Diokno expects faster economic growth in H2
At A Glance
- Finance Secretary Benjamin Diokno expects improved growth performance in the second half of the year as public spending recovers.<br>Diokno said the second half gross domestic product (GDP) performance historically outperforms the first six months.<br>Slower growth recorded in the first semester was attributed to anemic government spending, which accounts for approximately 20 percent of the economy. State expenditure contracted by 7.1 percent from April to June.<br>Government agencies have committed to catch-up plans to boost spending until the year's end.<br>The Cabinet's Economic Development Group (EDG) requested selected agencies to submit quarterly disbursement amounts and rates.<br>Agencies must also report issues with appropriations, catch-up plans, expected disbursement rates, and historical disbursement rates.
The government's chief economic manager expects better growth in the second half of the year as public spending picks up after a slow start in 2023.
Finance Secretary Benjamin E. Diokno said the gross domestic product (GDP) growth rate from July to December could surpass the average of 5.35 percent seen in the first half of the year.
Diokno noted that historically, the second half has exhibited stronger GDP performance compared to the first six months.
“Let me be clear that second half performance of the economy will be much better than the first half,” Diokno told reporters during the Chat with SBED briefing on Friday, Oct. 6.
“In fact that's also the judgment of IMF [International Monetary Fund], the second half of growth will be faster than the first half,” he added.
The economy recorded a modest growth rate of 4.3 percent in the second quarter, short of the 6.4 percent GDP recorded in the first quarter of 2023.
In order to meet the full-year goal target of 6.0 percent to 7.0 percent, the country's GDP would need to grow by at least 6.6 percent in the second half.
One of the reasons for the slower-than-expected growth was the government's anemic spending, which makes up around 20 percent of the economy.
Between April and June, state expenditure contracted by 7.1 percent.
Finance Undersecretary Zeno Ronald R. Abenoja said that government agencies have committed to implementing catch-up plans until the end of the year.
However, when asked if the government can hit its expenditure target, Abenoja said that actual spending would only come close to the initial plan.
As of the end of August, public expenditures reached P3.315 trillion, accounting for 63.4 percent of the government's full-year program of P5.228 trillion.
To ensure timely spending, Diokno said the Cabinet's Economic Development Group (EDG) has asked selected government agencies to provide quarterly reports.
These agencies include the Department of Works and Highway, Department of Transportation, Department of Health, and Department of Social and Welfare and Development,
Reports should include information on their disbursement amounts and rates for the year, any challenges they have faced with their appropriations or allotments, their catch-up plans for achieving the expected disbursement rate by the end of the year, and their historical disbursement rate.
“The main challenges identified by the presenting agencies are seasonality in project implementation with higher disbursements expected in Q4 2023, take-up of beneficiaries, preparatory activities for procurement, implementation problems, and payment issues,” he said.