A Department of Finance (DOF) official on Tuesday said the country has to ramp up capital formation or investment efforts by about 30 percent to 40 percent to be able to meet its gross domestic product (GDP) target of 7 percent to 8 percent by the end of the year.
DOF Undersecretary Gil S. Beltran told financial reporters that investments for the second quarter of this year grew to 20.7 percent, coming from 12.4 percent in the first quarter, and also higher compared to the 7.6 percent recorded in the second quarter of 2017.
“We have to push capital formation further because during those years that we achieved a 7.7 [-percent] to 7.8-percent growth, we had a 30 [-percent] to 40-percent increase in capital formation. Right now, we are about 20 percent, so we will need to work harder,” Beltran, also the DOF’s chief economist, said. He further explained that the 30-percent to 40-percent growth can be met when both the private sector and the government strengthen their efforts in capital formation for the rest of the year.
“It’s both public and private, but this time around the government is doing a lot,” Beltran pointed out.
Under investments, construction reached 12.9 percent in the second quarter of this year, which expanded compared to the first- quarter figure of 10 percent and last year’s 4.7 percent.
Private investments for the same period reached 7.9-percent coming from 6.7 percent in the first quarter, and from 0.6 percent in the second quarter of 2017.
Meanwhile, public investments for the second quarter contracted to 21 percent, from 24 percent in the first quarter, but posted higher compared to the 12.2 percent recorded in the second quarter of 2017.
Last week the country registered a GDP of 6 percent for the second quarter of the year, lower than the 6.6 percent recorded in the first quarter of the year, as well as that of the 6.7 percent recorded in second quarter of 2017, based on data from the Philippine Statistics Authority.
The DOF pointed out that the economy took a breather in the second quarter as real GDP growth decelerated to 6 percent, from 6.6 percent in the first quarter, with the main drivers for the contraction being a slowdown in manufacturing to 5.6 percent, from 7.6 percent in the first quarter; as well as in agriculture to 0.2 percent, from 1.1 percent in the first quarter.