MANILA – The Philippine economy could grow by 6.5 percent in the first quarter, with the delayed approval of the national budget unlikely to have a significant impact, an economist said Monday.
President Rodrigo Duterte could sign the P3.7 trillion national budget by the end of the Holy Week, Malacanang said. Wrangling among lawmakers over alleged insertions stalled the budget debates, leading the government to operate for the meantime on a reenactment of the 2018 budget.
"If the delay is ended this month, I think that shouldn’t cost too much damage and they can find ways to accelerate for example to off-budget type of projects," Nomura Southeast Asia senior economist Euben Paracuelles said.
"It’s not just the fiscal side that’s driving growth, there are other things and the private sector has also been a sort of crowded, in terms of their investment spending so I think there are other engines that are helping the economy at least,” Paracuelles told ANC.
Socioeconomic Planning Secretary Ernesto Pernia’s earlier estimate that country’s GDP could slow to 4.2 to 4.9 percent if a reenacted budget is in force for an entire year “a little bit of a large estimate,” Paracuelles said.
“Historically, reenacted budget for the entire year, I think they don’t really show up massively on big drag on growth. I think it's pointing to the fact that the government really needs to spend and there are measures and counter measures that they can do to try and mitigate the impact of reenacted budget,” he said.
An interest rate cut is “plausible” by the third quarter or as early as June if inflation slows to at least 3 percent, or within the government’s target of 2 to 4 percent, he said.