Davao City: Election-related spending likely drove the Philippine economy to grow faster in the second quarter of 2016 compared with the first three months of the year, possibly above 7 percent, before slowing in the second half of the year, two of the incoming administration’s economic managers said on Monday.
Incoming Socioeconomic Planning and National Economic and Development Authority Director General Ernesto Pernia said on the sidelines of an economic forum in Davao that gross domestic product (GDP) growth in the April to June period was “likely above 7 percent,” while incoming Budget and Management Secretary Benjamin Diokno also said economic expansion in the three months to June could be higher than the 6.9 percent GDP growth posted in the first quarter of the year.
Both added, however, that despite the expected higher growth in the first half of the year, economic expansion might slow down in the remaining months of 2016 as the impact of election-related spending dissipates and seasonality kicks in.
“For the second quarter, higher growth is possible because of the delayed effect in the recording of data…and the election spending,” Pernia told reporters on the sidelines of the first day of the Duterte administration’s consultation workshop with the business community here.
Going forward, Pernia said that economic growth could slow down by the third quarter but confidence in the new administration, its reforms to improve law and order, and reduce corruption and the overall crime rate would encourage more economic activity to support a growth rebound in the fourth quarter of the year.
Pernia said that the current GDP target of 6.8 percent to 7.8 percent would be reviewed by the next administration.
“We prefer to be somewhat conservative. It is not going to be smooth right away. We try to learn the ropes of each of our respective departments, then make some adjustments,” he explained.
Asked for an exact growth projection for 2016, Pernia said a 6.5-percent growth rate would be feasible and conservative enough for the whole year.
“Later on, we will work up the econometric forecasting model,” he said.
Meanwhile, Diokno also believes that growth could be higher in the second quarter before moderating in the July to September period.
“I stick to 6.2 percent for the entire year with a slowdown in the third quarter, because of seasonality. Third quarter is a rainy season,” he explained.
“The second half growth will be lower than the first half. That is for sure,” he added.