By Joann Santiago
BAGAC, Bataan, June 11 (PNA) — A World Bank (WB) executive sees a turnaround for the Philippine economy in the second to fourth quarters of 2015 partly due to expected revival of government spending.
In a briefing Thursday, WB Philippines Lead Economist Rogier van den Brink said they believe that the “Cabinet and line agencies are working very hard to ramp up that spending.”
“We see the rest of the quarters showing a different pattern, especially since the reduction in government spending in the first quarter was quite stark,” he said at the sidelines of the two-day Asia-Pacific Economic Cooperation (APEC) Senior Finance Officials Meeting being held in Las Casas Filipinas de Acuzar in Bagac, Bataan from June 11-12.
The below-programmed government spending from January to March 2015 is among the factors, along with the drop in exports, that contributed to the drop in gross domestic product (GDP) growth to 5.2 percent after recovering to 6.6 percent in the previous quarter.
Growth in the first quarter this year is also lower compared to the 5.6 percent in 2014.
Public spending in the first three months of the year grew by only four percent year-on-year to PhP504.05 billion.
This is 13 percent short of the program for the quarter, which economic managers traced to still low absorption capacity of line agencies as well as more stringent rules on fund disbursement vis-a-vis the move to ensure efficient use of public funds.
Economic managers, however, vowed increase in spending in the succeeding quarters, especially since the government has to front-load spending for infrastructure projects in the first half of next year or 60 days before the May 2016 national polls.
Another expected driver of government spending this year is the reconstruction efforts in areas ravaged by typhoon “Yolanda” (Haiyan) in November 2013.
Also, some infrastructure projects in 2014 will only be started this year because of delays in fund releases.
Economic managers remain positive for the sustained improvement of the domestic economy and the achievement of the government’s seven to eight percent growth target for this and next year with the help of government expenditure, particularly on infrastructure.
In 2014, domestic output, as measured by gross domestic product (GDP), was below the government’s 6.5-7.5 percent target due to combination of the impact of calamities in the last quarter of 2013 and the congestion in Manila ports after the Manila city government implemented an expanded truck ban from February to September last year.
Amid this slide, the domestic economy has been posting higher than five percent growth in recent years, making it among the strongest and resilient not only in Asia but in the world.
Its 2014 performance is second best in Asia after China. (PNA)