The Duterte administration’s ongoing administrative and structural reforms will efficiently mobilize public resources to achieve sustainable and inclusive growth, the Department of Finance (DOF) said.
In the latest DOF Economic Bulletin, Finance Undersecretary Gil Beltran said the government could sustain the country’s robust economic growth and make it inclusive through higher investments in physical infrastructure and social services.
Based on Beltran’s report submitted to Finance Secretary Carlos Dominguez 3rd, the economy, which expanded by 7.1 percent during President Rodrigo Duterte’s first three-months in office, continued to be supported by strong macroeconomic fundamentals.
The Philippine gross domestic product (GDP) grew at its fastest pace in three years in July-September, beating market expectations and that of other major Asian economies like China’s 6.7 percent and Vietnam’s 6.4 percent.
“Amid uncertainties in the global economy, the Philippine economic growth is the fastest in the region,” Beltran, also the DOF’s chief economist, said in a statement.
The third-quarter growth brought year-to-date economic expansion at 7.0 percent, which is at the high-end of government’s 2016 target range of 6.0 percent to 7.0 percent.
“Both administrative and structural reforms would eventually result in a more efficient resource mobilization of public resources,” Beltran said. “These would catalyze greater investments in both physical infrastructure and social services.”
“Higher public investments, in turn, will translate into sustainable and inclusive development,” the Finance official added.
To raise funds for higher public spending, Beltran said the Duterte administration needs the comprehensive tax reform to be passed into law.
Meanwhile, he noted in the third-quarter Philippine economic performance report that consumption remained strong at 7.3 percent, owing to robust overseas Filipino remittances and stable prices.
“What is more noteworthy is the sustained double-digit rise in investments for four quarters in a row, which telegraphs robust economic growth ahead. This is welcome news as policy-makers steer the country to a more investment-led economy,” Beltran said.
He added that the narrowing trade deficit after exports recovered during the quarter that contributed to growth and the 20.1 percent rise in government construction.
From the supply side, Beltran said the growth was largely driven by the industrial sector, which expanded by 8.6 percent in the third quarter amid strong manufacturing, construction and utilities.
In the first nine months of the year, the Philippine industrial sector maintained its steady domestic upward trajectory at 8.2 percent, significantly higher than 5.9 percent in the same period of last year.
The local agriculture sector also recovered during the quarter, finally reversing five quarters of continuous decline at 3.9 percent.
The services sector also posted robust growth rate of 6.9 percent.
“Domestic consumption and investment continue to grow due to robust internal demand backed up by higher employment and rising real wages,” Beltran said.
Along with consumption and investment, he noted, strong balance sheet of banks, the Bangko Sentral ng Pilipinas’ sizable reserves and the country’s lower exposure to foreign debt fostered macroeconomic stability.
“They will continue to provide the country more cushions to withstand external headwinds,” Beltran said.
“Government also has ample fiscal policy space to increase spending specifically for much needed infrastructure investments.”