The Market Monitor Minding the Nation's Business
By Jerry Maglunog
Contrary to the Aquino administration’s proud boasts of inclusive and sustainable growth, the past five years of his term showed the economy failed where it mattered most—in the agriculture sector where a third of the Filipino workforce are employed.
This, according to University of the Philippines School of Economics (UPSE) Prof. Benjamin Diokno, who said that, while President Aquino could probably boast of the highest average growth rate among his predecessors, his administration lagged behind in spurring agricultural output.
Diokno, a former budget secretary, acknowledged that from 2011 to 2015—Mr. Aquino’s first five years — GDP growth averaged 5.86 percent, higher than his mother’s (the late President Corazon Aquino) 3.3 percent, former President Fidel V. Ramos’s 3.6 percent, former President Joseph Estrada’s 3.75 percent, and former President Gloria Macapagal Arroyo’s 4.8 percent.
But the current administration’s neglect of agriculture was “indisputable” since, from 2011 to 2015, agriculture grew by only 1.6 percent, which was even way below the population growth rate, Diokno said. The growth of this sector under Mr. Aquino is second to the last ranking among past five presidents.
Diokno said: “On average, agriculture grew by 6.5 percent during Estrada’s truncated term, 2.8 percent under Arroyo’s, 1.9 percent under Mrs. Aquino’s and 0.8 percent under Ramos’s.”
Last year’s economic growth of 5.8 percent also fell short of the Aquino administration’s rosy target of 7.0-to 8.0-percent growth in 2015, and missed even its revised and “realistic” target of 6 percent,” Diokno said.
He added that the agriculture growth last year was a negative 0.02 percent, or a contraction that cast doubts on the inclusiveness of the economy’s below-target performance.
“About one-third of the employed come from the sector, and more than half of the poor rely on agriculture,” he said.
“Agricultural output is expected to remain sluggish because of El Niño, while net exports is expected to be negative because of weak global demands,” Diokno added.
Diokno also said the slide of the industrial sector growth from a peak of 9.2 percent in 2013 should also be a cause for concern for policy makers.
“The industrial sector provides more meaningful and decent jobs. Yet, its growth clearly decelerated from 9.2 percent in 2013 to 7.9 percent in 2014 then 5.9 percent in 2015,” he added. “This neglect would have serious consequences on the government’s war on poverty.,” Diokno said
Still, the prospect for this year is brighter, as the economy is expected to surge to at least a 6-percent to to 7-percent growth rate, according to government economic managers.
Former National Economic and Development Authority Director-General Arsenio Balisacan said the usual economic drivers, led by manufacturing, agriculture and exports, would be boosted further this year.
Balisacan said spending, in relation to the May 9, 2016, elections, would mean a lot because the money flowing from the polls would reach almost all sectors—from the man on the streets to giant media outfits that employ thousands of workers.
Diokno said the government’s growth forecast is doable, “given the usual boost coming from the election spending.”
But Leonor Magtolis-Briones, a former national treasurer, expects that election spending would fail to make up for the government’s underspending on infrastructure.
According to Briones, a huge 13 percent of the national budget for 2016—or P812 billion—is allocated for debt servicing and this will mean taking away this big sum from key infrastructure projects, airport improvement and new bridges.
Of the total, P419.3 billion will be for principal payments and P392.8 billion for interest payments, said Briones, also a co-convenor at Social Watch Philippines (SWP), a budget watchdog.