Government Spending Disappoints

PHILIPPINES - In Brief 26 Jun 2014 by Romeo Bernardo
Early news releases report a disappointing 9% decline in government non-interest expenditues for the month of May. This followed a mere 0.5% growth in spending last month which had been attributed to seasonal slowdown during Lent. Although there is still June performance to consider, weak public sector spending so far supports what we think will be a further slowing in the 2Q14 GDP growth number, from 5.7% in 1Q14. We think 2Q14 economic activity bore the brunt of the three-month long (beginning late February) truck ban that affected not only the timeliness of export and import flows, including delays in releases of shipments of raw materials needed for local manufacturing, but also raised production costs that many fear will in time feed into higher prices and blunt demand.

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