Readers of the annual World Bank and International Monetary Fund reports on the preceding-year performance and near-term prospects of the Philippine economy tend to focus on the elements of the reports that are positive in tone, especially growth figures. They tend to give little attention to, or completely disregard, parts of the reports that are negative in character, such as expressions of concern or words of caution.
This is particularly true of government officials, who are inclined to like reading only good things about the Philippine economy and to disdain reading about misgivings, concerns and uncertainties. They don’t want anything to spoil whatever good things the WB and IMF reports have to say. This is a dangerous attitude because expressions of concern and words of caution are there for a reason: they are meant to alert the policymakers to the dangers and risks that may be lurking in the environment in which the Philippine economy operates.
This year’s WB and IMF reports on this country’s economy are cases in point. The WB’s April 2017 Philippine Economic Update, titled “Advancing the Investment Agenda,” forecasts that the Philippine gross domestic product will maintain this year its 2016 growth rate, to wit, 6.9 percent. Such a growth rate would be close to the midpoint of the 6.5 to 7.5 percent growth range that the government has programmed for this year.
A trifle less exuberant, the IMF projects 6.8-percent growth for Philippine GDP in 2017. In its 2017 World Economic Outlook, the IMF says that Philippine economic growth will “remain robust,” led by strong domestic demand and a recovery in exports.
Economists of both the government and private sector were quick to seize upon the GDP growth rates projected by the Bretton Woods twins—the highest in the Association of Southeast Asian Nations – and to suggest that the 6.9 percent and 6.8 percent growth projections were sure things. But they missed the words of caution and concern that accompanied those forecasts.
In its report the World Bank stressed the importance of “the government’s commitment to further increasing public infrastructure investment” for the sustenance of this country’s growth momentum. The Secretary of Finance has made clear that attainment of the Duterte administration’s infrastructure targets depends on the availability of the incremental resources to be generated by the tax reform package that is now before Congress. As of this writing, the package is still at the committee-hearings stage in the House of Representatives. It is unlikely to clear the Lower House before the first session of the 17th Congress goes into adjournment.
The World Bank report also speaks of support for the Philippine economy from “recovery among other emerging markets and developing economies.” In effect, the bank is saying that the strength or weakness of that recovery will affect the prospect of attainment of its 6.9 percent 2017 growth forecast for Philippine GDP.
On the other hand, the IMF report speaks of “(s)pillovers from slower growth in China or higher global financial volatility.” It also speaks of “(p)rotectionist policies in advanced economies (having) an overall negative impact in Asia, including the Philippines.” Furthermore, the report speaks of “higher commodity prices [resulting] in faster inflation.”
Words of concern and caution in economic reports are not there without reason. They have significations. After all, economic reports are not intended to be goody-goody documents.
The authors of the 2017 World Bank and IMF reports on the Philippines wrote about the possibility of protectionist policies in advanced countries, recovery in regional markets, infrastructure targets and commodity price movements in order to make the point that their 6.9 percent and 6.8 percent GDP growth forecasts, respectively, might not be attained if certain positive conditions—the ones they indicated – fail to materialize.
Readers of reports on the Philippine economy should get themselves to read them in their entirety —the good things as well as the bad. They fail to do so at their peril.