✅️ Philippines' Economy grew by 4.3% in 2nd quarter of 2023; Gov’t to accelerate spending, delivery of social services to gain momentum

 

The Marcos government will accelerate spending in the coming quarters to recover the momentum following the 4.3 percent economic expansion of the country’s economy in the second quarter of this year.

In a joint statement Thursday, the administration’s economic managers said that for the second quarter, the 4.3 percent gross domestic product (GDP) growth was driven by increases in tourism-related spending and commercial investments, but was tempered by high commodity prices, the lagged effects of interest rate hikes, the contraction in government spending, and slower global economic growth.

“While government expenditure contracted by 7.1 percent in the absence of election-related spending in the first half of the year, government spending will accelerate in the coming quarters to allow us to recover our growth momentum,” the economic managers said in the statement.

The Economic Team is composed of officials from the Department of Budget and Management (DBM), Department of Finance (DOF) and the National Economic and Development Authority (NEDA), all designated as President Ferdinand Marcos Jr.’s economic managers.

The Economic Development Group (EDG), according to the officials, has already been discussing how various government agencies can expedite the implementation of programs and projects for the rest of the year.

Government agencies, including local and regional government entities, are encouraged, if not instructed, to formulate catch-up plans, accelerate, and even frontload the implementation of said programs and projects.

Line agencies already have their catch-up plans and are enjoined to implement these urgently. Moreover, fiscal stimulus activities are underway to increase the productive capacities of both the public and private sectors.

To address the adverse impact of the recent typhoons and monsoon rains, they recommended the immediate use of the Quick Response Fund (QRF) and other disaster-related budgetary instruments of the government.

“Inflation in the country has been decelerating in recent months, reaching 4.7 percent in July 2023. Nevertheless, we will continue to intensify our supply-side interventions and demand-side management measures to maintain overall price stability amid upside risks such as weather disturbances, including El Niño, trade tensions, and the imposition of export bans in other countries,” they said.

“The improving outlook for inflation bodes well for the easing of interest rates and should pave the way for the expansion of activities of businesses, households, and the rest of the private sector. The government will also intensify its targeted measures to cushion the impact of high inflation on vulnerable sectors.”

The economic team also said it will continue to monitor closely the impact of the global economic slowdown and the recent wave of trade protectionism on the country’s export sector and will facilitate the diversification of external markets to expand opportunities for Filipino exporters.

To craft policy designs and assistance measures, the government will also hold more discussions with sectors adversely affected by the global economic slowdown and shifts in demand preferences as the pandemic wanes and with those that have not yet returned to their pre-pandemic levels in terms of production and capacity.

To aid those sectors, the government is continuing its implementation of credit programs designed to provide loans for marginalized farmers and fisherfolk and micro and small enterprises at low-interest rates, with minimal or no collateral, and fewer documentary requirements.

The economic team expressed optimism on the strong and positive prospects of the Philippine economy, believing it could sustain the momentum of its initial gains.

“We firmly believe that the prospects of the Philippine economy remain strong and positive. Our economy has weathered the worst and most challenging times during the pandemic. Now, we are better equipped and more resilient to withstand the various risks and challenges on both the external and domestic fronts,” it said.

“Our robust growth strategies and the active participation of all sectors of society, especially our private partners, will keep us on track to achieving our social and economic transformation agenda toward a prosperous, inclusive, and resilient Philippines.” PND

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