The repercussions of last year’s squabbles among the Philippines’ lawmakers fighting for their pork continue, with both multilateral lender World Bank and debt watcher Moody’s Investors Service declaring that the country’s 2019 economic expansion was below six per cent.
In its January 2020 Global Economic Prospects Report, the World Bank said it was expecting the Philippines’ gross domestic product (GDP) to have grown by 5.8 per cent last year, below the government’s already downscaled six to 6.5 per cent target.
The government will disclose the country’s fourth-quarter and full-year 2019 performances on January 23.
Last year, “some commodity importers operating at or above capacity have experienced a cyclical moderation of activity, such as Cambodia, the Philippines and Thailand”, the World Bank said.
“Weak export growth has added to the slowdown, especially in the economies that are deeply integrated into global and regional production networks, including Thailand and the Philippines,” the World Bank added.
Separately, Moody’s said in its report titled Passage of Philippine Budget Supports Robust GDP Growth that economic growth last year likely settled also at 5.8 per cent.
As the 3.7 trillion peso ($73 billion) 2019 national budget was signed only in April and the government had operated using re-enacted 2018 appropriations, Moody’s said “national government spending excluding interest payments contracted 1.9 per cent in the first half of last year compared with the year-earlier period and weighed on economic growth”.
It said the 27.2 per cent contraction in real public construction ate up more than one percentage point from the real GDP.
It noted expenditures tried to catch up, but spending at end-November rose only 6.7 per cent, a far cry from the 20.7 per cent increase for all of 2018.
For this year, Moody’s said it would help that the government extend until year-end the validity of unused 2019 funds.
“We expect the pace of government spending to normalise and, along with residual spending from the 2019 budget, support a significantly larger fiscal expansion in 2020.
“We project the Philippines’ real GDP growth will accelerate to 6.2 per cent this year, faster than most regional and rating peers and bucking the trend of lacklustre global economic growth,” Moody’s said.
Moody’s 2020 GDP growth forecast for the Philippines was still below the government’s 6.5-7.5 per cent target range.
“In 2020, revenue will be enhanced by scheduled increases in excise taxes effective at the beginning of this year, some of which were part of the Duterte administration’s first package of tax reforms passed in 2017.
“In addition, a 2018 law raised duties on tobacco products. We expect national government debt to remain stable and debt affordability to improve,” Moody’s added.
For its part, the World Bank projected the Philippine economy to grow 6.1 per cent this year, and 6.2 per cent both in 2021 and 2022.
PHILIPPINE DAILY INQUIRER/ASIA NEWS NETWORK