THE ghost of the delayed passage of the national budget for 2019 is expected to still haunt the country’s economic growth numbers up until the third quarter of this year, a local economist said.
In his most recent commentary, Security Bank economist Robert Dan Roces said he projects the third quarter gross domestic product (GDP) to hit 5.8 percent.
While this is a slight acceleration from the disappointing growth numbers in the first and second quarter which averaged at 5.6 percent, it is still below the lower end of the government’s annual target range for the year which is at 6 percent to 7 percent.
“Leading indicators suggest an otherwise unremarkable recovery for the quarter as sluggish growth in capital goods and a slowing imports sector offset gains from higher household consumption on the back of slower inflation, and a late surge in public spending seeking to play catch-up after getting derailed by the late budget,” Roces said.
“Private investments which plunged in the second quarter will still be a source of weakness due to external uncertainties,” he added.
In the highlights of the Bangko Sentral ng Pilipinas’s (BSP) latest monetary board meeting, the country’s monetary leaders admitted that slower growth in manufacturing activities due to weak external demand was exacerbated by the budget impasse and led to the lower-than-expected growth in the first half of the year.
The BSP’s latest move was to take advantage of the low inflation environment to cut its interest rates in an effort to spur economic growth in the country.
For October inflation, Roces said he sees price growth to be at 0.8 percent for October.
“The slow inflation rate may be attributed to essentially unchanged price levels in rice, electricity, and transport costs plus favorable year-over-year base effects. We expect inflation to remain below target until November,” he said.
September’s inflation number was at 0.9 percent and the nine-month average hit 2.8 percent. The government’s target range for the year is at 2 percent to 4 percent.