by the SERDEF Media Bureau (First published in the Philippine Online Chronicles, Feb. 1, 2013)
The year just past saw the Philippine economy growing steadily and impressively.
From sick man of Asia in the 2000s to trotting llama in 2010 to tiger cub in 2012. And now, to rising Asian tiger — an assessment by Canadian prime minister Stephen Harper who recently visited the country to forge economic and military ties with our government.
As early as 1997, eminent economist Jesus Estanislao wrote a paper entitled “The Philippine Economy: Emerging Asian Tiger” where he took note of increasing references in the (international) media about the Philippines emerging as an Asian tiger. He also said that statistics about the macro-economic fundamentals seem to bear out the hope that at long last the Philippines is out of the woods.
Turnaround
P-noy’s State of the Nation Address in July last year brimmed over with good news about the state of the nation and the economy. He proudly took account of the progress achieved in the economic, industrial and business sphere.
He announced the Philippines is now “open for business under new management,” as he ticked off evidences of the improved state of the country’s economy: the highest growth in south East Asia in the first quarter; a Philippine Stock Exchange Index hitting numerous record highs; an international credit rating marked one notch below investment grade; a business processing/ outsourcing sector that has contributed P11 billion to the economy and generated 1.3 mlllion in jobs; a substantial inflow of foreign investments; growth in tourism for the past two years.
The growth showed no signs of flagging during the second half of 2012.
By the third quarter of 2012, the Philippines grew by 7.1 per cent, again ranking No. 1 in GDP growth in the region and surpassing expectations even by the country’s economic managers.
Today, the full-year growth figure for 2012 is out. Our economy expanded, according to Socio-Economic Planning Secretary Arsenio Balisacan, by 6.6 per cent, way beyond the 5-6 per cent growth predicted by the NEDA early in the year.
No wonder we are riding into the new year on a wave of confidence, worthy of an Asian tiger.
There is also optimism that within 2013, the much sought-after investment grade credit rating will finally be achieved. This week, credit rating agency Fitch noted our debt burden has declined to such levels comparable with countries enjoying investment grade. Economic leaders took that as a broad hint our rating will be revised upward anytime soon and the economic Holy Grail is within grasp.
The challenge of sustainability
Over the past few decades, the Philippines, time and again, had been poised for an economic take-off. Somehow something happened to derail our flight. During Marcos’ time, “growth interrupted” was blamed on crony capitalism, on unbridled greed of the powers-that-be, on the world oil crisis. Then, we became the toast of the democratic world after the bloodless EDSA revolution that paved the way for the Cory Aquino government. Buoyed by optimism, we were then on our way up, but that was before the Cory government became too busy quelling coup and destabilization attempts by Honasan and company. From then on, there seemed to be no way for us to go but downhill.
We have, it seems, finally made a turnaround. Will we finally make it?
The challenge is to assure that the growth is no flash-in-the pan but will rather be be sustained and intensified over the long term, benefitting all of society, including and especially those at the base of the pyramid.
Most of the growth being experienced is driven by a booming business outsourcing sector and the still strong inflow of OFW remittances. These are, alas, weak bases for sustainable growth. Outsourcing, after all, employs only about one per cent of the labor force, mostly the highly-educated segment. On the other hand, the export market for our labor is contracting, no thanks to the financial crisis still plaguing Europe and Northern America.
This is why despite improving growth rates, the country still teems with the poor and the hungry, the unemployed and underemployed.
Beating poverty and unemployment
The key to inclusive and sustainable economic development is to strengthen the manufacturing sector which requires high capital investments and provides jobs even to the undereducated.
The Philippines must identify and support priority products that can give it competitive edge in export markets like sugar, coconut products, jewelry, musical instruments, gifts and housewares, and fabrics. Firms must be encouraged and assisted to strengthen their innovation capability in terms of new products and designs and improved product quality.
The growth of manufacturing should be bolstered by the deliberate promotion and strengthening of small and medium enterprises.
There are two other sectors that would contribute significantly to job generation, and these are agriculture and tourism. Like manufacturing, both are able to absorb the under-trained and undereducated among the population.
Photo: “Happy New Year 2013” by Mark Kens, c/o Flickr. Some Rights Reserved