GDP growth seen at ‘close to 6.8%’

Published September 3, 2018, 12:00 AM

by manilabulletin_admin

By Chino S. Leyco

 

Stephen Schwartz (right), Fitch Ratings Head of APAC Sovereigns, spoke with Finance Secretary Carlos Dominguez III, in a pre-recorded interview in Manila on 16th August 2018. An excerpt of the interview will be telecast at Fitch Ratings’ Global Sovereign Conferences in Hong Kong (11th September 2018) and Singapore (13th September). (Fitch Ratings photo)
Stephen Schwartz (right), Fitch Ratings Head of APAC Sovereigns, spoke with Finance Secretary Carlos Dominguez III, in a pre-recorded interview in Manila on 16th August 2018. An excerpt of the interview will be telecast at Fitch Ratings’ Global Sovereign Conferences in Hong Kong (11th September 2018) and Singapore (13th September). (Fitch Ratings photo)

 

 

The Department of Finance (DOF) said that the country’s economy would continue to expand at a respectable pace this year on the back of the government’s infrastructure program but the rate is likely below the target range.

Finance Secretary Carlos G. Dominguez III said that the country’s economy, as measured by its gross domestic product (GDP), may likely increase by “close to 6.8 percent” this year fuelled by the growing momentum on the government’s infrastructure buildup.

“I think we will still be close to 6.8 percent this year,” Dominguez said in an interview with the debt-watcher Fitch Ratings last August 16. “I think the momentum on our build, build, build is strong and we are really moving quite well in our infrastructure program.”

The 6.8 percent GDP estimate, however, is below the Duterte administration’s target of 7.0 percent to 8.0 percent for 2018, but higher than the 6.3 percent expansion registered in the first semester.

In the second-quarter, the Philippine economy grew by 6.0 percent, while the GDP performance in the first three-months was revised to 6.6 percent.

According to Dominguez, the slowdown in GDP in the quarter-ending June was just “a breather” and is expected to grow at a much faster rate in the second-semester.

“We are looking forward continuing our build, build, build program, basically we’re catching up with our neighbors in infrastructure. That’s going pretty well,” Dominguez said.

The finance chief also shrugged off fears that the Philippine economy is on the brink of overheating.
“We believe we’re not in danger of overheating at the moment, we still ways to go. Our industries are not at running 90 percent capacity or there, so I think we’re well within the safe borders,” Dominguez said.

“Another reason why I think we’re not in a great danger, we did passed our first package of the tax reform and we have been able to raise revenues quiet significantly. In fact, our first-half this year our revenues were up by 20 percent. That is the basis for our additional spending,” he added.

There is also lending support amounting to $19 billion from China, Japan and South Korea to help fund the Duterte administration’s ambitious infrastructure program, the finance chief said.

On the expected US interest rate hikes, Dominguez said the Philippines already responded with the increasing global yields with the Bangko Sentral ng Pilipinas’ 100 basis points monetary actions this year.

“We have adjusted to those, we have had a 100 basis points increase in our rates this year and I think, we will cope with it at best we can,” Dominguez said.

The ongoing trade war between China and United States is unlikely to affect the Philippines in the short-term, Dominguez said, pointing “we are not part the of big trading nations so we’re not going to be affected by the slowdown in the demand around the world.”

Dominguez, however, admitted that the long-term impact of the trade issues, if not resolved, will going to affect the Philippine economy.

“In the long run we will be affected by it. In the short run though, I think steel prices will going to soften because the markets in the US are basically closed and since we’re spending a lot on infrastructure that should benefit us,” Dominguez said.

“We are hopeful that in the medium terms, there’s going to be settlements of these trade issues that are happening and it’s not only China, it’s Canada, some extent Europe and now Turkey,” he added.

 
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