The economy is expected to meet the government’s 7-percent to 8-percent growth assumption despite the 5.2 percent slower-than-expected expansion in the first three months of 2015, economic managers said on Thursday.
It is reasonable to believe the economy will grow at a faster pace in the remaining quarters despite the first quarter performance, National Economic and Development Authority (NEDA) said.
“To reach the low end of the 7 percent to 8 percent target, the next three quarters should deliver an average of 7.5 percent. It’s not impossible, because in some quarters in the past that rate was achieved,” Socioeconomic Planning Secretary Arsenio Balisacan explained during a press briefing on the first quarter results.
The chances of achieving the growth target is higher than the Philippines ever had in the past because of favorable macroeconomic fundamentals and low inflation, oil prices and interest rates, said Balisacan, who is also the NEDA director general.
“I’m not giving up, because I think the target is still within reach,” he said.
The NEDA chief noted private sector economic activity remains vibrant, with private construction registering a double-digit growth of 14.2 percent for the quarter and private investments in durable equipment expanding by 14.3 percent.
“The latest business confidence index from the Bangko Sentral ng Pilipinas shows that next quarter confidence index climbed to 58.2 percent from 43.1 percent in the previous survey,” he added.
Balisacan said growth in household consumption remains steady at 5.4 percent.
He cited the first quarter 2015 Consumer Expectation Survey, which showed how consumer sentiment improved due to expectations of stable commodity prices, decline in oil prices, availability of more jobs, higher number of employed family members, and fewer calamities during the period.
“These clearly indicate that business and consumer confidence… is still very high and is supportive of our optimism in hitting our growth targets for 2015,” he said.
The NEDA chief noted the missed opportunity for a higher growth is not totally out of the picture as the government still expect public spending to pick up for the rest of the year.
Citing the latest report of the Department of Budget and Management, Balisacan noted the disbursement performance for the first three months of 2015 shows a trend toward faster spending.
“If this disbursement trajectory is sustained and reflected in all government agencies, the higher government spending will fuel even more activities in the private sector, and thus push economic growth in the next quarters of the year,” he said.
The central bank believes there are positive developments in that should lift the economy in the remaining quarters of 2015.
“Economic growth in the first quarter of 2015 was modest. There are developments on the ground, however, that should boost economic performance going forward,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr., said in a text message to reporters.
On the production side, Tetangco said government initiatives to mitigate El Niño can push agricultural output beyond its first quarter performance of 1.6 percent.
“The higher inflows of foreign direct investment associated with liberalized entry of foreign banks and their indigenous corporate investors should boost industry, particularly manufacturing and construction,” he added.
On the demand side, the BSP chief noted sustained growth in remittances should continue to support domestic consumption.
“We should also see the impact of higher public spending on growth in the next three quarters,” he said.
The BSP continues to see monetary policy as appropriate given the continued growth in the economy and the good prospects for the rest of the year, he added.
“There is sufficient liquidity in the economy while domestic credit remains supportive of growth. The BSP will continue to promote an enabling environment of stable prices and strong banking system,” Tetangco noted.
PH second-fastest in Asean-5
Staying optimistic, the Department of Finance said the 5.2 percent output in the first quarter placed the administration’s quarterly average at 6 percent.
In a statement, Finance Secretary Cesar Purisima said the Philippines is the second-fastest growing Association of Southeast Asian Nations (Asean)-5 economy, second only to Malaysia with 5.6 percent.
Asean-5 is composed of Indonesia, Malaysia, Philippines, Singapore and Thailand.
Among the Asian countries that have reported on the first quarter output, Purisima noted the Philippines stands next to China (7 percent), Vietnam (6 percent), and Malaysia (5.6 percent).
“This rounds out 13 straight quarters of above 5 percent growth in what is now 65 straight quarters of growth since the 1997 Asian financial crisis,” he said.
“Numbers fluctuate each quarter but they clearly show an unmistakable positive trajectory. We are less concerned about the quarterly numbers game than getting the foundations of our growth right,” he added.
The government is committed to spending right, following the 5 Rs – right project, right quality, right people, right time, right cost, Purisima said.
“It is not always easy or fast, but growing with the right foundations makes our trajectory more sustainable. We are cognizant of the opportunities ahead and will resolve to boost government capacity to spend at the right pace,” he added.