Economic managers vow genuine inclusive growth for Philippines

THE new administration’s economic chiefs, acknowledging that the poor continue to be left behind in the country’s march to progress, have pledged to implement policies that would finally enable the masses to benefit from the country’s growth.

It has been observed that although the country’s growth figures have been remarkable, the benefits from such growth had been enjoyed only by fraction of the population, a large percentage of which continues to live below the poverty line.

“We need to sustain a rebalancing toward investment-driven growth, especially investment that will lead to more inclusive, poverty-reducing, inequality-reducing growth,” Socioeconomic Planning Secretary Ernesto Pernia has said.

Pernia said the Duterte administration was particularly concerned about the farming and fisheries sector, which accounts for about 10 million workers and their families.

“Knowing that the majority of poor Filipinos rely on this sector for their livelihood, this administration will prioritize agricultural development,” he said.

The sector declined 2.1 percent from April-June, the fifth consecutive quarter of declines.

But despite the setbacks, the Philippines, among the major emerging economies in Asia, likely remained the fastest or second fastest-growing in the second quarter of 2016, followed by China, which grew by 6.7 percent, Vietnam by 5.6 percent, Indonesia by 5.2 percent, Malaysia by 4.0 percent, and Thailand by 3.5 percent. Data for India are not yet available but some forecasts put it above 7 percent.

The challenge is to make this growth inclusive so that more people contribute to, and benefit from it, according to Pernia.
“For this, we must improve the competitiveness of our markets and business climate to take advantage of the new surge of investments in the region. Importantly, we must look at the sectors and geographic areas that have been lagging behind and determine how to improve their access to these opportunities,” he said.

Pernia noted that public spending remained strong, driven by the boom in public construction and government consumption, which grew by 27.8 percent and 13.5 percent, respectively. Similarly, private consumption grew stronger in comparison to the previous quarter and year due to the low inflation and interest rates, improved labor market conditions, and steady consumer confidence.

Overall, domestic demand growth accelerated to 12.3 percent from 12.0 percent in the first quarter of 2016.
Pernia said external demand weakened further, as exports of goods and services continue to slow down to 6.6 percent, despite the 15.3-percent growth of services exports.

“Conversely, imports of goods rose to 22.9 percent largely due to increased purchases of capital goods and durables, which indicate an increase of investments from firms. Services imports remained strong at 13.3 percent, significantly higher than the 10.3 percent in the previous quarter,” he said.

He said the performance of the agriculture sector remains dismal due to the lingering effects of El Nino.
“There is also a developing risk of La Nina that will likely intensify between August and October this year. This highlights the urgency of crafting holistic agriculture development policies that include disaster resiliency,” Pernia said.

“This will benefit workers from the sector, which employs the biggest chunk of our labor force. For La Nina, the Department of Agriculture is already crafting an action plan that identifies the most vulnerable municipalities, focusing on appropriate interventions, preparedness, response, immediate recovery and rehabilitation,” he added.

Meanwhile, Finance Secretary Carlos Dominguez III acknowledged that the administration of President Benigno S. Aquino III had helped set the foundations for even stronger overall growth, setting a target of at least 7 percent for the second half of this year and 6.5 percent to 7.5 percent in 2017.

“Our strong macro-economic fundamentals will buffer the Philippine economy from external shocks,” Dominguez said.
The government aims to cut the poverty rate from the current 26 percent to 17 percent when Mr. Duterte steps down in 2022.

Dominguez said this would begin with a stimulus program focused on infrastructure, education and health.
In the proposed 2017 budget, the government announced an overall increase of 11.6 percent in spending. Education is one of the biggest winners, with a 31-percent spending increase.

Dominguez also said the administration would expand a government program providing free contraceptives to poor couples and allowing sex education to be taught in schools.