Price pressures, infra gaps post risks to Phl economy

Then Bangko Sentral ng Pilipinas cited downside risks to economic growth amid positive prospects for the second half after the slower growth in the second quarter. JOEFEL O. BANZON

Jasmin Dacio, BSP Department of Economic Research officer, said that on the domestic front, inflationary pressures and infrastructure gaps continue to post risks to growth prospects.

Price pressures, she said, are driven by higher excise tax on fuel amid the implementation of a new tax law and rising global commodity prices.

On the external front, she cited political and policy uncertainties overseas, and the rise of protectionist policies particularly in the US as among the risks to the country's growth.

While the Philippine economy is well-insulated, Dacio said it isn't immune from external shocks: global spillovers are manageable given homegrown sources of resilience.

She recently joined other officials from BSP and Department of Finance in a forum in Cebu City on inflation, tax reform and economic developments.

"The Philippine economy is expected to sustain its growth story over the medium term," she said, citing the robust domestic consumption.

Despite this, she also pointed out the need for continued vigilance one inflation dynamics amid the rising consumer prices.

Inflation last month grew 5.7 percent, its highest in around five years, as costs of basic goods and fuel continued to rise.

The DOF had earlier raised optimism the economy would grow faster in the second half on the back of larger investment inflows and exports, higher infrastructure expenditures, and an improved revenue effort which posted a first-semester performance in 2018 that is the highest ever in the country's tax history.

The country's gross domestic product (GDP) rose 6 percent in the second quarter, slower than expected.

The DOF had noted that domestic demand remains robust while investment flows grew in the first half of this year.

In terms of expenditure, the government's effort improved to 19.47 percent, which is the highest first semester expenditure effort since 2003.

In the first half of the year, the government's revenue effort also improved by 1.47 percentage points to 17.12 percent, which is the highest first semester revenue effort ever achieved since 1946.

The tax effort of 15.23 percent is also the country's highest first semester tax effort.

“Our tax effort is now at par with the best-managed economies in the region. It is a tax effort we can very well sustain, especially with the subsequent packages of the comprehensive tax reform program (CTRP) now being deliberated [by the Congress],” DOF secretary Carlos Dominguez III had said in a statement.