EDITORIAL

What Filipinos should be proud of is what makes the PH economy unique

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THE real story behind the Philippine growth narrative lies not in the numbers of gross domestic product (GDP) growth or widening trade deficits that many Filipinos actually don’t grasp, even the educated ones, especially when gauged against their actual financial condition and what’s left of their monthly income before the next pay day arrives.

As the US-basedAtlantic magazine noted ages ago when the Philippines supposedly emerged from being “The Sick Man of Asia” and into the limelight as the world’s latest economic darling—after credit rating agency Fitch Ratings lifted the country from junk in terms of sovereign creditworthiness to investment grade for the first time ever—the grim reality behind such accolade was the fact that only an elitist few were actually benefiting from the economy.

As we know by now, the latest government figures heralded the GDP as having grown by 6.8 percent last year, the fastest since 2013 – the year Fitch gave the Philippines its vote of confidence.

On Friday, the Bangko Sentral ng Pilipinas (BSP) added more mystifying numbers to the raft of economic and monetary data. “For the 14th consecutive year, the current account recorded a surplus. The $601 million surplus in 2016 (representing 0.2 percent of GDP), however, was 91.7 percent lower than the $7.3 billion (2.5 percent of GDP) surplus in 2015. The decline in the current account surplus was due primarily to the widening deficit in the trade-in-goods account.”

What the central bank is saying is that the current account, or the difference between a country’s savings and its investment, shrank by 91.7 percent to around $601,000,000 last year, from around $7,300,000,000 in 2015. It also pointed at the trade balance (exports minus imports) that registered a huge merchandise trade deficit, the reason why the country ended up with only around 8.3 percent of the money in its current account in 2016 than what it had a year earlier.

Any economist would explain the current account shortfall by noting that it follows the cyclical trend of the economy since the trade balance is actually the biggest factor in determining the current account balance. When the economy is expanding at a stronger pace, imports grow in tandem.

The Philippines registered a merchandise trade deficit of $34.1 billion last year, or 46.2 percent wider than the $23.3 billion in 2015, according to BSP data. Obviously, exports weren’t able to catch up and were almost stagnant at $43.4 billion, from $43.2 billion, up by 0.6 percent. At the same time, imports of goods surged 16.6 percent to $77.5 billion, from $66.5 billion.

What this means is that buyers of Philippine products ordered less manufactured goods and mineral products, while the country bought more capital goods and raw materials and intermediate goods used for making a final product.

What is really interesting to note in the central bank trade numbers are those that pertain to services, or non-merchandise trade, which grew by 30.6 percent to $7.1 billion, from $5.5 billion. Then there are the export earnings in business process outsourcing (BPO) services totaling $20.2 billion, up 12.8 percent from $17.9 billion.

A separate BSP report showed that remittances from overseas Filipinos totaled $29.706 billion, up 4.9 percent from $28.308 billion.

Now, those numbers are the real deal for the majority of Filipinos who can easily relate their financial condition to the amount of monthly remittances their respective households receive from a relative abroad, or from the share a call center or BPO worker contributes to the monthly household budget.

The Philippine economy is unique in that it thrives on labor export as the country does not have a well-developed industrial sector with big-ticket items for the export market like South Korea and its cars and electronics and electrical machineries.

The reality is that’s what we are as a people and a nation, nothing to brag about after 119 years of independence since 1898, but definitely something to be proud of as the country moves along in these interesting times of socio-political and economic changes.

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8 Comments

  1. MARIANO PATALINJUG on

    Yonkers, New York
    20 March 2017

    There is no disputing the economic statistics which this Editorial of the Manila Times uses to drive home the conclusion that the Philippines is “unique,” meaning it is one of the brightest lights,if not the brightest, in the whole world.

    But is it factually correct, indeed, to trumpet that the Philippines is no longer “The sick man of Asia?”

    This Editorial studiously refrains from adding a paragraph or two about the fact that right now no less than around 30 million Filipinos are stuck in the quagmire of widespread and chronic poverty, living lives of extreme degradation and dehumanization, probably because doing that would refute its suggestion that the Philippines is no longer “The sick man of Asia!”

    It also refrains from commenting on the negative fact that Little Tyrant Rodrigo Duterte, since June 30, 2016, has inflicted a REIGN OF TERROR on the Filipino people through his warrantless genocidal extrajudicial mass-slaughter of those even merely suspected of being engaged one way or the other in the illegal drug problem, a psychotic and blood-thirsty drive which has netted for him some 8,000 hapless victims so far, his macabre goal being 3 MILLION!

