Budget chief upbeat on Philippine economic prospects

MANILA, Philippines - There are more factors that can push economic growth faster this year than pull it lower, the country’s budget chief said Friday.

“It’s not so much the GDP figures themselves, but the attendant positive and negative conditions and factors affecting the growth,” Budget Secretary Florencio Abad told The STAR in a text message.

“For internal/domestic factors, (there are) many upsides. For extraneous elements, at best, it’s uncertain,” he added.

Economic growth, as measured by gross domestic product, accelerated to a one-year high of 6.3 percent in the fourth quarter of last year, bringing the 2015 average to 5.8 percent.

The full-year result was below the government’s original seven- to eight-percent target as well as its forecast of six percent. For this year, the goal has been retained so far, pending a meeting by economic managers.

Abad, who chairs the inter-agency Development Budget Coordinating Committee, said the Philippine economy would benefit from its strong domestic demand from both consumers and the government.

In particular, he said rising public construction, which rose by 51 percent in the last quarter of 2015, is expected to persist this year. “Improving public spending will continue to be a growth driver,” Abad added.

The poll season, which officially started last Saturday, could also fast track spending as public officials move ahead of the election ban on bidding infrastructure projects. The public-private partnership (PPP) initiative could also provide a boost.

“Many PPP projects are getting on stream,” Abad said.

While global economic volatility remains, the budget chief expressed optimism specific recoveries in the US and Japan – the country’s biggest trading partners – would help buttress trade from a slump.

According to the Philippine Statistics Authority, Japan and the US collectively accounted for 35.3 percent of local exports as of November. Shipments were down 5.8 percent during the same period.

“The positive news from the US and Japan are good for us since they are our main trading partners, development and security partners,” Abad noted.

On the flip side, few negative risks still abound, such as the ongoing El Nino phenomenon which already pulled down agriculture growth last year.

In an event last Friday, National Treasurer Roberto Tan cited rising interest rates as something to watch out for after the US Federal Reserve initiated such adjustments in December.

“The days of very low interest rates are over,” Tan said in a speech during the awarding of the top government securities and exchange dealers led by the Land Bank of the Philippines.

“The Bureau of the Treasury will continue to help the market toward its transition to higher interest rates,” he added.