PNoy admin vows to make up for Q2 slack

Economic planners pledged to boost government spending in the coming months to pump prime the economy and make up for the slack in the first and second quarters. The second quarter results were “…below NEDA's forecast of 4.5-5.5 percent, as well as private analysts' average projection of 4.9 percent, and some international organizations' average outlook of 5.0 percent in the second quarter," NEDA director-general Cayetano Paderanga said in a statement Wednesday. The economy, as measured by the gross domestic product (GDP), grew 3.4 percent in the second quarter from a revised 4.6 percent in the first quarter and 7.9 percent a year earlier, National Statistical Coordination Board (NSCB) data showed. The second quarter GDP amounted to P2.4 trillion, according to NSCB data. "We are quite surprised that growth decelerated further in the second quarter. This must be driven by the prolonged strong downpull of weak global economy which affected both exports and remittances," according to Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo. But the NSCB saw the lower-than-expected figures in a different light. “On the demand side, the growth came mainly from consumer spending as fixed capital formation particularly construction has not really felt the promise of the Public and Private Partnership program, while external trade has been lackluster at best," NSCB Secretary-General Romulo Virola said. Q3, Q4 rebound The NEDA chief said the forecast from several sectors shows better performance in the remaining months of the year. “The manufacturing sector will be buoyed by the food manufactures. Real estate and private construction will continue to remain upbeat given the bright prospects in the property market, in particular the office, residential, retail and hotel/leisure submarkets," Paderanga said. “Other services and trade will be supported by inbound tourists, the number of which is expected to rise, on the average, by 6.3 percent in 2011," the socio-economic planning secretary added. Paderanga said the mining sector is bound “to benefit further from high metal prices in the world market." The BSP’s most recent business expectations survey shows the private sector sentiment is buoyant about the third and fourth quarters. Although some financial institutions like Metrobank and Citigroup saw the slower economic growth coming. More government spending Budget Secretary Florencio Abad assured that “interventions to speed-up spending and implementation of programs and projects are now taking effect. We’re seeing that departments and agencies will catch-up significantly with their targets in the last five months of the year." The Department of Budget and Management said it has disbursed P832.3 billion so far, but this is less than half or 48.6 percent of the 12-month disbursement program of P1.7 trillion which means that the national government has to spend P830.59 in just five months. Addressing this issue, Paderanga said “recognizing the low utilization and absorptive capacity of its departments and agencies, the government focused on fast moving expenditures to beef up its spending." The economic chief noted the DBM has set timelines for the processing of the notice of cash allocation (NCA) as well as allowing the government agencies to pay their creditors and contractors using their available NCA." The DBM is supposed to have some leeway in terms of deficit spending inasmuch as the cumulative deficit in the first seven months has reached only P43.713 billion, which is far from the full-year deficit target of 3 percent of GDP or P300 billion. The Budget chief said among the projects lined up in the next five months include hiring of nurses and healthcare workers, rural electrification, infrastructure for agrarian reform, aquaculture support, on-site housing and resettlement, local roads connecting to national roads, farm-to-market roads and additional national roads and bridges. Construction sector spending in the second quarter, usually a peak season for infrastructure, fell 13.5 percent to P131.38 billion from P151.8 billion. The BSP’s Guinigundo assured the Aquino administration of its readiness to address the challenge of increasing investments and domestic absorptive capacity by ensuring ample liquidity in the system and low cost of money. The BSP’s policy-setting Monetary Board has decided to keep benchmark interest rates at current levels of 4.5 percent for overnight borrowing and 6.5 percent for overnight lending. — Earl Victor Rosero/VS, GMA News