MANILA, Philippines – The country’s economic growth accelerated further in the third quarter of 2015 on the back of higher government spending and robust consumption and investments, ING Bank Manila said Monday, October 5.
ING Bank Manila Senior Economist Joey Cuyegkeng said the country’s gross domestic product (GDP) grew faster at 6% in the third quarter of 2015 from 5.6% in the second quarter, attributed to the 20% rise in government spending in the first 8 months of the year.
“We believe that the acceleration, together with consumption spending and private sector investments would offset the drag of weak exports and slower agriculture production," Cuyegkeng said.
Latest data from the Bureau of Treasury showed the government booked a surplus of P15 billion ($322.72 million) in August as revenues climbed 4% to P176.7 billion ($3.80 billion), while expenditures jumped 15% to P161.6 billion ($3.48 billion). (READ: PH gov't records P15B surplus in August)
This helped lower the government’s budget deficit to P3.4 billion ($73.19 million) from January to August 2015 from P25.9 billion ($557.53 million) in the same period in 2014. Revenues jumped 13% to P1.441 trillion ($31 billion) while government spending increased 11% to P1.444 trillion ($31.08 billion) in the first 8 months of 2015.
Cuyegkeng explained the low deficit for the period is also a result of a one-time remittance of P60 billion ($1.29 billion), representing part of the coco levy fund made in May. Without the one-time remittance, the government’s budget deficit could have amounted to P64 billion ($1.38 billion) in January-August 2015.
“Even this higher deficit calculation reflects government underspending relative to the 2015 budget,” he added. Programmed government spending in the first 9 months of the year is P1.9 trillion ($40.88 billion).
“Underspending has resulted in the outperformance of the fiscal deficit target. Had [the] government spending kept a pace with the program, the deficit would likely have been larger since government revenue collections on a year-on-year basis seem to have reached a plateau,” he added. The government sees a budget deficit of P197.2 billion ($4.25 billion) this year.
Cuyegkeng said fiscal spending turned the corner and posted a significant growth in the third quarter after a weak start in the first quarter of 2015.
“We expect robust spending growth in the next 10 to 12 months as government expands the economy’s absorptive capacity, prepare for the repercussions of an intense or severe El Niño, which is expected to extend to the second quarter 2016 and for the national elections in May next year,” he added.
The ING Bank Manila's resident economist said the country’s strong macroeconomic fundamentals would help the Philippines survive external shocks brought about by uncertainties due to the impending interest rate hike in the US as well as the economic slowdown in China.
The ING Bank Manila's forecast came on the same day the World Bank announced another trimmed growth forecast for the Philippines, from 6.5% to 5.8% in 2015. (READ: World Bank again cuts PH growth forecast for 2015) – Rappler.com
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