The 7.1 per cent Philippine economic growth in the third quarter “posted
the fastest expansion” within the Asean (Association of Southeast Asian
Nations), gloated Socioeconomic Planning Secretary Arsenio Balisacan.
He said that the year-to-date
growth was already 6.5 per cent, prompting him to predict that the full-year
growth would likely surpass the government’s target of 7 to 8 per cent. “Next
year we expect this momentum to continue,” Balisacan said.
Don’t celebrate too prematurely,
Mr. Secretary. In a volatile economic climate, either global or domestic,
nothing remains static and predictable.
In fact, some leading figures in
private business are not carried away by the government’s optimistic forecasts,
given that the administration craves credit for being responsible for—or being
the driver of—this unaccustomed surge, which appears to some hard-boiled
businessmen as a one-off phenomenon, or a fluke.
For example, Aurelio Montinola
III, president of the conservative and prudent Bank of the Philippine Islands,
is somewhat sceptical. In a speech at the “Man of the Year” awards of the
Management Association of the Philippines on Monday, he said that the 7.1-per
cent growth made it likely that the pace of continued expansion at the upper
end of the 5- to 6-per cent growth is attainable. “I think we have a very good
chance to do 6 per cent this year, and the big bet is we can do another 6 per
cent next year,” he said. To sustain growth and make it inclusive, it is
necessary to have an average 5- to 6-per cent growth every year for the next
five or six years.
Questions were raised in business
circles over whether the high-growth rate benefited only the middle and upper
classes while bypassing the poor classes. A recent survey of the Social Weather
Stations (SWS) in the third quarter found 31 per cent of the 1,200 respondents
optimistic of an economic improvement, while 14 per cent were not. SWS
interpreted this result as “very high” at the net score of +17. The survey was
conducted last August, and its results were first published by the
BusinessWorld newspaper.
According to SWS, net economic
optimism was “very high” in seven out of the last 10 surveys, and the August
survey results were up from May’s “high” of +8. But there’s a downside. Asked
about the quality of their life over the past 12 months, 21 per cent of the
respondents said it had improved, while 28 per cent said it had worsened, for a
net score of -8 percentage points.
Net personal optimism dropped
from +39 to +30 in Luzon areas outside the metropolis, from +37 to +36 in Metro
Manila, and from +18 to +17 in the Visayas. It only increased in Mindanao from
+20 to +22.
By socioeconomic class, personal
optimism decreased in classes ABC (from +34 to +32), class D (from +32 to +28)
and class E (from +24 to +20). The Palace declined to comment on why personal
optimism had dipped but said this should improve in the coming months, based on
the third-quarter growth.
How economic growth translated
into flow of benefits to reduce poverty is shown in a United Nations report for
2012. In its report on the growth outlook for Asia-Pacific, the Nations Economic
and Social Survey of the region wrote on the Philippines. A summary of the May
2012 report follows:
Economic growth weakened due to
declining exports and lower public spending, but in response to weak growth, a
disbursement acceleration programme was announced in October 2011. In terms of
foreign direct investment (FDI) inflows, the Philippines continued to lag
behind other major economies in the subregion, receiving only $1.3 billion in
2011, similar to the 2010 level.
The country faces many challenges,
including a high share of non-wage earners and large infrastructure gaps. The
share of workers earning wages and salaries, as opposed to the self-employed
and unpaid family workers, also remains low. At the same time, income
inequalities have led to a slower reduction of poverty and to higher rates of
self-rated poverty.
On government intervention in
providing social subsidies to ameliorate poverty, an Inquirer research shows:
As of June 2012, the Conditional Cash Transfer (CCT) programme has reached out
to a total of 3,014,586 families, more than the 2012 target of 3 million.
Between January and February
2012, the programme reported a compliance rate of 95.89 per cent among mothers
who visited the healthcare centres for checkups and immunisation for babies;
97.97 per cent among mothers who brought their children to healthcare centres
for deworming; 95.15-per cent attendance rate in day care centres among
children; and 96.40-per cent attendance rate for primary and secondary
schoolchildren.
In May, SWS found that self-rated
poverty dropped to an estimated 10.3 million Filipino households, or 51 per
cent of the total households in the country. The figure declined from 11.1
million households, or 55 per cent.
The effectiveness of the CCT is
under review in a congressional oversight committee: to look into whether it is
being used as a poverty alleviation measure or as an electoral vote-buying
scheme for the 2013 mid-term elections. Sen. Franklin Drilon, chair of the
committee and a leading member of President Aquino’s Liberal Party, is
scrutinising the 2013 national budget, which contains a proposal to fund the
CCT with 45 billion pesos ($1.1 billion). The programme distributes money to
the poorest families in the country.
Amando Doronila
Business & Investment Opportunities
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