Excerpt of ‘An assessment of the economic performance of the Aquino administration’ | Eagle Watch (2024)

Joseph Anthony Lim /EAGLE WATCH

The Philippines was supposed to have made a significant breakthrough in economic growth and development during the administration of Benigno Aquino III from 2010 to 2015. The growth started from the GMA administration from 2002. Excluding the “uncontrollable” years (2009, a global recession year and 2010, a year split into two administrations), GMA gave an average of 5.16 percent GDP growth from 2002 to 2008, while P-Noy delivered an average of 5.93 percent growth from 2011 to 2014. This is 0.77 percent higher average growth for P-Noy.

The observed special features of the P-Noy growth showed that during the period 2012-2014, household consumption, government consumption expenditure and fixed capital formation (or gross investments) were the highest growing components in the economy. Export growth, as well as net export (export less import) growth, was highest during GMA’s period and the P-Noy period registered the lowest export (and net export) growth among the three administrations of Erap, GMA and P-Noy. Thus, the P-Noy high-growth performance depended more on growth in the domestic economy and domestic demand rather than external demand, due to a weak global environment. The initial high confidence in the Philippine economy resulted in the stronger domestic demand. The more participative role of government investment and spending in spurring domestic demand should also be noted as the Philippines became fiscally stronger. It should be noted that the P-Noy administration did not use the advantage of a strong domestic-led economy to strengthen the economic sectors, and improve their productivity and competitiveness for long-run resiliency of the Philippine economy.

Despite this, foreign and domestic investors and credit-rating agencies were raving about the Philippines’s perceived improved governance against corruption, and successful fiscal reforms and fiscal management. This was true, especially after the passage of the sin taxes on cigarettes and alcohol. The sovereign credit-ratings upgrade and higher government expenditures had contributed to the high confidence and high economic growth, especially in private investments and private consumption. The improved fiscal strength also allowed the government to spur domestic demand growth to counter a very weak global environment for exports. These twin policies provided the pillars of the country’s high growth in 2011 to 2015.

The higher growth most likely led to some improvement in employment. Unemployment rate fell from about 7.3 percent in January 2010 to 5.8 percent in January 2016. Underemployment, however, continues to remain high.

Notwithstanding these gains, the P-Noy administration is facing the lack of evidence and perception that the poverty situation has improved. This is also tied to the perceived lack of improvement in basic social services in health and education, and especially in transportation.

In April 2015 the Social Progress Index Global Survey results for 133 countries were released by Washington-based Social Progress Imperative (Flores, 2015). It showed the Philippines’s score remaining stagnant and its rank deteriorating from 56 to 64 out of 133 countries from 2014 to 2015. The Philippines scored badly in basic human needs (especially personal safety) and some health indicators such as premature deaths from noncommunicable diseases and obesity rates. It also fared badly in the ecosystem sustainability component (especially depletion of water resources) and in some human-rights issues, especially press freedom (killings of journalists).

Toward the latter stretch of the P-Noy administration, various confidence-shaking challenges came upon the daang matuwid agenda. Among these were the Mamasapano incident in January 2015, the Supreme Court ruling in February 2015 declaring that the Disbursem*nt Acceleration Program (DAP) was unconstitutional, leading to a big reduction in the government’s ability to pump-prime the economy. Likewise, the government’s governance capability is being questioned in its inability to tackle major problems, such as the continuing power crisis in Mindanao, a devastating typhoon in late 2013, as well as drastically deteriorating traffic congestion and mass-transit breakdown in Metro Manila.

Now, the biggest challenge haunting the business sector is the uncertainty concerning who the next president of the country will be. Ultimately, it is clear that the incoming president’s primary task is to bring back the economic confidence in the country and, at the same time, meet the social needs, particularly of the poor. The question is how these objectives can be fulfilled at the same time. The gains and efforts made by the current administration are in danger of being reversed by candidates perceived as corrupt or inefficient. It seems that the President’s daang matuwid, had not firmly established the institutions and mass base to improve political and economic governance in the country, which is its very goal. This may jeopardize the high-growth path the Philippine economy had been treading.