Called by Asian Development Bank president Takehiko Nakao as a potential “rising star of Asia,” is the country really headed toward being an economically developed country as President Aquino boasted in his last State of the Nation Address (SONA)?
Well, for one this is not the first time that an incumbent president proclaimed that the Philippines is on the road to development. The late dictator Ferdinand E. Marcos boasted of the establishment of 10 or so basic industries to propel the country toward development. But that was long ago and history showed how the country became the sick man of Asia, from being one of the fastest growing economies in the region, after the Marcos dictatorship; no thanks to the scandalous corruption, the foreign debt problem, and Marcos’s strict adherence to the dictates of the IMF-WB.
In more recent history, early on into his presidency, Fidel V. Ramos declared that the country was moving toward becoming a “newly industrialized country” and NIC-hood became his rallying call, especially after GDP growth appeared to have steadily increased from 1994-97 after a period of negative to less than 1 percent growth in 1991 and 1992. The Ramos administration fast-tracked trade and investment liberalization, deregulation and the privatization of Government Owned and Controlled Corporations (GOCCs), through laws such as the Electric Power Crisis Act and the Build-Operate-Transfer law.
But the 1997 Asian financial crisis erased all illusions of development, and the GDP growth plunged to –0.58 in 1998. It exposed the vulnerability of the Philippine economy that was liberalized, deregulated, and privatized beginning the Cory Aquino administration and fast-tracked under Ramos.
Gloria Macapagal-Arroyo, an economist before she became a politician, boasted of the same supposed economic growth and the country’s purported sound fundamentals. The average annual GDP growth rate under the Arroyo administration was 4.1 percent and the highest growth during her administration was 7.08 percent in 2007. The 2010 GDP growth of 7.3 percent could still be partly attributed to her administration, which presided over the first half of the year.
Whenever her administration was on the defensive because of the corruption scandals involving her and her family, she boasted of her accomplishments in the economy and proclaimed that the country was about to take off toward joining the ranks of economically advanced countries. But the 2008 global economic crisis again exposed the country’s vulnerability when the GDP plunged to 0.92 in 2009.
During his last State of the Nation Address, Pres. Benigno Aquino III repeated the same boast that the country would soon join the ranks of economically advanced countries. According to Ibon Foundation, the average annual GDP growth from 2010-2014 was 6.2 percent. Also, President Aquino declared as his achievement the investment grade status the Philippines garnered from credit rating agencies. These he attributed to the good governance thrust of his administration.
However, Aquino glossed over some facts. First, economic growth is already slowing down. The 5.2 GDP growth during the first quarter of 2015 is the lowest first quarter growth figures during the last four years and the lowest quarterly growth rate since the fourth quarter of 2011.
Ibon Foundation attributes this to the slowdown in the main sources of growth under the Aquino administration namely real estate, renting and other business activities, financial intermediation, trade and repair, and manufacturing amid a global economy that is finding it difficult to recover from the 2007-2008 crisis. On the expenditure side, public construction and household final consumption expenditure slowed down. Likewise, exports of goods and services also slowed down from 12.7 percent in the first quarter of 2014 to 1.0 percent in the same period this year. This is not surprising as China, the country’s biggest export destination, slowed down to 7.3 percent and suffered a sharp stock market crash early July 2015.
Second, the Aquino government is merely continuing the economic policies and thrusts of its predecessors. Even as President Aquino wants to project himself as the opposite of his predecessor, the main policies of his administration, especially with regards the economy, are still the same. The only difference is that the Aquino administration tried to project an image of good governance to earn the confidence of investors.
The Aquino government could not attribute the GDP growth to its administration alone. Even the National Statistical Coordination Board (NSCB) admitted to this in a January 2013 report. It said GDP growth is affected by external factors such as regional and global crises and the political climate prevailing in the country; thus, “GDP growth could not be fully attributed to a certain president or his/her economic team.” What the NSCB failed to mention is the essential reason why no one president could lay claim to GDP growth under his or her administration: all Philippine presidents after the Marcos dictatorship strictly adhered to the neoliberal regime of liberalization, deregulation, and privatization.
Third, since the policies of liberalization, deregulation, and privatization were implemented starting with the Cory Aquino administration, the country’s production base has been progressively eroded. According to Ibon Foundation, the current 10 percent share of agriculture in the GDP is the lowest ever recorded and the 23.2 percent share of manufacturing is as low as in the 1950s.
Fourth, GDP growth under the neoliberal regime has never been inclusive. President Aquino declared that the unemployment rate has gone down. Ibon Foundation attributes the purported decrease in official unemployment figures to: the official change in methodology, to exclude those who have been discouraged from looking for work, since 2005, the exclusion of Region VIII data – where 563,000 were unemployed and underemployed in 2013 before Typhoon Haiyan hit the country – and the quality of jobs of those employed.
Based on Ibon Foundation’s analysis, the unemployed most likely increased by 100,000, the underemployed by at least a million, and the number of part-time workers by at least 1.5 million since the start of the Aquino administration.
From April 2014 to April 2015 alone, the number of part-time work increased by 539,000 and full-time work decreased by 130,000. By April 2015, 40 percent of employed Filipinos or 15.5 million are in part-time work. The number of those with jobs but not at work also increased to 860,000. About 700,000 jobs were in the informal sector or in unpaid family work.
Migrante International also belied President Aquino’s claim that its job generation program motivated some OFWs to stay and work in the country. The migrants’ rights group cited data from the Department of Labor and Employment showing that the number of Filipinos leaving to work abroad increased from 2,500 daily in 2009 to 6,092 early this year.
Fifth, the GDP growth benefited a few and worsened the lives of the majority. According to Ibon Foundation, the wealth of the 10 richest Filipinos increased by 250 percent, from P630 billion in 2010 to P2.2 trillion in 2015 ($13.7 billion to 47.8 billion). The net income of the Top 1000 corporations in the country increased by 26 percent from P804 billion in 2010 to P1.0 trillion in 2013 ($17.47 billion to $21.7 billion).
On the other side of the spectrum, the average daily basic pay of millions of workers increased by a meager 3.5 percent, less than P9 ($0.20). Because of this, official poverty statistics – which uses a very low standard of P52 per day ($1.13) – considered 23.8 million Filipinos as poor in 2012. Poverty incidence during the first semester of 2014 increased to 25.8 percent from 24.6 percent in the same period in 2013. Data from the 2012 Family Income and Expenditure Survey revealed that around 66 million Filipinos live on P125 ($2.7) or less per day. The Ibon May 2015 survey revealed that seven out of 10 respondents or 67 percent considered themselves poor. This translates to 67 million poor Filipinos.
Despite the hype on GDP growth rates, the economic program of the Aquino government, as well as that of previous administrations, is not bringing the country toward a path to development, but rather to a straight path to worsening poverty and underdevelopment.