MANILA - The Bangko Sentral ng Pilipinas (BSP) expressed confidence that the country’s growth momentum, best indicated by resurgent growth in the second quarter, will be sustained in the third quarter on the basis of accelerated public- sector spending, and more robust manufacturing- and construction-sector activities.
At a recent briefing, BSP Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said the pace of economic expansion should persist in the July-to-September quarter due to sustained or accelerated performance of several sectors during the period.
The Philippine Statistics Authority (PSA) earlier reported that the Philippines grew by 6.4 percent in terms of the gross domestic product (GDP) in the second quarter, up from the revised 5.6 percent in the January-to-March period.
“We have seen how remittances have been sustained. It is possible also that with the sustained inflow of remittances, private consumption expenditure could have improved in the third quarter. It is possible that private consumption could have increased in the third quarter,” Guinigundo said. PSA data show that consumption in the private sector slowed from 5.9 percent in the first quarter to only 5.3 percent in the second quarter.
Aside from the rebound in private household consumption, Guinigundo also said more public disbursement in pursuit of various growth-boosting programs should help boost local output during the period.
Actual disbursement of public funds in July this year have not been very encouraging, the cash-disbursement portion of which having actually fallen 16 percent to P120 billion, according to data published by the Bureau of the Treasury. Cash disbursement in the first seven months, however, showed promise as this expanded by 8 percent to P934.1 billion. A carefully timed public-disbursement program in tandem with remittance-driven consumption should help optimize this year’s growth seen averaging as high as 7 percent by the nation’s economic architects, according to the BSP.
Guinigundo also highlighted the key role played by the manufacturing sector seen helping lift the country’s output growth in the third quarter.
Manufacturing output has increased in both volume and value based on June data reported by the PSA, the sector having actually expanded in excess of 13 percent during the month.
“I think the result of the Business Expectation Survey [BES] would support a continuing, sustained performance of manufacturing because if you look at the expansion plans [of firms] and also the employment outlook index, the trajectory is going up,” the deputy governor said.
Latest data from the BES, a quarterly survey helping the monetary authorities craft the policy response needed to optimize growth for the $270-billion economy, revealed continued optimism among the country’s business people in the third quarter. More important, businessmen optimism betrayed a more sanguine outlook in the fourth quarter, particularly those in the trade sector already looking forward to robust consumption activities in the months leading to the long Christmas holidays.
“More private spending, more public sector spending, sustaining performance in manufacturing, construction – I think these are important considerations. And hopefully for the last quarter of the year, if the port congestion issues are solved, then we should see more exports contributing to GDP,” he added.
Guinigundo also lauded the performance of the agriculture sector and the construction sector in the past quarter, saying that the improvements in these sectors highlights the structural transformation of growth in the Philippines.
“What we should emphasize is the structure of the economy going through significant transformations in the last few years,” he said.