The stock market is supposed to be the most sensitive barometer of a country’s socio-political and socioeconomic conditions, but the benchmark Philippine Stock Exchange Index (PSEi) hardly moved on August 18, when the government announced that gross domestic product (GDP) grew by 7 percent in the second quarter of the year. It was the fastest growth rate of economic output since the fourth quarter of 2013, and probably the best performance in Asia.
From the standpoint of equity analysts and brokers, however, there was nothing spectacular about the second-quarter GDP, which measures the goods and services a country produced in a given period, because it was expected and within range of the government’s 6 to 7 percent target.
As an anti-climax to his GDP report, Socioeconomic Planning Secretary gave a presentation a day earlier in Davao City. He was probably pre-empting the naysayers by spilling the beans on the real score of the economy and what the government was intending to do to in terms of policy under the Philippine Development Plan in the run-up to 2040.
In his presentation, Pernia minced no words: While the economy expanded cumulatively by 43 percent in the six years to 2015, the incidence of poverty fell by only 2.3 percentage points.
In the same vein, Finance Secretary Carlos Dominguez 3rd cited the latest government figures that showed that 26 percent of Filipinos were mired in poverty. This meant that nearly 30 million Filipinos were poor and were probably struggling on a daily basis with hunger.
Here’s the Philippine socioeconomic quandary: The fastest-growing economy in Asia has nearly 30 million of its people going hungry every day.
Pernia was explicit in pointing to the imbalance in the distribution of the benefits of economic growth across the country and across all sectors of the economy.
In other words, inclusive growth, where no Filipino is left behind without money to buy food and other basic necessities, remains as elusive as ever for this country.
The ambitious goal of eradicating poverty 24 years from now through policy intervention is supposedly rooted in the experience of other Asian nations like Malaysia and South Korea.
NEDA, it seems, has audited an array of empirical studies, the core of which has revealed that the right policies can actually improve output and efficiency and yield a tripling of per capita income. This concept of national income is the value of goods and services the country has produced, divided by the population.
Estimates by NEDA placed Philippine per capita GDP at $3,500 compared with Malaysia’s $11,000 in 2014.
It took Malaysia 33 years to triple its per capita GDP and reduce its poverty rate to 0.6 percent, while it took South Korea some 22 years.
That is what the Philippines is aspiring for, a per capita GDP of $11,000 by 2040 to allow the majority of Filipinos to enjoy nearly high-income country standards of living.
NEDA intends to reach this prosperity goal by reducing poverty and inequality in the first six years, eradicating extreme poverty in the second wave, expanding the middle-class in the third wave, and eradicating poverty by 2040.
Ambitious indeed, though we know the plan isn’t that simple. We commend NEDA at this point and wish the government the best of luck as it embarks on this journey to capture that elusive dream of inclusive growth.