During the first quarter of the year, the Philippine gross domestic product (GDP) stood at 5.6%, which is considered as the worst performance compared to the past results. The reported GDP is lower than the previous quarter’s 6.3% and 2018 first quarter’s 6.5%. If we take a look at the estimate of Business World’s poll of 20 economists in the past week which is 6.1% and the government’s target this 2019 at 6-7%, the difference from the current GDP is significant. For the previous 16 quarters, this is already considered as the slowest growth or since the economy reported a 5.1% growth in 2015. So, what’s the reason behind this slow growth?
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The delays in the 2019 fiscal budget have impacted the economy of the Philippines. Thus, it triggers the slower pace and now that the GDP is reported as worst, the government needs to double their effort in order to make up for the improvement. During the first months of the year until April, the government relied on the re-enacted 2018 budget until Mr. President Rodrigo Duterte signed the new budget into a law, rejecting P95.3 billion in appropriation in light of his understanding that it was not a part of the priorities of his administration and therefore cutting the national budget at P3.662 trillion. The GDP could have been at the estimated 6.6% if we started operating under the 2019 budget.
Breaking down the components of the GDP, the supply category grew by 7%, higher than the reported 6.7% last year. The industry went up by 4.4%, considered lower than the 7.7% reported last 2018. The expansion of agriculture, fishing, forestry, and hunting stood at 0.8%, lower than 1.1% in the previous year. The slower growth of the agriculture side is impacted by the current EL Nino the country is experiencing which is expected to last until August of this year. Meanwhile, the government spending slowed to 7.4% this quarter versus the 13.6% growth in 2018’s first three months. The delays on 2019 national budget trimmed down the growth of government spending.
With the joined statements of Department of Finance, Department of Budget and Management, and the National Economic and Development Authority, they say that in order to make it up to the worst performance this first quarter, the government needs a full-growth target which is at 6-7%. The economy needs to grow by 6.1% in average for the remaining quarters of the year. This target is still within our capacity if the private sector companies keep their current performance and if the government will be able to start and expedite the implementation of the new projects and programs.