ING Bank Manila said the fourth quarter of 2014 will show improved government spending and more favorable weather conditions for agriculture that should make up for the slowdown in the third quarter and allow the country’s gross domestic product (GDP) to grow 5.8 percent for the full year.
In his just-released market views, ING Bank Manila Branch senior economist Joey Cuyegkeng said he sees the causes of the slowdown in the third quarter to a 5.3 percent GDP expansion being addressed by the government in the fourth quarter.
The Supreme Court ruling making the legislature’s Priority Development Assistance Fund or “pork barrel” and the executive branch’s Disbursement Accelerated Program unconstitutional, along with the relevant media-wide probe into corruption issues, have been blamed for the cautious government spending which resulted in the third-quarter slack in economic growth.
“Transparency and the quality of government spending procedures had to be improved to meet the heightened standards of the Aquino Administration post the Supreme Court decisions against lawmakers’ pork barrel and government’s Disbursement Accelerated program,” Cuyegkeng said.
Cuyegkeng said the bank expects that the government will be able to start accelerating spending after more than six months of slow disbursement.
Favorable weather is also likely to allow agriculture to recover and post more decent growth, he said.
He added that a moderate episode of El Nino may limit agriculture gains but there will still be improvement from the third-quarter contraction in the sector.
The economist also predicts that service sector growth could recover amid moderating inflation and easing port congestion problems.
Furthermore, Cuyegkeng said the weakness of the Philippine peso in the fourth quarter of 2014 is likely to raise the spending power of families of overseas Filipino workers who send in remittances, while the recovery in agriculture may contribute to more favorable personal consumption spending growth in the last quarter.