ADB downgrades PHL’s 2019 GDP growth to 6%
The Asian Development Bank (ADB) on Wednesday trimmed anew its economic growth outlook for the Philippines as investment activities were tempered by the delayed enactment of the 2019 budget.
The Manila-based multilateral lender now expects the country’s gross domestic product to grow by 6.0% this year, compared with a previous forecast of 6.2%.
In its Asian Development Outlook, the bank also cut its 2020 growth projection for the country to 6.2% from 6.4%.
This is the fourth time that the lender lowered its Philippine growth forecast. It initially projected the economy to grow by 6.9% this year, but this was revised to 6.7% in September 2018, then to 6.4% in April 2019, and to 6.2% in July 2019.
In a press conference in Mandaluyong City, ADB country director Kelly Bird attributed the downward revision to slower domestic investment in the first half of the year.
“The delayed passage of the 2019 national budget and ban on public infrastructure spending in the run-up to midterm elections in May 2019 held back public expenditure,” Bird noted.
The P3.757-trillion national budget was signed into law by President Rodrigo Duterte only on April 15, but P95.3 billion worth of programs were vetoed as “not part of the President’s priority projects.”
The Philippine economy slowed to 5.6% in the first quarter and slowed further to 5.5% in the second quarter, dragged by a reenacted budget.
Nevertheless, the ADB said government spending should rebound in the second half of the year.
“Expenditure under the 2020 budget is 12% higher than in the 2019 budget, with the higher spending in particular on infrastructure, social services, and income transfers to poor households,” Bird said.
“Public and private investment should regain traction as new and larger infrastructure projects get under way. The government is mobilizing more revenue to support public investment, while at the same time keeping the fiscal deficit within its fiscal program for 2020-2022, equal to 3.2% of GDP,” he said.