Continued growth in the country’s October budget deficit, after already surging in the previous month, is a positive indicator that local growth is on its way to reaching the lower end of its target for the year, a local economist said.
ING Bank Manila economist Nicholas Antonio Mapa said the strong spending of the national government during the month may be indicative that they are closing in on their growth target for the year.
The government’s target growth is at 6 to 7 percent for this year. This has since been under threat as growth in the first half of the year and went below expectations due to the government’s inability to pass a budget on time.
The government carried on its catchup spending with expenditures up 1.4 percent, managing to still expand on top of the 35.2 percent surge in state spending last October 2018.
Strong revenue collection accompanied the solid spending numbers with the shortfall in October bringing the year to date deficit to P348.3 billion, roughly 80 percent of the magic fullyear target of P 438.1 billion.
This, according Mapa, mirrors early reports that the Department of Budget Management released the 96.7 percent of the budget as of the end of October while cash allocation utilization hit 93 percent of total.
“With less than two months to the close of the eventful 2019, the Philippines zeroes in on its full year deficit target with the economy in need of an added push post the budget delay. We expect government spending to sustain the same strong pace to close out the year, which should translate to higher spending growth in both November and December given that government spending was in contraction by end 2018,” Mapa said.
“State spending coupled with revived capital formation(after BSP rate cuts and robust consumption due to the low inflation and South East Asian games will likely be enough to get the Philippine economy past the 6 percent finish line as we flip the calendar to 2020,” Mapa added.