The Philippines Urge Extra Spending after a Weak Economic Report
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The end of 2014 saw the Philippines submit its weakest economic report in almost three years. Moves to curb graft are part of the reason behind this negative data. The abuse of power throughout the government has deterred public spending. Despite the positive things he has been able to achieve so far, President Benigno Aquino has to convince officials throughout the country to unclog the logjam.
The end of 2014 saw the Philippines submit its weakest economic report in almost three years. Moves to curb graft are part of the reason behind this negative data. The abuse of power throughout the government has deterred public spending. Despite the positive things he has been able to achieve so far, President Benigno Aquino has to convince officials throughout the country to unclog the logjam.
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Nothing to Cheer About
Though the president received praise for his ability to turn the Philippines into one of the fastest-growing economies in the region, experts predict that growth will slow to about 6% this year, from 7% in 2014.
The anti-corruption crackdown that took place in China forced officials to slash spending on luxuries and entertainment. Similarly, in the Philippines, a similar drive has seen civil servants delaying their projects, from fishing ports to rail lines, according to budget officials. About 15% of planned state spending, equaling about $1.85 billion was unused in the third quarter of 2014, according to government data. Maybe they could lower taxes and give it back to the people.
Spending Slowdown
Government data show that state spending has fallen by 8% since November 2013. Spending had contracted by 2.6% in the July-September period compared to the same period one year ago. That is the biggest drop in over fourteen quarters. Gross domestic product rose 5.3% in the third quarter of 2014, slowing from a pace of 6.4% for the previous three months.
According to experts, increased transparency throughout government and tighter enforcement can slow the use of public funds. However, this impact is short-term. Substantial gains can occur from the actions taken to reduce corruption, including improved investor confidence and enhanced efficiency regarding government spending.
The drive pushed forward by Aquino against graft has helped the country win credit rating upgrades, alongside greater direct investment from foreign countries. The Philippines have actually climbed to 85 out of 175 economies when it comes to the Transparency Internationals Perceptions of Corruption Index.
Philippines Future
The government is relying on spending throughout the country to improve this year for the sake of the Filipino economy. Financial insiders and government officials alike have banded together to insist that the problems the country currently faces are not permanent. Although the issues were significant in the third and fourth quarters of 2014, officials suggest that this year they expect spending to increase drastically, kick starting the economy.
But outstanding economies do not come from government spending, they come from private sector spending. The future is uncertain on this island nation.
