Philippines Pledges Record Spending to Fight Global Slowdownby
Outgoing President Aquino ramping up spending more than 30%
Government targets economic growth of 6.8% to 7.8% this year
The Philippines, heading into an election next month, plans to boost state spending by more than 30 percent to help shield the economy from a global slowdown.
The record proposed expenditure this year will support economic growth of as much as 7.8 percent, Economic Planning Secretary Emmanuel Esguerra, who took office in February, said in an interview in Manila on Wednesday. State spending rose 7 percent in January from a year earlier, the Finance Department said Thursday.
“We are a small country in an open economy but we have some degree of freedom and that is your government spending,” Esguerra said. “That is being ramped up. Sure, the global environment is not great but you have your domestic sources of growth.”
China’s slowdown is reverberating with the Asian Development Bank last week saying that growth in the region’s emerging economies will slide to a 15-year low this year as exports slump. Outgoing Philippine President Benigno Aquino, who’s overseen the economy’s best period of growth since the 1970s, is increasing spending to a record this year as he boosts outlays on roads and airports.
The weaker outlook in China and other major economies in Asia and in Europe pose risks to Philippine growth, Esguerra said in the interview at his office. Low inflation will help support consumer spending, and the peso will probably remain stable for the rest of the year, he said.
The peso rose 0.1 percent to 46.145 per dollar as of noon in Manila today. It has gained more than 2 percent this year. Philippine stocks rose almost 4 percent this year, among the best performers in Asia. Excluding debt interest payment, government spending increased 15 percent from a year earlier, the Finance Department said.
The government in February cut its economic growth target for this year to 6.8 percent to 7.8 percent, compared with a previous goal of as much as 8 percent. The economy expanded 5.8 percent in 2015, the slowest pace in four years.
While the government is not yet seeing overseas Filipino workers lose jobs because of the slump in oil prices, officials are monitoring the situation and are preparing a contingency plan, Esguerra said.