Government spending must increase to support the current pace of economic growth, Netherlands-based financial institution ING Bank said on Monday.
“A strong fiscal performance is needed to keep GDP growth at around 6.5 percent in third quarter,” ING Bank Manila senior economist Joey Cuyegkeng said.
Citing the government’s August cash operations report, Cuyugkeng said that growth in public spending – 14 percent year-on-year to P201.6 billion — was lower than expected.
“We had anticipated close to 20 percent year-on-year growth in August spending. We believe that the lower than anticipated performance may have to do with some accounting and booking delays,” Cuyegkeng said.
“The improvement should help overall economic growth to remain close to 6.5 percent in third quarter despite manufacturing growth indicators posting some moderation,” he added.
Third quarter GDP results are scheduled to be released by the Philippine Statistics Authority in November.
The Philippine economy grew by 6.5 percent in the second quarter, picking up from 6.4 percent in the first three months of the year but down from the 7.1 percent posted a year earlier.
Year to date growth, at 6.4 percent, remains just below this year’s 6.5 percent to 7.5 percent goal.
Socioeconomic Planning Secretary Ernesto Pernia has said that Philippine economic growth will likely hit the target on account of rising exports and spending on infrastructure.