“GDP growth is a single-digit number; poverty incidence involves millions of Filipinos”
Arguably, the most avidly-watched items in the business pages of newspapers and their online editions are items relating to the gross domestic product (GDP). Chief among the avid watchers are chief executive officers (CEOs), treasurers and budget planners of all kinds, fund managers, investment advisers and securities market analysts.
The job of tracking the trends and movements of GDPs – of developing and developed countries alike – falls heavily on the international financial and development institutions and the regional development finance institutions. The forecasts and reports of the largest commercial banks also form part of the international framework for monitoring the movements of nearly 200 economies around the world.
The Philippine-GDP reports and forecasts that are accorded the greatest respect are those of the International Monetary Fund (IMF), the World Bank and the Asian Development Bank (ADB). This is to be expected, considering that these institutions have access to government data by virtue of their official relations with the Philippine government.
The reports and forecasts of greatest value to users of GDP data are those issued by the IMF, the World Bank and the ADB in the wake of their periodic missions to this country, which involve comprehensive discussions with government officials.
The latest institutions to take position on the Philippines’ GDP prospects are the IMF and the ADB. In the latest edition of its World Economic Outlook, the IMF expects this country to grow 6 percent in 2024, “faster than most economies in Asia.” In the July update to its Asian Development Outlook, the ADB has this to say about this country’s GDP in 2024: “Growth forecast for the Philippines for 2024 are unchanged,” to wit, 6 percent.
On their part, the leading commercial banks, foreign and domestic, have been either reiterating or revising their forecasts for Philippine GDP growth as the year progresses.
Still other entities, including foreign governments, think tanks and financial intermediaries, maintain an interest in this country’s GDP and add their voices to the discussions of the growth prospects of the Philippine economy.
All the analyses and prognostications relating to the GDP revolve around the annual-growth range set by the National Economic and Development Authority (NEDA), which for several decades has been within the 6 percent to 8 percent range. For 2023, an optimistic NEDA set the growth range at 6.5 percent to 7.5 percent. When NEDA, citing numerous headwinds and uncertainties, brought the 2024 target growth range down to 6 percent to 7 percent, the analysts and planners could be seen rushing back to their drawing-boards.
In the face of what they consider to be less-than-robust 2024 prospects for the Philippine economy, GDP growth forecast lower than 6 percent have been brought to the fore, accompanied in every instance by extensive discussions of the factors underlying the forecast.
The GDP is the sum of all economic activities within an economy within a twelve-month period. It is the most important measure of the material progress of a country. Steady GDP growth is essential for a country’s economic, political and social stability. Accordingly, interest in the GDP is welcome, and wide public discussion of its growth rate, its composition and its direction, is good for a nation’s development.
But interest in the GDP must not be allowed to rise to the point where sight is lost on a prominent feature of this country’s economic situation – the high incidence of poverty. A GDP growth forecast is a single-digit number; poverty incidence involves millions of Filipinos. In the latest SWS survey of poverty in this country, 58 percent of the respondents rated themselves “poor”.
The P in GDP stands for the product of the labor of the millions of Filipinos who compose this country’s work force. But because the fruits of that product are so inequitably distributed – what economists call the Gini coefficient – poverty incidence in this country remains at an intolerably high 15.5 percent as of 2023, per NEDA.
So, the next time you read or hear anything about our GDP, give a thought to poverty incidence.
