GOVERNMENT spending, one of the country’s growth engines, will allow the Philippines to expand GDP by at least 6 percent in the third quarter, according to the National Economic and Development Authority (Neda).
Socioeconomic Planning Secretary Ernesto M. Pernia told reporters at the sidelines of the 5th Annual Public Policy Conference (APPC) held in Manila on Thursday that GDP growth may be around 6 percent in the third quarter, the low-end of the government’s target.
Pernia said growth will be driven by the government’s efforts to spend the 2019 budget. The economic team had blamed the budget impasse for the slowdown in GDP in the first semester of the year.
“You have to believe, right? We have to believe in ourselves, republic of beliefs,” Pernia said.
In his keynote speech, Pernia quoted former World Bank Chief Economist and Professor of Economics of Cornell University Kaushik Basu who wrote the book, titled The Republic of Beliefs.
Pernia quoted Basu, who said “the most important ingredients of a republic, including its power and might, reside in nothing more than the beliefs and expectations of ordinary people going about their daily lives and quotidian chores.”
He said applying this principle to the Philippines means that Filipinos’ belief in the administration is important in any reform work.
This is more crucial given the number of policies that the Duterte administration is instituting in the medium term, such as the Ease of Doing Business Act and the Philippine Identification System Act, and Universal Health Care law, among others.
“All of these will be nothing but ink on paper if the whole citizenry suddenly lose their belief in our society’s potential. Imagine making the monumental Bangsamoro Organic law work if the Bangsamoro citizens themselves in the first place distrust the law,” Pernia said.
Earlier, Neda said the Philippine economy will, likely, suffer a worse fate if the national budget will again be reenacted next year.
In the first budget hearing at the House of Representatives (HOR), Pernia said a full-year growth of below 5 percent would be likely if the 2020 budget is not passed on time.
Based on historical data compiled by the BusinessMirror, this level of growth has not been seen since 2011 when GDP posted a full-year growth of 3.7 percent.
Pernia said this does not bode well for the Philippines, especially in light of the increase in the country’s population. While the growth rate is declining, the absolute figure continues to rise.
The Philippine Statistics Authority (PSA) now estimates that Philippine population will reach 107.288 million in 2019, and further increase to 115.378 million by 2025. A high population will limit economic opportunities, especially if the economy is not doing well.
A delayed budget, Pernia said, accounts for the modest 5.5-percent GDP average in the first semester. GDP expansion in the first quarter and second quarter reached 5.6 percent and 5.5 percent, respectively.