The much-hyped 7.2 percent full year growth of the Philippines’ gross domestic product (GDP) remains to be a meaningless indicator for most Filipino households, as prices continue to rise unabatedly and the unemployment rate still high, a legislator said on Friday.
Kabataan Partylist Rep. Terry Ridon expressed concern that the GDP growth might prove to be “largely artificial and unsustainable.”
“Studying the components of the 7.2 percent GDP growth, one will see that it has been largely buoyed up by the recent property and construction boom in the country, coupled with the last-minute increase in financial activity brought about by the influx of foreign aid for relief and rehabilitation efforts in the aftermath of Yolanda,” Ridon said.
In a news briefing on January 30, the Philippine Statistics Authority (PSA) described the 7.2 percent GDP growth for 2013–which is up from the 5.8 percent recorded in 2012–as a “remarkable turnout,” as it was achieved despite the onslaught of natural calamities in the last quarter of 2013.
The growth rate made the Philippines one of the “best performing economies in the Asian region,” second to China, which posted a 7.7 GDP growth.
Real estate, renting and business activities posted an 8.4 percent growth, while construction posted an 11.1 percent growth.
Ridon noted that growth largely based on real estate and construction is “artificial and unsustainable,” noting that it could have been bloated by records-low interest rates, the suspected property bubble now permeating emerging market economies, and the economic stimulus programs of large countries including China and the US in the past year.
“But with China’s construction activity now decelerating and the US Federal Reserve now tapering its stimulus funding, the momentarily foamy growth posted in recent quarters may suddenly dive in the coming months,” Ridon explained.
He also pointed out that 7.2 percent GDP growth has not translated into higher job generation. Data from the PSA shows that despite the 7.2 percent GDP growth, employment increased by a measly 0.8 percent.
According to independent think-tank Ibon Foundation, job generation has actually been falling in real terms during the Aquino administration, with 1.2 million jobs generated in 2011, down to 408,000 in 2012, and dipping further to 317,000 in 2013.
“Despite stellar growth figures in real estate, construction, and manufacturing, we see insignificant employment growth in the said sectors, proving that the purported development is largely buoyed by speculative financing that has again enriched the select few while not resulting to inclusive wealth generation for the vast majority,” Ridon noted.
He also stressed that in PSA’s report, the per capita household final consumption expenditure (HFCE) has decelerated to 3.9 percent in 2013 from 4.8 percent recorded in 2012, which the government attributed to the spike in consumer prices in recent months.
HFCE is a measure of a household’s consumption and purchases for everyday needs such as food, housing, and various fees.
“The deceleration of household spending reflects the spike in inflation in past months thathas led to higher food and commodity prices,” Ridon said, noting that in December 2013, Philippine inflation rate has reached 4.1 percent, the highest recorded since December 2011. Food prices climbed 5 percent in December, higher than the 4 percent recorded in November last year.
“In short, the 7.2 percent growth is artificial, exclusionary, and meaningless for most Filipino households. What it just indicates is that business is booming for the upper one percent, while prosperity continues to elude the vast majority who has to grapple with growing joblessness and rising commodity prices,” Ridon said.
“For growth to be inclusive, the government must focus on enriching and improving sectors such as agriculture and local industries that provide more stable jobs, and not on drawing in speculative investment. This entails developing a sustainable and concrete program for national industrialization and genuine agrarian reform.”
“Improving domestic demand also means improving the living conditions of every Pinoy through increased wages and benefits, and better job opportunities here in the country,” he ended. JHOANNA BALLARAN