The year 2016 promises to be better than 2015. Economic growth will be higher, at 6 percent, than the 5.6 percent for the first nine months of 2015 and a likely 5.8 percent for the whole of 2015.
Two reasons for the better prospects in 2016: One, we will have a new president. Two, the economy is very strong, fundamentally. Even if the president were a rat, it would continue growing. Sheer law of physics. The Philippine economy is large —100 million in size of consumer market, more than $400 billion in purchasing power GDP, and $26 billion or P1.22 trillion in 100 percent value added remittances or more money than FDIs multiplied 10 times.
With 6.0-percent gross domestic product growth in the third quarter, the headline should have been: Philippines will miss its 2015 GDP growth target of 7.0 percent to 8.0 percent, sneers economist Ben Diokno on the economic performance for 2015.
Diokno says the Aquino administration is likely to miss its GDP target miserably, by 1.6 to 1.9 percentage points this year.
Under Aquino, economic growth has been decelerating, not accelerating. GDP growth was a high 7.6 percent when he took office in 2010. It fell to 3.7 percent immediately in 2011, his first full year as President, because of under-spending. Growth recovered to 6.7 percent in 2012, thanks to base effect of starting from a low number. GDP improved further to 7.1 percent in 2013 but fell to 6.1 percent in 2014. Every quarter since then, economic growth has been on a downward spiral. This year, economic growth will fall below 6 percent for the first time in five years.
Aquino says if you vote for his anointed, fellow hacendero Manuel Araneta Roxas II, for president in 2016, you will have more of Matuwid na Daan. Matuwid na Daan is a false mantra. It means incompetence, corruption, and slowing growth which translate into more Filipinos becoming poor and being jobless.
Two million more Filipinos joined the ranks of the poor during Aquino’s presidency. The economy, under his watch, refuses to create two million jobs year—the minimum number of new jobs needed yearly to reduce the unemployment problem. More than 12 million able-bodied adults have no jobs or are employed only part-time.
The main reason for slowing growth is that the government cannot spend the money it has budgeted to spend—especially for infrastructure and for agricultural modernization, in the past two years. The amount unspent is more than P500 billion—enough to rescue four million families from poverty for the next 10 years.
This under-spending explains why you have a serious food shortage of two million tons of rice every year, and you experience monstrous traffic jams in Metro Manila daily, for lack of trains, lack of roads, and lack of nearly everything that is basic. Even average brain is in short supply. What you have are huge doses of incompetence, stupidity, and corruption.
Diokno suggests the correct way to analyze economic performance under Aquino is compare actual GDP with the administration’s own target, which in 2015 is GDP growth of 7.0 percent to 8.0 percent or a mid-point target of 7.5 percent.
Joseph Estrada’s former budget secretary writes: “The administration knows best—the country’s stage of development, the country’s openness [exports + imports divided by the GDP], its resource endowment, its administrative machinery, and so on. Hence, it is fair to measure its actual performance against its own target.”
Assuming that growth in the first three quarters holds for the entire year, the Aquino administration would be woefully short of its growth target by almost two percentage points (1.9 percent), which by any measure, is a significant underperformance.
Based on the past three quarters’ growth, I forecast that the Philippine economy would grow by 5.8 percent in 2015.
Thankfully, by July 1, 2016, the Philippines will have a new president, one who is widely expected to be far better than Aquino III. A new leader means a new momentum, a sharper focus on jobs and the economy, and a more competent and hardworking administration.
BS Aquino has been seen as a vindictive, insensitive and do-nothing president. He claims economic growth of the past five years and a half as his legacy—a period when growth rate steadily went down, thanks to his government’s severe under-spending and lack of focus on heavy infrastructure investments to modernize the economy.
Aquino also claims improved governance under his Matuwid na Daan (Straight Path) mantra. Yes, he might be personally honest, but a number of his cabinet members as well as nearly the entire bureaucracy are corrupt to the core, on top of being grossly incompetent.
Among the Asean-5 countries, the Philippines has the best growth perspective with an average growth forecast of 6.0 percent for 2016, according to the Department of Foreign Affairs.
The DFA points to the strong momentum in domestic demand, buoyed by growing remittances as the main factor driving growth next year.
According to the Organization of Economic Cooperation and Development, the Philippines also benefits from improved attractiveness as a FDI destination.
Per the 2016 edition of the OECD Economic Outlook for Southeast Asia, China, and India, growth for the Asean-5 economies—Indonesia, Malaysia, the Philippines, Thailand, and Vietnam—shows “mild moderation,” but will remain “robust” at an average of 6.5 percent in 2016.
This is the second year in a row that the Philippines has the best growth forecast among the Asean-5 countries according to the OECD Economic Outlook.
Growth forecasts for the other Asean-5 countries are 5.9 percent (Vietnam), 5.2 percent (Indonesia), 4.6 percent (Malaysia) and 3.1 percent (Thailand). The growth forecast for China and India are 6.5 percent and 7.3 percent, respectively.
The OECD Economic Outlook is an annual publication on Asia’s regional economic growth, development, and regional integration process. It focuses on the economic conditions of the Asean member countries as well as the relevant economic issues in China and India in order to fully reflect economic developments in the region.
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