Statement of Budget Secretary Florencio Abad
On the first quarter GDP growth and fiscal performance
[Released on May 19, 2016]
We are proud to say that the Philippine economy grew to 6.9 percent in the first quarter of 2016. In doing so, we exceeded market expectations and bested 11 countries in the region, including China. Truly, the Philippines has become the fastest growing economy in Asia.
Government final consumption accelerated to 9.9 percent, a significant increase from the measly 0.2 percent in the first quarter of 2015. The growth was primarily led by public construction which reached almost 40 percent in the first quarter, a leap from the 20-point contraction in the same period last year. It is important to note that public construction has sustained double-digit growth since the second quarter of 2015.
As cited in the latest fiscal performance report, public expenditures recorded a remarkable double-digit growth at 17 percent in the first quarter, reaching P591.5 billion, largely contributed by the front-loading of agency budgets and faster rate of disbursements in the run-up to the elections. The increase was brought about by the comprehensive release of the budget at the start of the year, allowing agencies to get a head start on carrying out programs and projects immediately.
In particular, also in the first quarter, the rate of fund utilization of key agencies shows an improvement in spending. The Department of Public Works and Highways reached 97 percent, compared to the 91 percent in 2015, while the Department of Health reached 94 percent, improving by 21 percentage points from 73 percent in the same period last year.
With this development, we at the DBM are pleased that efforts to ramp up public spending since last year has shown substantial results. As budget reforms continue to make headway this year, we expect that spending will remain on track to drive further growth in the succeeding quarters.
Backed by vibrant domestic consumption and strong economic fundamentals, we remain optimistic that the economy will continue to expand this year. The country has made unprecedented growth in the past five years, and we primarily owe this to the principles of good governance—upholding transparency, accountability, and openness especially in the management of public funds.
We have seen that the Philippines has shown outstanding resilience in the midst of global volatility, and we are confident that with the reforms in place, the country will maintain its momentum and continue on the path to growth.