The Department of Finance (DOF) on Thursday traced the country’s continued expansion in the second quarter to the massive trillion-peso infrastructure buildup program that the economic managers quickly dubbed as the “Build, Build, Build” (BBB) program.
According to Finance Secretary Carlos G. Dominguez III, the second-quarter expansion to 6.5 percent in terms of the GDP, from only 6.4 percent in the first quarter, only proves that the multiyear buildup program is beginning to gain traction.
He expressed the hope acceleration to 6.5 percent puts the $305-billion economy on an expansion path ranging from 6.5 percent to as much as 7.5 percent this year.
The second-quarter performance represents a slowdown from local output expansion averaging 7 percent last year.
“With the upturn in state spending beginning in the year’s second quarter, President Duterte’s unparalleled investment strategy anchored on the BBB program has started to pick up steam,” Dominguez said in the wake of a Philippines Statistics Authority (PSA) announcement that the economy picked up speed during the period.
As a result, he likewise expressed hope that the Senate would help the government meet its high growth target of up to 7.5 percent this year by adopting the DOF-endorsed Comprehensive Tax Reform Package, also known as the Tax Reform for Acceleration
and Inclusion Act (TRAIN).
The proposed reforms in this piece of legislation were to help underwrite the government’s accelerated spending on infrastructure, as well as on human-capital formation and social protection for the poor and other vulnerable sectors.
“Hence, we are hoping that our senators share our confidence in the robust growth prospects of our economy and would pass soon enough and in full its version of Package 1 of the TRAIN, which the House of Representatives already passed in May this year,” Dominguez added.
He added the DOF endorsement of the TRAIN to both houses of Congress has boosted investor confidence in the economy, as shown by forecasts on the country’s growth by foreign and local business groups, as well as financial institutions here and overseas.
The TRAIN was seen helping raise revenues for the government to sustain aggressive spending on infrastructure and on social services, such as education and health care.
According to the PSA, the Philippines’s second-quarter growth was faster than Vietnam’s 6.2 percent and Indonesia’s 5 percent during the same three-month period.
Dominguez also said the ambitious buildup program would help induce the multiplier impact on the domestic economy of more jobs, greater investments and improved connectivity across the regions.
“We are optimistic that the accelerated state spending and project implementation would keep the Philippines in the club of Asia’s fastest-growing economies, as it sustains the momentum for the government-set expansion rate of 6.5 percent to 7.5 percent this year and a higher 7 percent to 8 percent in 2018 and onward,” he added.
Under this expansionary fiscal policy, the government looks to lift infrastructure spending from an equivalent of only 5.4 percent of GDP this year to 7.3 percent of GDP by 2022. The government set aside P1.097 trillion in 2018 to support the BBB program from the adjusted level of P858.1 billion this year.
“This is solid proof that the year-old administration has been making the right moves at the right time in pursuit of Duterte’s socioeconomic agenda on high and inclusive growth,”
Dominguez said.