The low end of the government’s growth target for the year remains within reach despite expectations of a slowdown in government spending amid the flood control controversy, according to the Department of Economy, Planning and Development (DEPDev).
‘The low end of the range is still very much achievable,’ DEPDev Secretary Arsenio Balisacan told reporters on the sidelines of the European-Philippine Business Dialogue.
For this year, the government is aiming for a 5.5 to 6.5 percent gross domestic product growth.
In the first semester, the economy posted an average growth of 5.4 percent.
Revelations of alleged irregularities in flood control projects have prompted the government to put many projects on hold.
With infrastructure spending expected to slow down, Balisacan said the economic team is set to meet next week to discuss the way forward.
While there may be a bit of a slowdown in the third quarter economic performance due to typhoons that disrupted economic activities, Balisacan is hopeful that it will not be lower than the 5.5 percent growth posted in the second quarter.
He told The STAR earlier that third quarter growth is expected to be at the same pace or slightly better than the second quarter, citing low inflation, labor market improvements as well as higher exports.
Finance Secretary Ralph Recto also said that growth in the third quarter could slow down amid greater scrutiny in government spending.
Balisacan said the flood control scandal is expected to impact both investment and consumer sentiment.
He also expects uncertainties in the external environment, particularly from tariffs imposed by the United States, to affect investment growth.
‘But we believe that the setbacks are very temporary,’ Balisacan said, noting that the flood control scandal gives the country an opportunity to address issues affecting the economy’s medium and long-term prospects.
‘As a result of this, we can put our house into better order. We can put reforms. We can get these institutional processes to address these issues. So we establish a better foundation for long-term growth,’ he said.
According to Balisacan, the six to seven percent annual growth target set for next year until 2028 remains doable.
Despite uncertainties mainly due to the US tariffs, he said the outlook is a little better now.
‘So we hope that there will be greater clarity and less uncertainty in the coming years,’ Balisacan said.