Friday, May 30, 2014

Statement: The Secretary of Budget on PHL’s 5.7% GDP growth

From the Website of GPH - Government of the Philippines

Statement: The Secretary of Budget on PHL’s 5.7% GDP growth

Statement of Secretary Florencio B. Abad:
On the Philippines’ 5.7% GDP growth
[Released on May 29, 2014]

When 2014 began, the country had only just begun to right itself from what seemed like an especially challenging year. The last ten months saw us go through some considerable setbacks, from corruption scandals in the Philippine bureaucracy to the devastation caused by Super Typhoon Yolanda.

GDP figures for the first quarter of the year reflect the difficulties of the work of recovery. Indeed, Yolanda struck at several sectors crucial to driving growth, particularly the agriculture and fishing industries.

Nevertheless, other forces helped keep our economic momentum going, albeit at a slower clip. Expenditures continued to play a major role in catalyzing growth. Public construction rose by 22.3 percent, spurred by a 49.2-percent increase in government expenditures for infrastructure and capital outlay in January and February. This helped boost the country’s capital formation to 7.7 percent in the first quarter, notwithstanding the 6-percent slump in private construction in the same period.

Disbursements for public construction were made largely toward infrastructure projects under the Department of Public Works and Highways (DPWH) and the Department of Transportation and Communication (DOTC), as well as the Health Facilities Enhancement Program (HFEP) of the Department of Health (DOH) and various infrastructure projects implemented through Grassroots Participatory Budgeting in the Autonomous Region of Muslim Mindanao (ARMM).

It’s useful to note, however, that the slowdown in private construction was influenced by some necessary interventions: the Bangko Sentral ng Pilipinas (BSP) had to tighten policies to prevent the formation of a real estate bubble. These involved the stricter enforcement of banking rules, including the reporting of investments in debt and equity that financed real estate activities in the first quarter of the year.

Vigorous activity in public construction was clearly a principal driver in the expansion of our first-quarter GDP, even as private construction decelerated in the first three months of the year. Without the Administration’s focused investments in infrastructure and capital outlay, it’s very likely that GDP growth in the first three months of 2014 would have contracted further.

Meanwhile, government final consumption expenditure climbed by 2 percent in the first three months of the year, thanks to increased public spending on Personnel Services (PS) and Maintenance and Other Operating Expenditures (MOOE). Disbursements for PS spiked by 6.3 percent to finance new teaching positions in the Department of Education, as well as to cover the Magna Carta benefits of social workers and the rise in pension claims and base pay of the country’s uniformed personnel. MOOE spending scaled up by just 2.7 percent, as most disbursements for this sector had been frontloaded in the previous year on account of the election ban.

With the Updated Philippine Development Plan as the Aquino administration’s blueprint for inclusive growth, we intend to accelerate disbursements in our bid for stronger and more inclusive development. For one, the government’s post-calamity reconstruction and rehabilitation activities—especially in Yolanda-hit areas—will go a long way in ramping up our public infrastructure investments. This is on top of the major infrastructure programs already lined up for this year, given the Administration’s drive to boost economic services in the country through public construction and capital outlay.

It’s crucial as well to note that public infrastructure has advanced by leaps and bounds since the Aquino administration took over. Government-driven construction has consistently performed well, and we can expect it to maintain—perhaps even surpass—its current pace and create a decidedly positive impact on the country’s economic profile.

Despite the volatility of the global market, the Philippines still proved to be one of Asia’s best-performing economies, despite the blows we absorbed in the previous year. Ours is a position of studied optimism, where we have a full appreciation of the economic risks in our purview, as well as of the country’s immense potential for robust development in the next three quarters.

As always, our good governance agenda and stable economic fundamentals remain at the heart of the Aquino administration’s campaign for inclusive growth. In this way, reforms for transparency, accountability, and openness will not just fuel rapid and sustainable economic progress, but will likewise bring real and tangible improvements to the lives of Filipinos.

GPH Website

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