The Philippine economy will grow by 6.9 percent this year, according to a World Bank forecast published January 2017. This is a slight improvement from the 6.8-percent actual growth in 2016. A 6.9-percent growth is disappointing.
The Duterte administration originally targeted GDP (Gross Domestic Product) growth rate of 7.5 percent to 8.5 percent per year during his six years as president to build on the momentum begun with an average GDP growth of 6.5 percent in the last four years of the BS Aquino administration.
A 6.9-percent growth puts the Philippines in the same level of performance as Cambodia and Myanmar, both of which will also do 6.9-percent economic growth this year. These countries, by the way, are not our peers insofar as economic management is concerned. We always claim we do better than China (6.5 percent GDP growth this year)—but then again, that’s China.
We should be worried that countries that emerged from years of poverty, conflict and mismanagement are doing just as well, if not better, than we do. They are catching up. Which means we are slackening.
Philippine GDP growth rates are now scaled down to just 7.1 percent for 2017, 7.2 percent for 2018 and 2019, 7.3 percent in 2020 and 2021, and finally 7.4 percent in 2022.
The World Bank, in its January 2017 Global Economic Prospects Report, projects a 6.9-percent GDP growth rate in 2017, 7 percent in 2018, and 6.7 percent for 2019—much lower than government projections and targets.
Year 2016’s 6.8-percent actual economic growth is above the growth rate of 6.7 percent achieved in 2012, the 6.2 percent scored in 2014, and the 5.9 percent in 2015 but below the 7.1 percent in 2013.
Budget Secretary Benjamin Diokno has promised a Golden Age of Infrastructure to propel the Philippine economy to higher growth rates, with a planned infra spending of 5.4 percent of GDP in 2017 to as high as seven percent by 2022, the last year of Duterte’s presidency. That implies an infra spending exceeding P1 trillion a year. A ground level though, there is concern whether the government can spend more than 1,000 billion a year on roads, bridges, and schools without creating moral hazard —meaning, part, if not much, of the money could go to the wrong hands like corrupt contractors.
Please note that BS Aquino for a number of years refused to spend as much as P500 billion on infra and other essential services for fear the money would be stolen anyway. So cash in the treasury is better than cash in people who create misery and penury (the grafters).
President Duterte, a lawyer, has said he knows little about the economy. I suggest he focus more on the economy rather than running after the corrupt in government and the scalawags in the Philippine National Police. Because when a huge chunk of the budget is stolen and the economy is mismanaged, it is the poor who eventually absorb much of the consequences—consequences more severe than the effect on illegal drugs and the pernicious effect of graft.
So he should spend more time with his economists rather than with his favorite police general, Ronald Bato dela Rosa. And they must be the right economists and planners, like Finance Secretary Sonny Dominguez and Budget Secretary Ben Diokno. As for DENR’s Gina Lopez, well, I consider her part of the fire and brimstone aspect of the presidency (just like his vicious illegal drugs war). The presidency is part showmanship and part serious work.
People like a telenovela. Digong has been giving a good daily dose of that with his expletives and frequent visits to wakes of fallen policemen and soldiers. At the same time, people want to be assured that prices of basic goods are reasonable, their security is okay in their homes and in the streets, that they can find a job when they look for one, and their children are sent to school and taken care of with basic medical care.
The economy, as measured by the GDP, grew 6.6-percent growth in fourth quarter 2016, pushing whole year growth to 6.8 percent. The fourth quarter rate was the slowest quarterly growth recorded for 2016, indicating an apparent slowdown and a correction in the economy after the heady election spending in the first half of last year.
Still, fourth quarter’s 6.6 percent was higher than the 6.5-percent growth noted in the fourth quarter of 2015.
There are signs the economy is moving towards an investment-led growth rather than a consumption-driven economy.
According to the Philippine Statistics Authority, reporting on the economy last January 27, Manufacturing, Trade, and Real Estate, Renting and Business Activities were the main drivers of growth for the fourth quarter 2016.
Among the major economic sectors, Industry had the fastest growth at 7.6 percent, higher than previous year’s 6.5-percent growth. Services grew by 7.4 percent, a slower growth compared with the 7.8-percent growth in the fourth quarter of 2015. On the other hand, Agriculture declined further by 1.1 percent. In the same period of the previous year, it dropped to 0.2 percent.
Manufacturing remained the top contributor to GDP growth as it continued an accelerating growth in the fourth quarter with 6.9 percent. This exhibited faster growth rates in all quarters of 2016 than the previous year.
Among the industries under Manufacturing, Food manufactures, which grew by 9.3 percent, was the biggest contributor to the growth of the sector with 3.6 percentage points. Other contributors to the growth were: Petroleum and other fuel products, with 53.8 percent growth; Transport equipment, with 33.3 percent; Beverage industries, with 11.5 percent; and Chemical and chemical products, with 2.1 percent growth.
On the other hand, the following posted declines and pulled down the growth of the sector: Radio, television and communication equipment and apparatus, which declined by 3.9 percent; Publishing and printing, down by 12 percent; Non-metallic mineral products, down by 2.1 percent; Wearing apparel, down by 2.3 percent; and Miscellaneous manufactures, which declined by 1.4 percent from the previous year.
The Construction industry grew by 11 percent in the fourth quarter of 2016, faster compared with the 8.2-percent growth recorded in the previous year. The growth was fueled by both Public Construction and Private Construction
Electricity, gas and water supply (EGWS) continues to expand
Electricity, Gas and Water Supply grew by 8.9 percent year on year during the fourth quarter of 2016, faster as compared with the 5.2-percent growth recorded in the same quarter of the previous year. Electricity contributed the most to the growth of the sector as it accelerated to 9.9 percent as compared with 5.5 percent in the fourth quarter of 2015.
Manila Standard Opinion Page by Tony Lopez
