A rebound in government spending is likely to provide a boost to GDP growth in the Philippines over the next few quarters. Fiscal data published earlier this week from the Bureau of the Treasury show that government spending is starting to recover. In May spending grew by 7% y/y - compared with a 3% decline in the first four months of the year. It follows the passage of the delayed 2019 budget in mid-April. Up until then, the government had been operating on a re-enacted 2018 budget. It is likely that spending will accelerate further over the coming months, as delayed government infrastructure projects are brought on line. The economy grew by just 5.6% y/y in the first quarter of the year, but we expect full-year growth to reach 6.0%, supported by stronger government spending.
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