Economic policy needs rebalancing


    ONE of the 10-point socioeconomic agenda of the Durterte administration is to develop the rural areas in the country to even out economic growth which is largely concentrated in regions like Metro Manila and other parts of Luzon.

    Supporting this view of the government is the 2015 regional domestic gross product (GDP) data from the Philippine Statistics Authority (PSA).

    According to the Philippine Statistics Authority (PSA), the National Capital Region (NCR) was the top contributor to the country’s GDP in 2010 to 2015, followed by Calabarzon and Central Luzon.

    The PSA said this was “primarily due to the expansion of the industry and services sectors and obvious proximity to the NCR.”

    NCR’s contribution to the GDP grew, according to PSA, to 36.5 percent in 2015 from 35.7 percent in 2010, while the Calabarzon and Central Luzon posted 17.2 percent and 9.3 percent, respectively.

    These three regions constitute about two-thirds of the Philippine economy’s output, which means the 14 other regions share just a third of GDP, according to the National Economic and Development Authority (NEDA).

    Conversely, the PSA data revealed that regions with the smallest contribution to the GDP were the Autonomous Region for Muslim Mindanao (ARMM), Caraga, and Mimaropa.

    ARMM pulled down the national growth rate by 0.01 percentage point.

    Growth rate
    Despite its large contribution to the country’s overall GDP, NCR ranked only fourth in terms of growth rate, following Bicol Region, Western Visayas and Davao Region.

    In 2015, the Bicol Region recorded the fastest growth among the 17 regions of the country—growing at 8.4 percent and surpassing its growth of 4.3 percent in 2014.

    “Industry expanded faster than services, and both boosted the region’s economy,” the PSA said.

    The share of industry in the region’s total economy improved by 2.8 percentage points in 2015 from 19.7 percent in 2014 while shares of agriculture, hunting, forestry, and fishing (AHFF) and Industry and Services decreased in 2015.

    Other regions
    Out of the country’s 17 regions, six regions recorded accelerated growths from 2014 to 2015.

    Besides having the highest growth rate, Bicol also exhibited the biggest acceleration at 4.1 percentage points, from 4.3 percent in 2014 to 8.4 percent in 2015.

    Other regions which recorded faster growths in 2015 include Western Visayas, from 5.2 percent to 8.3 percent; Calabarzon, from 5.1 to 5.9 percent; NCR, from 5.9 to 6.6 percent; Zamboanga Peninsula, from 6.6 to 7.2 percent; and the Cordillera Administrative Region (CAR), from 3.3 to 3.7 percent.

    Meanwhile, the economy of Eastern Visayas rebounded from a contraction of 2.4 percent in 2014 to a growth of 3.9 percent in 2015. Mimaropa posted the biggest deceleration – 6.6 percentage points, from 8.3 percent in 2014 to 1.7 percent in 2015.

    Other regions which slowed down in 2015 were: Caraga, 9.4 to 4.2 percent; Central Luzon, 9.3 to 5.3 percent; Cagayan Valley, 7.2 to 3.7 percent; Central Visayas, 7.8 to 4.8 percent; Soccsksargen, 6.2 to 3.3 percent; Northern Mindanao, 7.1 to 5.5 percent; Davao, 9.3 to 7.9 percent; and Ilocos, 6.4 to 5.0 percent.

    ARMM contracted
    On the other hand, the economy of ARMM declined from a growth of 3 percent in 2014 to a contraction of 0.8 in 2015.

    Agriculture, hunting, forestry and fishing (AHFF) continued to be the largest share of the total economy of ARMM accounting for 58.5 percent in 2015. Services shared 36.0 percent while Industry accounted for 5.6 percent of the overall economy.

    However, AHFF further declined from negative 0.9 percent in 2014 to negative 1.5 percent in 2015. The industry suffered a reversal from 32.4 percent in 2014 to negative 16.4 percent in 2015, while services decelerated from 5.4 percent in 2014 to 3.3 percent in 2015.

    Declines in Industry and AHFF pulled down the region’s GDP growth rate by 1.1 percentage points and 0.9 percentage points, respectively. Services, however, contributed 1.1 percentage points.

    Growth not translating to employment
    High growth rates do not translate to jobs, as the data showed that those regions that posted expansion in 2015 had the lowest employment rates in July 2016.

    Employed persons were: wage and salary workers, self-employed workers without any paid employee, employers in own family-operated farm or business, and unpaid family workers.

    According to the Labor Force Survey, Calabarzon (92.4 percent), NCR (93.5 percent), Central Luzon (93.8 percent), and Northern Mindanao (93.9 percent) had the lowest employment rate in July.

    On the contrary, ARMM posted the highest employment rate during the period with 97.1 percent. It was followed by Cagayan Valley and Soccksargen, both with 96.5 percent.

    Bicol Regions, which posted the fastest growth rate in 2015, only recorded an employment rate of 61.2 percent.

    Meanwhile, most of the underemployed persons or those who work for less than 40 hours in a week can be found in Northern Mindanao (32.2 percent), Eastern Visayas (31 percent) Soccksargen (29 percent), Mimaropa (26.6 percent), Caraga (26.2 percent), and Bicol Region (25.4 percent).

    Lastly, Calabarzon (7.6 percent), NCR (6.5 percent), Central Luzon (6.2 percent), and Northern Mindanao (6.1 percent) were the regions with the highest unemployment rates.

    Unemployed include all persons who are 15 years and over as of their last birthday and are reported as: without work and currently available for work and seeking work; or without work and currently available for work but not seeking work.

    Addressing inequality
    Analysts have said that economic activity, growth, and opportunities have been concentrated in the NCR – both real and imagined.

    “Over the last six years, inequality across the regions in the Philippines deteriorated. This would imply that employment opportunities would be concentrated in the NCR as well,” Eugenia Victorino, ANZ Research economist, said.

    Justino Calaycay Jr., head of research and marketing at A&A Securities Inc., said:

    “it is not exactly good or bad for the economy, but the government can do better by dispersing opportunities to the countryside.”

    The NEDA had also emphasized the need to address inequality in the country.

    Socioeconomic Planning Secretary and NEDA Director General Ernesto Pernia said that addressing spatial and socioeconomic inequality requires linking lagging regions with the leading counterparts through connective infrastructures such as transportation, communications, and information technology.

    This way, it is much easier and cheaper to transport goods to larger markets in bigger cities and even overseas and enable people to access employment opportunities, he added.

    It is also important to link economic sectors – agriculture, services and industry, particularly manufacturing, within a region, Pernia said.

    “For example, local small farmers can be organized and supported so they can supply food or raw materials to bigger businesses like food manufacturers and restaurant and grocery chains,” he said.

    There must be a rebalancing of the regional infrastructure investment and growth opportunities to reduce inequality and poverty in the country, he emphasized.

    “This will allow more Filipinos throughout the country to participate in the growth process and ensure that no one is truly left behind,” he said.


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