2025 growth goal still ‘very much achievable’

THE country’s economic growth targets remain achievable despite expectations of slowed government spending as a result of corruption controversies, Socioeconomic Planning Secretary Arsenio Balisacan said.

“[T]he low end of the range is very much achievable,” the Department of Economy, Planning and Development chief told reporters on Thursday.

The government is targeting 5.5- to 6.5-percent growth this year and the Bangko Sentral ng Pilipinas (BSP) last week warned that the goal could be missed given the flood control project scandal’s impact on state spending.

Earlier this week, Finance Secretary Ralph Recto also said that growth — currently averaging just below the bottom end of this year’s target — could drop for the rest of the year and “possibly until next year” as government spending had slowed.

Balisacan said a third-quarter growth slowdown was possible due to supply shocks and impact of typhoons on work activity, but also noted that easing inflation and lower interest rates could provide a boost.

He acknowledged that the corruption scandal could affect business and consumer sentiment, and that development partners had been surprised by the extent of the issue, but claimed the setback would be temporary.

“As a result of this, we can put our house into better order,” he said. “We can put [in] reforms. We can get these institutional processes to address these issues, so we establish a better foundation for long-term growth.”

Should this year’s growth still fail to hit 5.5 percent, Balisacan said the miss would just be by 0.1 to 0.2 percent.

“[S]tatistically, they’re not too different,” he said.

Recto, meanwhile, on Tuesday said 2025 growth could end up at 5.4 percent, down from 5.7 percent last year.

“If part of the budget hadn’t been lost to corruption, the economy might’ve been growing by around 6 to 6.2 percent,” he said.

The BSP last week bucked market expectations and cut key interest rates by 25 basis points, noting the need to support economic growth and the impact of the corruption scandal.

Following the policy meeting, central bank Deputy Governor Zeno Abenoja said growth could be lower than projected.

“There’s probably a greater probability that we will be slightly below those targets that have been set by the government,” he said.

“Of course, a lot of this depends on the infrastructure spending, how it will evolve the rest of the year as well as into the next year, so we’re looking at this very closely.”

BSP Governor Eli Remolona Jr. said growth had underperformed as “what we thought was going to investment wasn’t going there at all.”

“[T]he reason we were underperforming is, I think, in large part because of the governance issues related to infrastructure spending.”