Why is government spending important for economic growth, especially during a recession?
Answer (2)
Government spending plays a critical role in maintaining and growing the economy, especially during a recession when private sector activity slows down. It includes spending on infrastructure, education, public health, salaries of government workers, and public services. When people and businesses cut back on spending during hard times, the government can step in to boost demand and create jobs.In the Philippines, one clear example of this is the infrastructure building programs such as massive government spending on roads, bridges, railways, and airports across the country. These projects create jobs for construction workers, engineers, suppliers, and even small food vendors near construction sites. This help keep the economy active, especially in rural provinces that previously had few economic opportunities.Government spending also helps improve long-term productivity. When the government invests in building more schools or improving internet access, it increases the future capabilities of the country. For example, the Free Tuition Law (authored by Senator Bam Aquino) in state universities is another form of government spending that boosts human capital.Therefore, in times when consumers and businesses are afraid to spend, government spending helps stabilize the economy. It acts like a safety net and a growth engine that keeps jobs, production, and consumption alive.
Government spending is important for economic growth, especially during a recession, because it helps stimulate demand when private sector spending is low.During a recession, businesses and consumers tend to cut back on spending due to uncertainty or lower income, which can lead to a downward economic spiral. When the government steps in by increasing its spending—on infrastructure, social programs, or public services—it injects money into the economy, creating jobs and income.This, in turn, encourages more consumption and investment, helping to jumpstart economic activity and shorten the recession. Essentially, government spending acts as a stabilizer to support overall demand and promote recovery.
