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Spending overdrive to fuel 6% growth

An economist of ING Bank Manila is hopeful that economic growth would hover about six percent this year despite the weak output in the first half, citing government efforts to boost the economy.

In a report, ING Bank Manila senior economist Nicholas Mapa noted recent Department of Budget and Management announcement that utilization of notice of cash allocation, or the DBM-issued disbursement authority to cover government agencies’ cash requirements, has reached 93 percent of this year’s program as of end-July.

As of last July, NCA utilization amounted to P1.569 trillion, almost near the P1.688 trillion that has been released.

DBM has said it released 89.1 percent or about P3.263 trillion of this year’s P3.662 trillion obligation program as of end-July.

“With the latest DBM release showing the government’s resolve to boost growth via expenditures, we can expect growth to finish the year on a strong note,” Mapa said.

He also said government spending on maintenance and operations in the first half of the year rose nine percent year-on-year amid the delayed approval of this year’s P3.7-trillion national budget.

Mapa expects capital formation to recover on projected expansion of the construction and durable goods’ contribution to domestic growth on back of the cuts in the Bangko Sentral’s key policy rates.

Consumption is also expected to get a boost from the continued deceleration of domestic inflation rate.

“With less than five months to go before the close of the year, DBM numbers do show the resolve of the government to get spending back to their 2018 ways and we can expect the Philippines to chase escape velocity to vault growth back into the six percent handle to finish the year,” he added.

In the first half of the year, the domestic economy registered a 5.5-percent growth, below the government’s six to seven-percent target band this year.

Economic managers attributed slower growth, as measured by gross domestic product, to the impact of the delay of the approval of this year’s national budget.