass the 2019 budget on time.

“As we have forewarned repeatedly, the re-enacted budget would sharply slow the pace of our economic growth,” he told reporters in a press conference in Pasig City.

“We estimate that we should have grown by as much as 6.6% this first quarter if we were operating under the 2019 fiscal program.”

Pernia also attributed the decline in the performance of the agriculture sector to the El Nino phenomenon, which the National Economic and Development Authority (NEDA) earlier forecasted would slash 0.2 percentage points from the full-year GDP.

The agriculture sector grew by 0.67% in the first quarter, slower than the 1.08-percent growth the same quarter last year.

Earlier this year, the Asian Development Bank (ADB) and the World Bank (WB) slashed its economic growth forecasts for the year, due to the reenacted budget and the ongoing El Nino dry spell.

“The agriculture sector’s slower growth is attributed to the El Niño phenomenon, which is projected to continue until August of this year. With this, the Department of Agriculture should extend its production support programs to adapt to a protracted El Nino occurrence,” said Pernia.

“There is also a need for a more robust El Niño Mitigation and Adaptation Plan to address water, food, and energy security, as well as health and public safety in a more sustained manner,” he elaborated.

Looking ahead, the government said it is still optimistic that the Philippines would be able to reach its target range of 6 to 7%.

“To reach the full-year growth target of 6.0 to 7.0%, the economy will need to expand by an average of 6.1% over the next three quarters,” he said.

“This is still achievable given the current performance of the private sector and if the government sector is able to jump-start and speed up the implementation of its new programs and projects,” explained Pernia.

Like basketball

Pernia likened the economic performance to a basketball game, where he said the country could still catch up in the second half.

“Basketball games can still be won in the second half performance,” he said, noting that construction is expected to pick up in the last six months of the year.

“The private sector construction was slowed in the first quarter of this year. We expect it to pick up steam in the coming quarters,” Pernia stated.

He also noted the recent credit rating upgrade, as S&P on Tuesday raised its sovereign long-term credit rating for the Philippines to “BBB+,” two notches above the minimum investment grade, and its highest rating so far.

“Also, the moderation in inflation will help also the private sector. I think this will continue to slow even further in the coming quarters,” said Pernia.

Inflation clocked in at 3.0% in April, the slowest pace in 16 months since the 2.9% in December 2017.

Pernia’s sentiments were mirrored by Finance Secretary Carlos Dominguez III, who said that growth is poised to pickup in the coming months.

“Economic growth is expected to finish stronger over the April-June period and for the rest of 2019 as the government puts ‘Build, Build, Build’ on the fast lane following the passage of the 2019 GAA and domestic consumption picks up amid cooling inflation,” he said in a separate statement.

The Philippine government plans to spend over P8 trillion in its Build, Build, Build program infrastructure projects until 2022, largely funded by government revenues from taxes.

“Henceforth, we expect growth to pick up on higher state spending in continuance of last year’s upward momentum,” added Dominguez. —KBK, GMA News