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PH economic growth in 2015 seen as lackluster

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Warren de Guzman, ANC

MANILA - The last full-year economic report under President Aquino&#x27;s administration will be released Thursday. The expectation is growth will be lackluster compared to previous years, but good enough for the Philippines to keep pace with the fastest growing economies in Asia.After all, an average expansion of just under 6 percent would still be better than growth in the developed world, including the US, Europe and Japan.<div>Government expectations</div>Government’s official forecast range for 2015 is between 7 and 8 percent. But throughout the year, quarter after quarter of economic growth came in below expectations.Outgoing National Economic and Development Authority (NEDA) Secretary General Arsenio Balisacan ended up offering an unofficial revised target of 6 percent. But even the lower target is unrealistic, because it would require a growth of 6.9 percent in the last quarter of 2015.Remember, this was a quarter which saw the agriculture sector hampered by the El Nino, and the financial sector roiled by divergent monetary policy and other external problems.The narrative from government has since shifted focus from 2015 growth, to the average growth under the Aquino administration.At the launch of United Nation’s 2015 Human Development Report on January 18, Balisacan said, “Over the past five years, we have made major strides on this front. During the course of President Benigno Aquino III’s administration, our country grew at an annual average of 6.2 percent from 2010 to 2014, making us one of the fastest-growing major economies in Asia.&quot;This robust growth reflected the improvement of our country’s employment wherein the proportion of the unemployed recently reached a new 10-year record low of 5.6 percent primarily resulting from the boost in the services and industry sectors. This is the first time the unemployment rate dropped below the government’s target of 6.6 to 6.8 percent.&quot;Moreover, expenditures for social services have significantly increased, wherein the average social services expenditures per person over the past five years, adjusted for inflation, are now 37 percent higher than the same expenditures from 2005 to 2009.”Balisacan will lead the fourth quarter and full-year 2015 gross domestic product (GDP) report Thursday morning.<div>INCLUSIVE GROWTH?</div><figure class="op-social"><iframe allowfullscreen="" frameBorder="0" height="350" src="https://www.youtube.com/embed/JrdYMYNuv-A" width="510"></iframe></figure>Economist Calixto Chikiamco, president of the Foundation for Economic Freedom, does not believe this growth is as inclusive as government says.First off, Chikiamco said despite growth over the last half decade, there is still a sizable population of poor. This is supported by the Philippine Institute for Development Studies, which estimates the wealth distribution of the Philippines has not changed under the Aquino administration, with about 53 percent of the nation’s families rated as poor, 46 percent as middle class, and fewer than two percent rated as rich.Chikiamco warned this distribution might get even more lopsided in favor of the rich, because the threats to the Philippine economy are more likely to impact the middle class, such as OFW families, rather than the wealthy.He said that “one of the growth drivers is remittances, but there are political uncertainties in the Middle East and, of course, oil prices have gone down. So the economies in Saudi Arabia, Kuwait are severely challenged, they might be sending OFWs [overseas Filipino workers] home.”Chikiamco said real security for the rich, poor and middle income classes, can be achieved through more investment. He explained that this would generate jobs, foster competition, spark innovation and bring down costs for the public.As of September 2015, The Philippines ranks seventh in terms of foreign direct investment among members of the Association of Southeast Asian Nations (ASEAN).Chikiamco said, “Even the World Bank has identified one of the biggest obstacles to investment and growth in general is monopolies and oligopolies forged in telecoms, power distribution, etc. That is right now restricted to 60 percent Philippine ownership.”Chikiamco also pointed to keeping the foreign exchange rate competitive, modernizing antiquated labor laws, dramatic improvements in agriculture, and continued anti-corruption efforts as keys to making growth more inclusive.<div>VIEW FROM THE STREET</div>As an OFW beneficiary and financial professional, millennial Gian Joaquin has a unique perspective of the economy. He said government has succeeded in fostering more competition in sectors like banking, which has led to a dramatic improvement in financial services, including remittances.He shared that in 2005 to 2009, when he was still in college; remittances took 3 to 5 days to arrive from his aunt in the United Kingdom. Today, it takes less than a banking day. He also noted it is much easier now to take out loans, thanks to relaxed credit requirements, and again competition.&quot;It&#x27;s easier to take out loans and financing nowadays. Getting a car through financing is easier than ever, there are more foreign dealers offering their wares dito sa Pilipinas,&quot; he said.Joaquin also noted the impressive streak of economic growth, as well as recent credit ratings upgrades under Aquino, have made his current job of selling insurance and investment products much easier.Joaquin said confidence in the Philippine economy, thanks to these achievements as well as Aquino’s anti-corruption campaign, has driven more OFWs and locals to invest. He believes it has opened up opportunities for the working class to really improve their situation.But Joaquin also noted there have been some setbacks under Aquino that really had an impact on the public, including the port congestion in Manila which not only slowed the export industry, but also the logistics responsible for delivering &quot;balikbayan&quot; boxes to OFW families like his.Still, Joaquin is very pleased with the overall economic growth under President Aquino, even though many of his colleagues and fellows fail to recognize the impact on their day to day lives.&quot;We&#x27;re better off than our Asian and world neighbors, we&#x27;re still afloat and we still managed to show positive growth,” he said.His message for Filipinos who feel Aquino has failed?“Wala namang pamana na nakukuha kaagad.”<div>MARKET REACTION</div>The Thursday GDP report could go unnoticed by the general public, during a week of victory parades for the most beautiful woman in the universe and a state visit from the emperor and empress of Japan.Financial markets, however, are a different story, and you can expect the investing public, including Joaquin, to be paying close attention Thursday morning.Any news offering clarity on the Philippine economy will definitely be welcome after weeks of foreign news dominating market sentiment.The Philippine Stock Exchange (PSE), which has sunk to multi-year lows, could definitely use a boost. But again, the general forecast for Philippine economic growth is disappointment.

MANILA - The last full-year economic report under President Aquino's administration will be released Thursday. The expectation is growth will be lackluster compared to previous years, but good enough for the Philippines to keep pace with the fastest growing economies in Asia.

PH economic growth in 2015 seen as lackluster

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PH economic growth in 2015 seen as lackluster

Warren de Guzman,

ANC

Published Jan 26, 2016 05:29 PM PHT

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Updated Jan 27, 2016 11:44 AM PHT

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