Philippines: Gov’t keeps 7-8% growth target for 2019

  • The government will hold on to its 7-8% growth target in 2019, according to Finance Secretary Carlos G. Dominguez III who noted the Philippines has room to stand resilient despite a slowing global economy.
  • This after the Philippine Statistics Authority (PSA) revised the third-quarter growth figure to 6%, a tad slower than the previously reported 6.1% due to lower growth in some sectors such as manufacturing, trade of motor vehicles, and financial intermediation.
  • “First of all, we’re not really a big international trader. Of course we are affected by the headwinds but because we have this ‘Build, Build, Build’ program, we are sort of insulated. And we have good credit, we have good tax collections, [so] we are quite insulated.”
  • Slower inflation is seen to persist as food supply normalizes and as world crude prices drop, Mr. Dominguez said, making it almost certain that price increases will return to the 2-4% pace in 2019.
  • Central bank is unlikely to raise interest rates further as prices cool, UBS said in a report published on 23 Jan 19.
  • Substantial investments in infrastructure would likewise propel growth, Mr. Dominguez added, as seen in the 50% increase in state spending from Jan – Nov 18.
  • Meanwhile, Mr. Dominguez pointed out that additional revenues drawn from the Tax Reform for Acceleration and Inclusion (TRAIN) law that took effect in 2018 will continue supporting the more upbeat government spending, with collections reaching PHP41.9bn as of Sep 18 albeit short of the PHP44.3bn target for the first nine months.
  • Mr. Dominguez also signalled confidence that package two of the tax reform program can still be passed within 2019.

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