A COMBINATION OF slow government spending, the stigma caused by the flood control fund scandal and weather-related disruptions have brought industry– including construction and manufacturing– to its lowest level in the third quarter.
An exasperated Economic Planning Secretary Arsenio Balisacan told newsmen recently that he was not “optimistic (on growth) as I used to, given what the data that have been coming out in recent weeks, particularly the performance of our industry.”
“The industry is probably at its lowest point in recent years.”
INDUSTRY SCANDAL A FACTOR
Without divulging more details, Balisacan said the Philippine Statistics Authority would release today (November 7) the official statistics on the gross domestic product (GDP).
He attributed the sluggish performance to the corruption scandal, weather-related disruptions and mounting global uncertainties that “have weighed on GDP growth in the third quarter.”
The slowdown in government spending and fixed-capital formation, and other areas like industry and services, said Balisacan.
A crackdown on anomalous flood control projects alongside a corruption probe may have affected government disbursements, Business World said.
‘(Balisacan) attributed the sluggish performance to the corruption scandal, weather-related disruptions and mounting global uncertainties that “have weighed on GDP growth in the third quarter … A crackdown on anomalous flood control projects alongside a corruption probe may have affected government disbursements.’
Q3 DISBURSEMENT ONLY P1.46T
The Marcos administration only disbursed P1.46 trillion in the third quarter, or P141.73 billion less than tha P1.6 trillion for the period due to lower spending by the Department of Public Works and Highways, the executive office that is in the middle of investigations on anomalous flood control projects, data from the Bureau of the Treasury showed.
Balisacan added that adverse weather conditions that led to the suspension of work and classes may have contributed to slower growth in the July-to-September period.
But he expects the impact on growth to be temporary, with a recovery likely in the next few quarters.
In the first six months of 2025, the economy grew by an average of 5.4%. The government is targeting 5.5-6.5% GDP growth this year.
“Our economic fundamentals have remained strong. The potentials have remained strong, our GDP growth potential is quite high, 6% and above. But reaching those potentials is another matter, and those are affected by instability, uncertainty, and we’ll see,” he said.
The country’s GDP likely grew by 5.3% in the third quarter, based on a median forecast of 18 economists and analysts polled by BusinessWorld. This is slower than the 5.5% expansion in the second quarter, but a tad faster than the 5.2% expansion in the July-to-September period of 2024.
RICE TARIFF REVIEW
Balisacan said the Economic Development Council is scheduled to convene on Tuesday to tackle the proposal to raise rice tariffs to 35% from the current 15%.
The Department of Trade and Industry will present its recommendation on rice tariff adjustments during the meeting. This recommendation was endorsed to the Council by the Tariff-Related Matters Committee.
The Department Agriculture earlier recommended raising the rice import tariff to its original 35% rate from the current 15%.
President Marcos, Jr. on Sunday approved the extension of the country’s rice import ban until yearend.
Balisacan said the government has “good enough supply” of rice to temper increases in retail prices.
“The overall goal of that is to protect farmgate prices from further falling, because in the past almost a year now, farmgate prices have dropped by more than 30%,” he said.
BUT FARMERS DISAGREE
Farmer groups have blamed the current 15% tariff for keeping farmgate prices low by encouraging cheaper imports, undermining local producers.
But he warned that tweaking the rice import tariff alone won’t fix the farmers’ problems.
“You have to use a combination of policy tools to address those problems, and that’s what we are going to present tomorrow. This approach will ensure the market will support medium-term and long-term development efforts,” he said.
Samahang Industriya ng Agrikultura spokesman Jayson H. Cainglet argued that the rice tariff cut to 15% has failed to benefit consumers, with importers and traders instead pocketing the savings.
He noted that palay production cost is P14.61 per kilo, but palay is only being bought at P8-12 per kilo, he told BusinessWorld.
He said the reduced tariff has resulted in P25-billion foregone revenues from the imported rice as of end-August.