As one of the primary growth drivers, government spending could actually serve as a coping mechanism in today’s uncertain trade war environment, an economist said.
Security Bank treasury group chief economist Robert Dan J. Roses said it is imperative for government to accelerate the year’s subpar spending that has resulted in growth averaging only 5.5 percent in the first half. The official growth target ranges from 6 percent to 7 percent in terms of the gross domestic product.
The government is now fast-tracking the release of funds to help nudge growth in the right direction. As of end-August, the national government already released 91.4 percent or P3.45 trillion of the P3.662 trillion national budget.
Roses noted that household consumption, a primary internal source of growth, is recovering as inflation has slowed.
“For now, household consumption is still tenuous at best with spending also being pushed by remittances from our overseas workers who are exposed to any global economic slowdown,” he said.
According to him, the level of household spending in the first half of 2019 is still slightly below the high inflationary period of 2018.
“In summary, external sources will be hard-pressed to support growth, leaving domestic consumption and government spending as primary drivers,” Roses reiterated.
“But with overseas remittances tied to the fortunes of global events, government spending will carry the heavier burden of driving Philippine economic performance.”