The Philippine economy remains one of the strongest in Southeast Asia. This is despite just missing the forecasted growth rate for 2019.
Last Thursday, the Philippine Statistics Authority (PSA) reported that the Philippines’ gross domestic product (GDP) growth for 2019 settled at 5.9%. This was 0.1% below the forecasted range of 6.0% – 6.5%.
Despite this, along with our Southeast Asian neighbors, our economy remains bullish. The region actually secured [slower than forecasted] growth for 2019, due to several factors, but the future looks better.
Factors contributing to slowdown
A major contributor to the slower growth forecast for the region is the combined impact of the US-China trade tensions since July of 2018. Other factors include the developments of Brexit, as well as the softening of the Chinese economy.
“Looking at the external environment, I think the external environment was quite challenging in 2019 because of the factors that were not emanating from the Philippines but has been impacting our economy,” said European Chamber of Commerce of the Philippines (ECCP) President Nabil Francis in a press conference. He added that the Philippine economy has become “extremely resilient” in 2019 amid these external factors.
On top of these external factors, some internal factors also contributed to this slower growth as well. The biggest is the delay of the approval of the 2019 budget.
“A full percentage point was lost because of the delay in the passage of budget. We could have grown close to if not right smack 7 per cent,” said Socioeconomic Planning Secretary Ernesto Pernia.
In 2019, the budget was only approved in April, which delayed government spending. This directly affected the growth rate, which we almost met due to a surge of spending in the latter half of the year.
All factors point to better 2020 performance
A lot of factors point to a better performance for the Philippine economy this 2020. A great sign is that the budget for the year has already been passed by President Rodrigo Duterte. This means that the government can already spend, including all projects that they have lined up, which will push economic growth.
The ‘Build, Build, Build’ infrastructure project is now in full swing. Foreign investment remains strong, with the upgraded credit rating of the Philippines to BBB+. 2020 is looking good for the Philippine economy – all factors point to us exceeding expectations.