Election spending to boost economy

CEBU, Philippines — The Philippine economy may see stronger growth this year, with election spending projected to boost domestic consumption, and economist said yesterday.

BPI lead economist Emilio Neri Jr. said the bank expects the Philippines to expand 6.5% this year, as inflation starts to cool down and household consumption sets to recover.

Neri was in Cebu City yesterday for a briefing for journalists on the current economic and financial developments.

He said the projected 6.5% gross domestic product (GDP) growth may even be exceeded.

"Should oil prices stabilize this year, growth may accelerate further as household spending is expected to recover from the 2018 slowdown and as overall spending activity picks up ahead of the May 2019 midterm elections," he said.

Neri said he expects inflation to return to the 2-4% target range this year on the back of moderating global oil prices.

With slowing inflation, the economy has the opportunity to see a higher growth this year just as election spending boosts overall demand, the economist said.

"With the expected increase in consumption as a result of the 2019 elections, GDP may exceed the growth in the previous two years," he said.

In 2018, Philippine GDP growth hit 6.2%, missing the government's target.

On the currency market, BPI expects the peso to return to the P54 to a dollar range as early as the second quarter of 2019 despite hitting P52 as of end 2018.

Neri said the manageable widening trade deficit is expected to modestly depreciate the peso, with additional pressure from global trade disputes and financial market volatility in major markets.

This will be the result of external financial and economic factors along with sustained domestic private and public sector demand for dollar in 2019 as capital outlays catch up with ASEAN norms. (FREEMAN)