THE year-end holidays and stepped-up government spending will help drive growth towards the close of 2023, National Economic and Development Authority (NEDA) Undersecretary Rosemarie G. Edillon said.
“(For household consumption) there is holiday spending… Early on we recommended to the President to implement holiday economics,” she said, referring the practice of manufacturing long weekends by moving holiday observances to Fridays and Mondays.
Speaking at the SGV Tax Symposium on Wednesday, she said other drivers include the improving labor market and accelerated government spending. “For the second semester, we will be seeing more spending from the government,” she said.
Gross domestic product (GDP) grew 4.3% in the second quarter, the slowest reading in over two years.
Government spending during the period contracted 7.1%, reversing the 6.2% growth posted in the first quarter and the year-earlier rise of 10.9%.
Government agencies have been tasked to come up with catch-up plans for spending amid low budget utilization levels in the first half.
Ms. Edillon also cited the push to maintain infrastructure spending levels of at least 5% of GDP as a driver.
This year, the government plans to spend 5.3% of GDP on infrastructure, equivalent to P1.29 trillion. It plans to spend 5-6% on infrastructure yearly.
NEDA also noted that parts of the economy continue to recover from the pandemic, such as real estate, tourism, and mining and quarrying.
Ms. Edillon noted the risk of elevated inflation, as seen particularly in high food prices.
“We are still seeing several challenges with respect to food inflation. We have a very small agriculture sector in terms of productivity. There are also many challenges with respect to logistics and we are trying to address that,” she said.
Inflation accelerated to 6.1% in September from 5.3% in August. The indicator remained above the Bangko Sentral ng Pilipinas (BSP) full-year forecast of 5.8%.
September also marked the 18th straight month that inflation had breached the BSP’s 2-4% target band for this year.
Food inflation surged to 10% from 8.2% a month earlier, as rice inflation accelerated to 17.9%, the highest such reading since March 2009.
Inflation averaged 6.6% in the first nine months, against 5.1% a year earlier. — Luisa Maria Jacinta C. Jocson