Economic Planning Secretary Arsenio M. Balisacan
Press Conference on the 2015 Q1 Performance of the Philippine Economy
28 May 2015, 10:00 AM
PSA-NSCB Operations Room, Makati City
Ladies and gentlemen, members of the media, our colleagues in government, good morning.
The 5.2-percent GDP growth in the first quarter of 2015 reported by the Philippine Statistics Authority is lower than what the government and the market expected for the period. While growth in the private sector remains robust, the slower-than-programmed pace of public spending, particularly the decline in public construction, has slowed down the overall growth of the economy. Apart from the normal first quarter delays in government spending, the recent uptick in disbursements from the Department of Budget and Management has not yet been reflected in the national income accounts. Still, the 4.8 percent growth in government consumption is much faster than in the first quarter of 2014, driven by the 19.2-percent increase in disbursements for maintenance and other operating expenses primarily on social protection programs, bottom-up budgeting projects, and the country’s hosting of the Asia-Pacific Economic Cooperation meetings.
Despite this lower-than-expected growth, it is reasonable to believe that the economy will grow at a faster rate in the remaining quarters. Private sector economic activity remains vibrant, with private construction registering a double-digit rise of 14.2 percent for the quarter and private investments in durable equipment rising by 14.3 percent. The latest business confidence index from the Bangko Sentral ng Pilipinas shows that next quarter confidence index climbed to 58.2 percent from 43.1 percent in the previous survey. Likewise, growth in household consumption remains steady at 5.4 percent. Based on the first quarter 2015 Consumer Expectation Survey, consumer sentiment improved in the quarter due to expectations of stable price of commodities, decline in oil prices, availability of more jobs, higher number of employed family members, and fewer calamities during the period, among others. These clearly indicate that business and consumer confidence on the economy is still very high and is supportive of our optimism in hitting our growth targets for 2015.
But the missed opportunity to have a higher growth for the period is not totally foregone as we still expect public spending to pick up for the rest of the year. According to the latest report of the Department of Budget and Management, the disbursement performance for the first three months of 2015 shows a trend towards faster government spending. If this disbursement trajectory is sustained and reflected in all government agencies, the higher government spending will fuel even more activities in the private sector, and thus push economic growth in the next quarters of the year.
The growth performance in this quarter tells us that there are still issues that the government needs to confront in order to maintain the high level of confidence that the business sector is showing and entrusting the country. Therefore, we are keeping a careful watch over the spending performance of the agencies to ensure that implementation bottlenecks are being addressed and the execution of programs and projects will not be further delayed.
Amid the challenges that government continues to face, we must keep in mind that the economic performance in the first five years of this administration remains the highest five-year growth average recorded by the country since the mid-1970s – a testament to the private sector support for the governance and economic reforms that we have been implementing. This is what should drive us all to continue to work to make both the government and the private sector move at the same pace of growth for our economy to reach its highest potential. As we have always reiterated, the country needs to continuously take on the high growth path alongside of ensuring that it is sustainable and inclusive. We are also hopeful that through the effective facilitation of programs and projects on poverty reduction and employment generation, we will be able to reach the targets that we have set until the end of this administration.
Salamat at mabuhay tayong lahat!