The Marcos administration's economic managers on Thursday, Aug. 10, recommended an accelerated government spending in the coming quarters to recover its growth momentum following the 4.3 percent expansion of the country's gross domestic product (GDP) in the second quarter of 2023.

(File Photo/MANILA BULLETIN)

In a joint statement released by the Presidential Communications Office (PCO), President Ferdinand "Bongbong" Marcos Jr.'s economic managers explained the need for more government spending.

Despite the 4.3 percent growth driven by increased tourism-related spending and commercial investments, high commodity prices also tempered this, 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 statement read.

The Economic Team is composed of officials from the Department of Budget and Management (DBM), the Department of Finance (DOF), and the National Economic and Development Authority (NEDA).

The team is optimistic that the Philippines economy can 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," the statement said.

They credited the country's "robust growth strategies" and the participation of all sectors, including the private partners, for being on track to achieve "our social and economic transformation agenda toward a prosperous, inclusive, and resilient Philippines."

According to the Philippine Statistics Authority (PSA), the country's GDP expansion of 4.3 percent from April to June was slower than the 6.4 percent growth recorded in the first quarter.

This was also slower than the 7.5 percent expansion during the same quarter last year.

The officials said that the Economic Development Group (EDG) was in discussion about how various government agencies could expedite the implementation of programs and projects for the rest of the year.

To boost spending, government agencies, including local and regional government entities, are encouraged or instructed to prioritize implementing projects and programs; line agencies are asked to implement their catch-up plans; and public and private sectors are to follow fiscal stimulus activities to improve their productions.

The recent typhoons and monsoon rains that caused massive flooding in parts of Luzon may also trigger more government spending after the economic managers recommended the immediate use of the government's 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," the economic managers 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," they added.

The team furthermore detailed its plan to monitor impact of the global economic slowdown, as well as trade policies on the country's export sector.

It will also focus on finding diversified external markets to create more opportunities for Filipino exporters.