Growth target downgraded

PHILIPPINES - In Brief 14 Mar 2019 by Romeo Bernardo

---

Yesterday, economic managers downgraded their GDP growth target for 2019 from 7-8% to 6-7%, blaming the continuing delay in the passage of the national budget. The budget, which was supposed to have been transmitted for the President’s signature early this month, hit an unexpected snag when the Senate refused to sign-off on the enrolled bill, accusing the Lower House of amendments after both chambers had ratified the bicameral conference committee report. The President reportedly tried to break the impasse in a meeting in Malacanang Tuesday night but apparently failed to resolve the problem then.Economic managers said that the revised 6-7% growth target continues to assume that a new budget will be in place soon, i.e., by April, adding that “the longer the budget impasse lasts, the larger the adverse effect to the Philippine economy.” It estimates the losses in economic growth points as follows: -0.7 to -0.9 ppts if the budget is reenacted until April 2019, -1.4 to -1.9 ppt if until August 2019, and -2.1 to -2.8 ppt under a full-year reenacted budget.Clearly, the economic managers’ message is intended to pressure congress to settle their quarrel over pork barrel and deliver a signed budget document to Malacanang’s doorstep soon. Looking at their baseline scenario of a new budget by April, government’s GDP estimate is 6.1% to 6.3%, which simply brings it in line with the consensus forecast (6.3%). In comparison, our February outlook report already showed a GDP forecast of 5.9% in 2019. This forecast is among the least upbeat, in part reflecting budget delay losses net of some catch-up spending later in the year. To be sure, considering that both houses of congress had r...