By Bernadette Reyes
If only numbers could speak, the world would have heard by now about the Philippines’ growling economy. The country was once dubbed as the “Sick Man of Asia” with massive public debt, high incidence of poverty and abysmal unemployment against a backdrop of mediocre economic growth. The mantra of the Aquino government to combat corruption through good governance seems to be paying off. Bernadette Reyes reports on the rising economic numbers and investor confidence.
In 2010, the country posted a robust performance of 7.6% economic growth. While the economy moved at a slower pace in 2011 marked by a 3.7% growth, other growth indicators were on the upside.
The Philippine stock market rose 27 times in the past 22 months. Remittances by Overseas Filipino (OFs) reached a record high of US$20 billion last year, which resulted in higher domestic consumption. Despite of the repatriation of thousand of OFs from the Middle East due to political instability and war, demand for OFs in various labor markets increased.
Even as construction weakened, the services sector grew by 5%, with information and technology and business process outsourcing industries continuing to contribute to growth.
Agricultural output on the other hand rose by 2.6% in spite of typhoons and floods that hit the country due to the increased efficiency of farm technologies.
With more public infrastructure spending lined up this year, the economy is expected to accelerate further up to 4.8%.
With all these positive developments, the International Monetary Fund and the World Bank have reclassified the Philippines from a low income to a middle-income country.
Finance Secretary Cesar Purisima anchored the country’s growth on the growing prospects of Asia. He said, “The age of transition is happening now when the balance of power is shifting to Asia from the developed markets in Europe and the US.”
The U.N. Economic and Social Commission for Asia and the Pacific, the regional arm of U.N. tasked to identify and analyze economic and social trends in the region, is optimistic the Philippines will grow further. “In terms of regional integration, the Philippines is moving ahead of the more developed countries. There is more tendency for the Philippines to move with other Asian partners,” said Sudip Ranjan Basu. Economic Affairs Officer of U.N. ESCAP.
Even as growth is expected, Purisima emphasized the need to invest in infrastructure and human capital on the back of a solid institution. “In the Philippines, President Aquino is focused on delivering good governance that will translate into good economics. His administration has invested significantly in conditional cash transfers to enable those living in poverty to be productive participants in the economy and in the expected rise of Asia,” Purisima said.
Today some 3 million people are enrolled in the conditional cash transfer program dubbed as “Pantawid Pamilyang Pilipino Program” or 4Ps of the Philippine government. By end of 2016, the number of beneficiaries is expected to go up to five million.
4Ps is a social assistance and development program that provides conditional grants to the extremely poor households of the country to improve their health and education. The government gives the families cash assistance as long as they meet the requisites to send their children to school and avail of health care services.
The true measure of economic growth however, lies not only on amassing more wealth for the privileged few, but alleviating poverty as well.
To reduce poverty, Basu stressed the importance of generating more employment.
In the Philippines employment figures have improved. In January 2012, the National Economic Development Authority reported that employment rose to 92.8 percent or an estimated 37.4 million employed individuals.
“We need to make sure that there are opportunities for jobs, which brings additional income to the people. That in turn creates private consumption which can boost the economy,” Basu explained. Once more employment is generated, it creates a multiplier impact on the economy, which leads to reduction in poverty and inequality,” Basu said.
The Philippines, said Basu, should capitalize on its strongest industries such as automobile, electronics, business process outsourcing and agro-business. “We believe the Philippines can get a lot out of that but only if the country will be mindful of the spillover impact of these industries to other industries. It should not be part of some very specific pool of people. We maybe happy right now given that we have a lot of revenues coming in the country right now but we need to make sure that these revenues can be used to improve the productive capacity,” he said.
The private public partnerships that are being initiated by the government can encourage more investors to do business in the country and ultimately provide more employment to Filipinos. “If there is a program or incentive for the private sector to diversify and go to other sectors, then we really believe more people can really get opportunities,” Basu said.
The Bangko Sentral ng Pilipinas (BSP) believes the country’s economic growth is sustainable. “I think there is a lot of catching up, but apart from that, you are seeing a broadening of the growth drivers and I guess because of that we are quite bullish about the prospects,” said BSP assistant governor Cyd Tuaño-Amador.
Private consumption, investment, and net exports were the main drivers of growth on the demand side. On the supply side, industry and services boosted the economy. “We don’t concentrate on a single growth driver. Our drivers are broader, more inclusive, more into economic mainstream. That should provide some more boost to the Philippine economy,” she added.
Presidential Communications Development and Strategic Planning Office, the office in charge of the communication strategy of the President has been receiving positive feedback from our neighbors. PCDSPO Secretary Ricky Carandang said other countries have started to see the Philippines in a different light. “They see that the country is changing coverage, describing the country as moving towards inclusive growth,” he was quoted.
Bank Singapore Chief Executive Officer Renato de Guzman said, “Philippines is no longer the sick man of Asia” because of less corruption. Still, the country is not immune from getting sick again but it is “well insulated” said Amador.
To refrain from getting “sick” again, the Central Bank prescribes a slow but steady cure toward a healthier economy for the Philippines. “Sometimes there is what you call a ‘boom and bust cycle’. Our game is not to grow fast. Little by little we see progress and as long as there is popular support for all these measures, I know our plans to boost our economy is not just a dream,” Amador said.