Gross domestic product in the first quarter stood at 5.2%, the slowest expansion since fourth quarter of 2011, as weak exports and government spending weighed on the Philippines’ overall economic performance.
The first-quarter output also prompted economic managers to concede that hitting the upper end of the government’s 7%-8% target range will be a “challenge” although they kept growth goals intact in their latest meeting last month.
“We have taken that into account in our last policy meeting, the performance of the real sector. We believe that the economy continues to be strong, that there are drivers of growth and that the monetary situation is that there is sufficient liquidity in the system and interest rates continue to be at historic lows,” Mr. Tetangco told reporters last week.
“So based on that, and considering the statement of the government, that they’re going to accelerate government spending, the Monetary Board is of the view that there is no need for monetary stimulus, initial monetary stimulus at this time because there’s enough liquidity,” he added.
Money supply in May hit a five-month high on the back of sustained demand for credit.
M3 — the broadest measure of money within an economy — grew 9.3% year on year last May to P7.6 trillion, slightly faster than the 9% recorded in April and the fastest since the 11.2% recorded in December 2014.
The pace, however, was slower than the 29.2% growth in the same month last year and lower than the “normal” 12%-15% growth deemed by monetary authorities.
The national government also vowed to accelerate public spending and help boost economic growth, with President Benigno S. C. Aquino III signing Administrative Order no. 46 which created full-time specialist units at government agencies to focus on getting spending to flow.
The Department of Budget and Management also set rules to closely monitor the spending performance of government offices and help resolve underspending in the public sector.
Government expenditures grew 5.5% in the first four months of the year to P660.6 billion.