MANILA -- The Philippines on Wednesday slashed growth targets for 2019 and 2020 as a deepening budget impasse threatens to slam the brakes on the country's rapid economic expansion.
President Rodrigo Duterte's economic team cut the government's gross domestic product growth targets to 6-7% for this year and 6.5-7.5% for 2020, after aiming for 7-8% over the next two years. The government last targeted 6-7% in 2016.
Growth targets for 2021 and 2022 were kept at 7-8%.
A deadlock over Duterte's spending plan threatens to end the country's seven-year streak of growing more than 6%. The budget row puts the government's ambitious infrastructure plan on hold, delays salary increases and risks pushing thousands into poverty.
Congress initially approved the budget last month, but last-minute insertions have further delayed its submission for Duterte's signature.
The government has been operating this year under 2018 allocations. "The longer the budget impasse lasts, the larger the adverse effect to the Philippine economy and its people," Acting Budget Secretary Janet Abuel said.
The country's socioeconomic planning agency projects GDP growth to fall between 6.1 to 6.3% this year if Duterte signs the 2019 budget next month at the earliest. If the budget remains on hold for the rest of the year, the country's growth could fall as low as 4.2%. That would be the slowest rate in eight years.
When the government last operated on a previous year's re-enacted budget in 2009, the economy grew just 1.1%.
Growth in 2018 already dropped to its slowest pace in three years as a decade-high inflation rate crimped consumer spending, the Philippines' main economic driver. Despite Duterte's economic team prodding lawmakers to pass the budget soon, and a meeting between the president and congressional leaders on Tuesday night, the end appears to be nowhere in sight.
"We call on the senators and representatives to break the stalemate and deliver to the Filipino people an appropriations law that can aid this government, better their lives and help our country move forward," Duterte's spokesperson said.
Beyond the budget, Finance Secretary Carlos Dominguez also flagged "unresolved trade issues" as a concern, without naming specific countries. "Any slowdown in growth of trading partners will affect our growth possibilities," he said.
Back home, Socioeconomic Planning Secretary Ernesto Pernia cited El Nino-induced drought as yet another threat to the country's prospects.
Dominguez said the government has already missed out on the crucial window to launch infrastructure projects before the rainy season sets in during the second half of the year. A ban on public works leading to the midterm elections could also further delay infrastructure construction.
"It's going to be very difficult to catch up," Dominguez said. "We missed the best time to start construction projects."