    Let us face the TRUTH. This Editorial sees the Philippine condition through roseate glasses. That’s not the way the United Nations and its agencies, nor former President Barack Obama, nor the European Union, nor the European Parliament, perceives it.

    MARIANO PATALINJUG
    patalinjugmar@gmail.com

    • Agree with your assessment of the state of the country but i don’t know if it applies to the article at hand.
      I didn’t reach the conclusion that the article was trying to say that the Philippines is no longer the sick man of Asia or that it carefully walked around the issue of poverty.

      The article was simply explaining the trade deficit with a mention of the labor export and the BPO remittances that are a major contribution to the general economy.

    • even with your grim view of the Philippines which you shared with the alleged vice president, and even including the UN, US, and EU. the traders don’t seem to mind. besides, the Philippines should make this an opportunity to be close friends again with our neighbors in asia, as well as with the other countries whom we don’t have relations yet, like the African nations. the world does not revolve on the US and EU.

    • I totally agree with your 1st and 2nd Paragraph and perhaps the 3rd one.

      What i do not agree is your bias conclusion in the 4th Paragraph!

      To bring about a pragmatic solution to our socio-economic problem in the 3rd Paragraph is to analyze holistically what is the best approach. Our President has chosen the best approach to tackling the Problem on the basis of his Premise: No progress (economically) can ever be made without law and order. For law and order to take place, you need to control/eliminate the following: Drugs, Crimes, and Corruption in our government/society.

      Only President Rodrigo Duterte had the guts to fight Drugs, Crimes and Corruption, thereby placing his Presidency at stake, the Previous President did only lip services.

      To solve your problem in 3rd Paragraph is for us, Filipinos, to help and support his advocacy because that is the shortest and pragmatic way for attaining law and order. Business Confidence, Economic Industries will only flourish if there is Law and Order and that is the sure effect.

  2. The Filipino people can grow despite govt inefficiency. Here in my native province a visitor could rarely meet a robust guy idly sitting by the whole day. Even a sick-looking ama ng pamilya musters his energy to work for the day to push his family. A typical combine of kasipagan at pagtitipid, plus an abiding love of the pamilya. No govt intervention, except that taxes keep going up and price of commodities proving hard to cope with. We keep moving on. Not minding BSP projection or juggling with figures.

  3. RE: A separate BSP report showed that remittances from overseas Filipinos totaled $29.706 billion, up 4.9 percent from $28.308 billion.

    One of the things the Filipino knows how to do, and do it well, is make babies. We also know very well how to EXPORT them as young adults as professionals as well as laborers.

    Let us therefore contract with capable countries of HIGH educational STANDARD to educate our educators in order to better educate our children, thus better enabling them to obtain professional colligate degrees to get even better paying jobs.

    • The Philippines government could do this on it’s own if they would allocate more money to the education budget.

      Everyone knows that the schools are underfunded, the teachers underpaid and the schools makes the student’s families pay for anything and everything.

      The Philippines does not provide a bus service so the poor can go to school, They have to provide their own transportation for their children and they can’t so the children drop out and get left behind.

      The government does not fund the school system for air conditioning even tho the country is sitting in a tropical zone, In some schools students have to chip in to purchase a fan for the class.

      Look around at the state of the jails, Overcrowded, underfunded just like the schools.

      City management ?

      Expensive and unreliable electrical power, Unreliable water service, Unreliable trash pickup.

      Gridlock due to Malls, Universities and businesses on the main roads issued permits without adequate parking.

      Infrastructure ?
      Expensive and slow internet
      Public libraries ?

      People work 12 hour days 6 days a week for p300 a day, Barely enough to feed one person.

      What has the government done about any of these problems ? I can’t see that they have done anything except issue press statements and photo ops about how they solving everything.

      What exactly did Aquino’s government accomplish during the liberal parties 6 year administration ?
      Canceled numerous projects and put the money into a DAP fund of p170 billion and what became of that ? Besides paying senators p50 million each to impeach a sitting chief justice (Corona)

      The pork barrel fund ? (p10 billion stolen)
      20 senators on the Napoles list and only 3 opposition senators arrested.
      100 house rep’s on the Napoles list (none arrested)

      6000 of the best and brightest people leave the Philippines every day to go work in another country.

      The people get the government they deserve

      Enjoy

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