By Chino S. Leyco
The Philippine economy could have risen beyond seven percent in the first three-months if this year’s national budget was approved on time, the Department of Finance (DOF) said yesterday.
In his latest DOF economic bulletin, Finance Undersecretary Gil S. Beltran said the country’s gross domestic product (GDP) could have expanded by 7.2 percent in January to March this year if Congress was able to approve the 2019 general appropriations act (GAA) before December last year.
The DOF’s estimated GDP growth without the 2018 re-enacted budget was the highest since the fourth-quarter of 2017.
Beltran, who is also the DOF’s chief economist, said the GDP fell to its slowest growth pace in 16-quarters due to the huge drop in government spending.
He said public expenditures increased by merely 0.08 percent in nominal terms at end-March, significantly slower compared with 25.4 percent in the same period last year.
“Underspending of P69.5 billion in the first quarter of the year reduced GDP growth by 1.6 percent of GDP,” Beltran said in his report submitted to Finance Secretary Carlos G. Dominguez III.
From the expenditure side, the lower first-quarter growth was traced by Beltran to a moderated expansion in both government consumption and capital formation, which grew by 7.4 percent and 6.8 percent respectively, compared to 13.6 percent and 10.3 percent a year before.
“The slowdown in capital formation is explained by the significant contraction in public construction by 8.6 percent compared to 22.6 percent growth in the same quarter of 2018. This is slightly tempered by 8.6 percent growth in private construction compared to 8.1 percent in the same quarter of 2018,” Beltran said.
From the supply side, the finance official said that agriculture has decelerated to 0.8 percent in the first quarter due to El Niño.
Industry also slowed, weighed down by mining and quarrying, slowdown in manufacturing activities, and construction.
Meanwhile, Beltran said the budget delay was offset by election spending of candidates and lower consumer inflation by the combined impact of about 0.7 percent of GDP, boosting household consumption by 6.3 percent in real terms.
“If the budget was approved as scheduled and disbursements were made promptly, GDP growth in the first quarter would have risen to 7.2 percent,” Beltran said.