PERHAPS the most positive thing that might be said about the 5.6-percent expansion of the economy in the second quarter is that “It could have been worse.”
The growth of the Philippines’ gross domestic product in the April-June period, as announced yesterday by the Philippine Statistical Authority (PSA) was, in fact, the third highest growth rate in this part of the world, trailing only China and Vietnam. But for a country that has grown accustomed to being the darling of the world’s business media as one of the ‘hottest’ economies in Asia, if not the entire planet, the second-quarter results were definitely underwhelming.
The GDP growth figure only just reached the lower edge of the range of forecasts by analysts earlier in the week, and in reality might not have done even that well; on Wednesday, the day before the latest release, the PSA revised the first quarter’s growth figure downward from 5.2 percent to an even 5.0 percent, so an adjustment in yesterday’s data could very well be in the offing in the months to come.
The local stock market, already on edge from a wild week of worldwide equity sell-offs, was certainly unimpressed: In 20 minutes following the 10 am press conference by the PSA, the PSEi plunged 74 points, although by mid-afternoon it regained its composure and finished on a positive note.
The PSA, of course, tried to put the best face on the lackluster figures by pointing out that growth in manufacturing and construction, trade, real estate leasing, and other services helped buoy the economy against a retraction in agriculture and a sharp slowdown in the growth of net primary income from the rest of the world. Similarly, both government and private analysts pointed to several seemingly-obvious factors weighing on the Philippines’ growth, such as the general cooling of the world economy, the slowing of the Chinese economy in particular, and the effects of what has turned out to be the strongest El Niño climate phenomenon in decades.
What is a bit worrisome, however, is that none of those explanations are recent developments, and are to some degree simply recycled excuses for the ‘poor’ GDP growth result in the first quarter. The country’s economic policymakers have been aware of and understood these factors since very early this year, yet evidently were unable to make the necessary adjustments. What is even more worrisome is that in the current (third) quarter, we have seen the emergence of new factors: Volatility in foreign exchange rates, in large part due to China’s aggressive attempts to shore up its currency; recent sharp downturns in global financial markets; and continuing declines in oil and other commodity prices.
Clearly, the Philippines cannot be entirely insulated from the impact of global economic conditions, but what the country’s leadership can do is to aggressively address purely local conditions that are putting the brakes on growth – factors like the appalling traffic congestion around Metro Manila, the snail’s pace of recovery from calamities like 2013’s Typhoon Yolanda, the lack of assistance to the agricultural sector to cope with the El Niño (it is, after all, something the country has experienced before), and its stubborn refusal to even so much as consider broader easing of foreign investment restrictions.
The Philippines will certainly not reach the 7 percent to 8 percent growth target for the year the government is optimistically clinging to, and with the latest GDP growth result, even making a respectable showing in the 6-percent or even upper 5-percent range now looks doubtful. If it has any wish at all to leave a legacy of at least having been present during a period of admirable growth and keep most of the gains that have been made in the past five years, the Aquino Administration must stop resting on laurels that don’t even exist, and take some bold steps in its last months to truly demonstrate that the Philippines is a “bright spot” in a gloomy world economy, instead of just another faltering also-ran.