2016 election spending seen to boost PH GDP – Standard Chartered
MANILA, Philippines – The presidential and national elections scheduled on May 9, 2016 are seen to boost the country's economic growth, Standard Chartered said.
In a research note entitled “Philippines – Economic trends in election years,” Standard Chartered economist for Southeast Asia Jeff Ng said the country’s gross domestic product (GDP) growth would accelerate to 6% next year from the projected 5.7% this year.
“A further, indirect or secondary impact on the economy is likely as the manufacturing, communication, and government services sectors receive inputs from other sectors due to high backward linkages. This may in turn indicate more demand from the primary, utilities, and trade sectors,” Ng said.
Ng added a study conducted by Ballester, Bartolazo, et al conducted in 2010 showed P13.5 billion ($288.03 million) was added to domestic spending, resulting in a 0.34 percentage point increase in the country’s GDP.
The study further revealed that government services, manufacturing, and private services benefited the most from increased spending, Ng said. The Commission on Elections has set expenditure limits.
For next year, Ng said presidential and vice presidential candidates are expected to spend up to P10 billion ($213.27 million) or 0.08% of nominal GDP on their campaigns.
The election spending of senatorial bets and candidates for national and local positions are expected to reach between 0.1% and 0.3% of GDP.
Standard Chartered also sees an increase in the number of registered voters that stood at 52 million in 2013.
Higher contributions from private consumption to GDP growth were noted during the elections in 1992, 1998, 2004, and 2010, but the Philippines was affected by external and domestic factors such as the Asian financial crisis in 1997 and the global economic recession in 2009.
Although external factors and domestic fundamentals have historically been more important drivers of the peso than presidential elections, the bank said there is no clear trend that elections affect the performance of the peso.
“At the margin, we expect the peso to benefit after the upcoming election as political risk subsides and portfolio inflows pick up,” Ng added. – Rappler.com