Economic Growth Depends on Infrastructure Boost

MANILA, Philippines – Economic expansion of the Philippines is greatly weighed on the ability of Duterte administration to make its infrastructure projects happen.

A BMI Research analyst stated that infrastructure boost in the country could keep up the growth of the economy while hinting positivity that this could be done even if there is no public-private partnership (PPP) project approved in the first two quarters of the new administration.

BMI Research quoted in its Asia Monitor January edition that the economic growth of the Philippines would sustain its pace in the short term, presuming the government under Duterte would accomplish its plan to augment compensation for road and rail network developments.

The report also added that performance of the Philippine economy would chiefly be based on the ability of the current administration to ensue investment and infrastructure developments alongside red tape contraction. Moreover, the government’s commitment to sustain and improve the program for public-private ventures would also play a role.

Infrastructure spending is eyed to be increased by 7.1 percent of gross domestic product (GDP) by 2022, which is the year Duterte’s term would finish. According to the Investor Relations Office’s EconomyPH December issue, this is higher than the pre-set GDP of 4.3 percent in 2015 and 1.8 percent in 2010.

The national budget for 2017, which is worth P3.35 trillion, is also inclusive of public infrastructure spending hike of 13.79 percent to P860.7 billion. The infrastructure allotment is 5.4 percent of GDP this year from 5.1 percent of GDP in 2016 worth P756.4 billion.

Benjamin E. Diokno, Department of Budget and Management (DBM) Secretary, stated that the government anticipates spending around P9 trillion from this year towards 2022 to fill in the gap, which economists claimed to have delayed the growth potential of the country.

Ernesto M. Pernia, Socioeconomic Planning Chief, stated that the present government would recover from where Aquino administration left off relative to PPP development, stating that Duterte and his Cabinet projects to execute 17 deals from July 2016 until the end of this year.

The agreements for 14 PPP developments are valued at P293.91 billion, which have been provided since their unveiling in the third quarter of 2010, following assumption of office by the previous president.

Over six months since President Rodrigo Roa Duterte governed the country on June 30, the new administration has yet to honor a PPP contract to date.

Nonetheless, Raphael Mok, BMI Asia Analyst, stated that this is not a great reason for concern, particularly now that President Duterte has only been in the position for around two quarters, which is a short term, and his government would need time to adjust and roll out whatever it is to be done.

About the Author
The Stock Signals Philippines is the online news media arm of Equilyst Analytics. Inc., an SEC-registered stock market consultancy firm in the Philippines that guides Filipinos on long-term investing and short-term trading and offers mentoring services.

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