"Which events had the greatest impact on the state and prospects of the Philippine economy?"
"Which events had the greatest impact on the state and prospects of the Philippine economy?"
With 2020 only two weeks away, the time has again come to look back on the year that’s about to end and select the events and changes in 2019 that had the greatest impact on the state and prospects of the Philippine economy.
Without a doubt, the most important event of the year that is about to end was the election of May 13. The electoral exercise saw the election of all the 12 senatorial candidates of Hugpong ng Pagbabago and Partido ng Demokratikong Pilipino-Laban and of most of the candidates for House of Representatives seats, governorships and mayorships supported by HPP and PDP-Laban. With the support of majorities in both houses of Congress, the administration legislative program—especially the TRABAHO reform package—was approved by Congress without much difficulty.
The other major happening of 2019 has been the decline in the rate of growth of this country’s GDP (gross domestic product). During 2019’s first three quarters, the Philippine economy grew by 5.8 percent, its first below-6-percent growth rate in recent years. The IMF (International Monetary Fund) and the two leading multilateral lending institutions—World Bank and Asian Development Bank—had signaled their increasingly less sanguine assessment by gradually scaling down their projections of full-2019 Philippine economic growth. Some analysts have said that the economy will have to grow by around 6.3 percent in the final quarter for it to post 6-percent growth in the year that is about to end.
Almost universally blamed for the deterioration in the economy’s 2019 performance was the nearly-four-month delay in the approval of this year’s GAA (General Appropriations Act). The delay in the approval of the P3.7-trillion budget was caused by a Senate charge of unauthorized insertion of projects valued at P85 billion. By April 27, when President Duterte approved the GAA, almost four months’ worth of opportunity for increased government spending had been lost, said many analysts.
The decline in GDP growth would have been greater if Filipinos’ purchasing power had not been effectively increased by the movement of the inflation rate from the 2018 high of around 6 percent down to the 1.3 percent of November 2019. The decrease in rice prices following the February passage of the Rice Tariffication Act went a long way toward restoring stability to Filipinos’ food spending. So did the suspension of the scheduled increases in taxes on petroleum products.
Two sour notes have been struck during an otherwise generally harmonious year.
One of the discordant notes has related to the Duterte administration’s BBB (Build, Build, Build) program. In the course of the Congressional review of the program, it was reported that of the 75 “flagship” projects announced in 2016, only nine had been completed at end-2019. The Duterte administration’s economic managers offered the 2019 GAA’s late approval as the explanation for the dismal completion record.
The other discordant note related to water. During the dry months of 2019 some parts of the concession areas of Manila Water Co. and Maynilad Corp. suffered sharp drops in water supply level; the government accused the concessionaries of inefficiency, and the latter blamed the government for failure to develop alternative sources of water for their concession areas. And towards the end of the year, Mr. Duterte declared that his administration would not pay the P11 billion worth of unpaid rate increases that the Singapore-based Permanent Court of Arbitration awarded to Manila Water and Maynilad. Unwilling to jeopardize their relations with the Duterte administration, the two companies decided to waive the awards they won.
A significant development, in the administrative side, was the creation by Congress of a Cabinet department to replace HUDCC (Housing and Urban Development Coordinating Council). With the creation of the department, matters relating to urban development, especially housing, will now receive the high-level government attention that it has long merited.
Toward the end of 2019, a series of above-6-magnitude earthquakes rocked a part of this country that hitherto has been relatively earthquake-free, namely, Mindanao. The nation’s planners and businessmen have now changed their thinking about the geologic structure of the Philippine archipelago’s second largest island.
This review of 2019 would not be complete without a notation of the passing, one after the other, of two of this country’s business titans, Henry Sy and John Gokongwei.
A happy new year to everyone.