Malacañang on Thursday remained confident that the country’s economic growth will eventually pick up and hit its 7 to 8 percent gross domestic product (GDP) target for this year.
Economic growth in the first quarter slowed to a three-year low of 5.2 percent, well below forecasts, because of lethargic government spending and weak exports, officials said also Thursday. (See related story on B1)
The expansion in the January-March period for what recently was one of Asia’s best performing economies was the worst since the 3.8-percent expansion in the last quarter of 2011, according to government data. It was also lower than the 6.6-percent median forecast of a Bloomberg survey and well off Manila’s full-year forecast of seven to eight percent.
Reacting to the development, Malacañang said President Benigno Aquino 3rd has ordered government agencies to accelerate implementation of vital infrastructure projects to boost economic growth.
“The President has directed the Department of Public Works and Highways (DPWH), the Department of Transportation and Communications, the Department of Education, the Department of Agriculture and all other departments to accelerate the implementation of vital public infrastructure projects. Among these agencies, it is noteworthy that the DPWH has posted the highest utilization rate of obligated appropriations,” Communications Secretary Herminio Coloma Jr. told reporters.
He said the President gave the instruction after the National Economic and Development Authority (NEDA) announced the country’s economic performance.
“A significant contributory factor to the slower growth rate is the 24.6-percent decline in public construction spending. This was due to delays in the actual disbursement of funds that are usually experienced at the start of the year,” Coloma added.
He, however, noted that despite the lower-than-expected result, further analysis of the components of the GDP provides “sufficient room for optimism on faster growth in the next three quarters.”
Coloma said that of the total GDP pie, the private sector accounts for approximately 88 percent, while the government accounts for 12 percent.
“Private-sector performance indicators point to faster growth during the next three quarters. Private construction increased by 14.2 percent and private investments in durable equipment rose by 14.3 percent. Moreover, growth in household consumption was sustained at 5.4 percent, equalling the growth rate attained in the past two years,” he added.
“These results are aligned with the findings of the Social Weather Stations that during the first quarter of the year, personal quality of life was at its highest in the past 30 years, while optimism about the national economy also remained high. According to the Bangko Sentral ng Pilipinas, the business confidence index on the outlook for the next quarter rose to 58.2 percent from 43.1 percent in its previous survey,” Coloma said.
Last March 30, he added, President Aquino issued Administrative Order (AO) 46 to address key institutional areas of improvement that were noted in the Department of Budget and Management’s (DBM) year-end 2014 disbursement report, specifically on planning and program/project design, procurement and program/project implementation bottlenecks.
Coloma said the directives in AO 46 include implementation of prompt budget execution measures, enhancement of procurement efficiency and establishment of a full-time delivery unit, to be headed by an undersecretary and fully staffed to ensure effective program and project implementation.
According to the DBM report, he added, national government spending for the first quarter of 2015 was P504 billion, which is 4.5 percent higher than the comparable 2014 disbursement level of P482.5 billion.