EDITORIAL

Realizing stronger growth

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As President Rodrigo Duterte marks his first year in office, people are in a reflective mood. And among the things that many wonder about is why the economy continues to grow even as the Western media and critics take exception to the President’s style of governance.

We have said so in the space that the economic momentum is strong enough to withstand any president.Case in point, review the economic growth during the term of President Benigno “Noynoy” Aquino 3rd. Despite slow public spending, the economy grew an average of 6.2 percent. And while total government spending grew somewhat during the last administration, key public expenditures particularly those in infrastructure was only 2.9 percent of GDP over six years. In fairness to the former president, that figure was higher than those spent during previous administrations with the exception of the Marcos government. It spent 3.2 percent of GDP over 21 years on infrastructure. The lowest ratio was recorded during the term of former President Gloria Arroyo, 1.9 percent of GDP over nine years. Still, the economy grew steadily during her time in office.

Along with the relatively small contribution of public spending to the aggregate economy, private investments and exports have also remained weak. As many have noted, the Philippine economy is consumption led. In fact, consumption accounts for about 80 percent of the GDP.

For decades, consumption has been fueled by remittances from overseas Filipino workers. The money that they send home to their families here account for about 10 percent of GDP. The business process outsourcing sector is another driver of growth. It accounts for another 10 percent of the GDP, and that figure is increasing.


Build, build, build
If the present government’s plans are implemented, the economy could be even stronger. President Duterte aims to usher in the “golden age of infrastructure” development. He hopes to spend P8.2 trillion on various projects over six years. The target is to boost infrastructure spending to 5.3 percent of GDP this year and increase that further to 7.4 percent of GDP by 2022, the end of his six-year term. Related to that, the government approved last week several infrastructure projects worth P305.6 billion.

Most of the recently approved projects are to be completed within the term of President Duterte. And of course, he is also continuing projects that broke ground during the previous administration, as he should. But to have a greater impact, we hope that this government will also embark on larger infrastructure projects that will have lasting impact and utility for generations to come.

Granted, having relatively smaller projects that can be completed within a president’s term is politically astute. The transfers of power in the past have been anything but smooth, with newly elected presidents unwilling to continue what was started by his or her predecessor. But political pragmatism should be a factor in policymaking, not the main determinant. We should assign greater weight to what the country needs to realize its dreams of economic development. And if Mr. Duterte does not shy away from bigger projects that take longer to build, future generations might credit him for an economy that grew stronger because of a president and not blame him for missed opportunities.

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1 Comment

  1. Our country does not have a strong industrial base that should provide employment. Thats the reason why we have 10 million OFWs from the lowest domestic helpers to professionals. It is sad that thirty years after martial law, we can only talk abourt OFW remittances, BPO and Bananas.