The Philippines’ chief economist expects the country to post improved gross domestic product (GDP) results in the second quarter compared with the first on the back of sustained domestic demand and investment.
In a press conference in Malacañang on Tuesday, Socioeconomic Planning Secretary Ernesto Pernia said
government spending, sustained investment flows, household consumption and a recovery in exports and agriculture will drive the expansion in April to June.
“We expect the second-quarter GDP will be better,” said Pernia, who is also director general of the National Economic and Development Authority (NEDA).
“Household spending and, well, essentially domestic spending—domestic demand, both investment … government spending and household spending—will continue, and exports are picking up. Agriculture is also improving on the supply side,” he added.
The NEDA chief noted spending on infrastructure would also be stronger.
The Duterte administration earlier unveiled “Dutertenomics” as its economic and development blueprint for the country. It is expected to usher in the “golden age of infrastructure.”
Under Dutertenomics, the government will spend about P8.4 trillion over the next six years, with P860.7 billion allocated to big-ticket infrastructure projects this year alone.
“I saw in the papers today that April spending, government spending on infrastructure fell by about 20 percent. So I’m sure that will be reversed in the second quarter and subsequent quarters, too,” Pernia said.
If Congress fails to pass the tax reform bill, it could have a huge impact on the economic growth and usher in the “dark age” of infrastructure, according to the Cabinet official.
Pernia said the proposed comprehensive tax reform program (CTRP) must be passed as the measure is “really tied together” with the Philippine Development Plan (PDP).
“They are really twins. Maintaining macroeconomic stability and the tax reform program are twins and they are inseparable. So that is why the President has decided to direct or to admonish Congress that it is an urgent measure,” said Pernia.
“That is quite understandable because the CTRP and the PDP are actually natural intimate bedfellows. They are inextricably linked, the two programs of the President, the tax reform program and the Philippine Development Plan. These are all the President’s program and, of course, the people’s programs are really tied together. One will not be good without the other,” he added.
Duterte on Monday certified the bill as urgent and called on lawmakers to approve it before they adjourn on Friday.
“The President has suggested to Congress that the CTRP is a priority bill and should be passed statim or immediately before they go on recess,” Pernia said.
In its current form, Pernia said the bill will generate an estimated P82 billion annually, half of the projected P162 billion under the original proposal submitted to the House of Representatives.
The Philippine economy grew slower than expected at 6.4 percent in the first quarter of the year, the slowest phase of growth for the GDP, since it registered 6.3 percent in the fourth quarter of 2015.
Pernia earlier said it was mainly due to the absence of election-related spending.
The government targets growth in GDP at 6.5-7.5 percent from 6.8 percent last year, which was among the fastest in Asia.
The NEDA chief also emphasized the tax reform is needed to usher in the “golden age” of infrastructure.
“That’s a problem. Then we will be unable to fund the Build, Build, Build. It will be small build, small build, small build,” Pernia said.
Non-passage of the tax reform package would also affect deals and aids from China and Japan.
“We’ll have to go slow on, you know, accepting or entering into ODA [official development assistance], you know, agreements with China. Yeah, because we need to balance, you know, spending, indebtedness on one hand and capacity to pay and service the debt on the other hand,” Pernia said.
“So instead of 10 projects, maybe just one or two. So it’s not going to be the golden age of infrastructure. It will be the bronze age maybe of infrastructure or maybe dark age—dark age of infrastructure. So that is how terrible, that is how unwelcomed the non-passage of the CTRP is going to be,” he added.