DOF pegs 2018 GDP ‘close to’ 6.8%

The Department of Finance (DOF) expects the Philippine economy to accelerate slightly this year, driven by the government’s infrastructure spending program.

In an interview with global debt watcher Fitch Ratings in mid-August, Finance Secretary Carlos Dominguez III placed the gross domestic product (GDP) growth at 6.8 percent.

“I think we will still be close to 6.8 percent this year,” he said in the interview, which was released to the media on Monday, September 3.

“I think the momentum on our Build, Build, Build is very strong and we’re really moving quite well in our infrastructure program,” Dominguez noted.

Infrastructure and capital outlays stood at P352.7 billion in the first half of the year, 4.3 percent higher than the P338.3 billion on program, Budget Secretary Benjamin Diokno told reporters on Aug. 1.

“The second quarter results came out and it looks like our economy took a breather and our growth rate, however, for the first half is still at 6.1 percent,” Dominguez said during the one-on-one with Stephen Schwartz, head of APAC Sovereigns at Fitch, in Manila.

“I think we can grow at a faster rate in the coming months and we believe that we are really not in danger of overheating at the moment,” the Cabinet official added.

While 6.8 percent is a slight improvement from 6.7 percent registered for the full-year 2017, it is below the government’s target.

The inter-agency Development Budget Coordination Committee (DBCC) earlier announced an economic growth target of 7.0 to 8.0 percent from 2018 to 2022.

Dominguez noted that growth could slow down in view of the recent move by the Bangko Sentral ng Pilipinas (BSP) to raise interest rates.

The BSP has raised policy rates thrice so far this year—25 basis points each in May and June, and another 50 basis points earlier this month.

The overnight borrowing rate was increased to 4.00 percent, while the overnight lending rate was adjusted to 4.50 percent and the overnight deposit rate to 3.50 percent.

“We have had basically ... 100 basis points increase in our rates this year, and I think we will cope with it as best we can,” Dominguez said.

“It will (affect growth) a bit, but as I said, we’re still only at 4 percent or around that area, so it’s not yet growth threatening.” —VDS, GMA News