By Cai U. Ordinario, Mary Grace Padin & Jovee Marie N. dela Cruz
PRESIDENT Aquino did better than the five presidents who came before him. This was the pronouncement made by the National Economic and Development Authority (Neda) after the Philippine Statistics Authority (PSA) released the 2015 GDP data.
PSA data showed that from 2010 to 2015, GDP growth averaged 6.2 percent. Former Economic Planning Secretary Arsenio M. Balisacan said this was “remarkable” as this was achieved without resorting to unsustainable borrowings and short-lived portfolio capital.
Computation done by the BusinessMirror using PSA data showed that GDP growth during the term of former President Corazon C. Aquino averaged 3.85 percent; Fidel V. Ramos, 3.75 percent; Joseph E. Estrada, 2.3 percent; and Gloria Macapagal-Arroyo, 4.45 percent. The PSA has no data on GDP growth during former President Ferdinand E. Marcos’s term.
Comparing this average to the initial goal of the Aquino administration, the President and his men fell short of the government’s target of growing GDP by an average of 7 percent during this term. In 2015 alone, when spending for elections was expected to ramp up in the latter part of the year, GDP growth reached only 5.8 percent, lower than the government’s 7.5-percent to 8-percent target.
In its economic blueprint, dubbed as the Philippine Development Plan (PDP) 2011-2016, the Aquino administration had initially targeted to increase GDP by 7 percent to 8 percent annually. The government revised its targets in the “updated” PDP which it released in 2013.
In the midterm assessment of the PDP, the government adjusted its growth targets. Starting 2013, the government aimed for a GDP growth of 6.5 percent to 7 percent; 2014, 7 percent to 7.5 percent; 2015, 7.5 percent to 8 percent; 2016, 8 percent to 8.5 percent.
However, economic performance from 2011-2015 has fallen short of expectations, most notably in 2011, when GDP growth slowed to 3.7 percent from 7.6 percent in 2010. This presented difficulties in creating more jobs and cutting poverty incidence.
Data from the Annual Poverty Indicators Survey showed that poverty incidence in the country remained high. In fact, poverty incidence even went up to 25.8 percent in 2014, from 24.6 percent in 2013.
‘Laggard’
Among all economic sectors, Agriculture can be considered a laggard. Under the original PDP, the government had targeted to increase farm output by 3 percent to 5 percent. The Aquino administration never hit its growth goal for agriculture in 2010 to 2015.
PSA data showed that in 2010, farm output contracted by 0.12 percent. While the sector’s production grew in succeeding years, the rates were lower than the government’s target: 2.34 percent in 2011, 2.92 percent in 2012, 1.15 percent in 2013, 1.83 percent and by 0.11 percent in 2015.
This despite the P339-billion budget given to the sector in 2011 to 2015. The agriculture sector’s budget increased yearly as the government sought to boost output, particularly of the country’s staples, and improve the income of farmers. Agriculture Secretary Proceso J. Alcala said, however, the sector’s recovery is a “slow process.” What the Aquino administration did, Alcala said, was to lay down the necessary foundation to ensure the sector’s continuous growth.
“When you tell a sick person to get up, it doesn’t mean he will get up quickly. The process for recovery should be done slowly. And I think the administration has done its part in laying down the basic foundation to improve the sector,” he said.
What kept the economy afloat during President Aquino’s term were the Industry and Services sectors. Under the 2011-2016 PDP, the government had targeted a growth of 8.1 percent to 9 percent for Industry and 7 percent to 7.9 percent for Services.
While the Industry and Services fared better than Agriculture, the performance of the two sectors could be considered quite erratic.
In 2011 the Industry and Services, sectors grew by 1.9 percent and 2.6 percent, respectively. These growth rates were lower than what the Aquino administration had targeted.
The Services sector fared better in 2012, when it grew by 7.4 percent which was well within the 7-percent to 7.9-percent target of the government. But the expansion of Industry, pegged at 6.5 percent in 2012, fell short of the 8-percent to 9-percent goal.
In 2013 the government hit its targets for Industry and Services which grew by 9.5 percent and 7.1 percent, respectively. For the next two years, however, the government would again fail to achieve its growth goals for the sectors.
‘Culprits’
According to economists, the Aquino administration was unable to meet its own targets mainly because it has been plagued by underspending and “flawed” agriculture policies like the rice self-sufficiency goal. This was compounded by climate change, which caused strong typhoons to hit the country, and the weakness in the global economy.
Former Budget Secretary Benjamin Diokno said the administration underspent by P1 trillion. This caused a huge setback in terms of moving projects forward and addressing other social problems that needed funding.
Diokno said Mr. Aquino also lost sight of what was important as he focused on exacting revenge on his political enemies.
“The [Aquino administration] overpromised. It assumed wrongly that its leaders can deliver on the promises. The President overpromised on the public–private partnership projects. It turned out to be a major disappointment,” he said.
“Aquino also took his eye off the ball. He spent too much time on exacting vengeance on his political enemies, including Arroyo and former Supreme Court Chief Justice Renato Corona,” Diokno added.
University of Asia and the Pacific School of Economics Dean Cid Terosa agreed with Diokno that underspending was a major factor behind the Aquino administration’s failure to hit its own targets.
Government data showed that since Mr. Aquino assumed office in 2010, the administration posted double-digit contractions in terms of spending.
In 2014 the Government Final Consumption Expenditure (GFCE) posted flat growth in the second quarter and contracted by 2.5 percent in the third quarter.
However, spending recovered in 2015, according to PSA data. The GFCE grew by 17.4 percent in the third and fourth quarters of last year.
But, by the time the government was able to gain a foothold on its spending, the term of President Aquino was already ending. In the end, the current administration’s effort to play “catch up” came too late to make a difference.
“[Ultimately, the failure to meet PDP targets] was a combination of weak global markets, natural disasters and overly cautious government spending,” Terosa said.
For Diokno, the Aquino administration’s economic targets were “too lofty” and were difficult to achieve. But other economists like Terosa and Ateneo de Manila University Eagle Watch Senior Fellow Alvin Ang said it was “necessary” to set high economic targets ased on careful study.
“I believe a high growth-rate target is necessary to mobilize enough resources and encourage coordinated action by the government, private sector and civil society toward the growth target. A high growth target sends out the signal to the world that we recognize our growth potential and we aim to achieve it,” Terosa said.
“[The PDP targets were] not really lofty but it’s based on studied facts and capacity of the economy. It’s just that the real economy is affected by too many factors,” Ang added.
Recommendations
Balisacan said succeeding presidents must continue targeting a GDP growth rate of 7 percent, even if the Aquino administration faced difficulties in hitting this goal.
Lawmakers also urged the next administration to focus on problems hounding the agricultural sector. House Committee on Agrarian Reform Chairman and Liberal Party Rep. Teddy Baguilat Jr. of Ifugao and Party-list Rep. Fernando Hicap of Anakpawis said the next president should deliver on the government’s promise of genuine agrarian reform.
“Accomplish the promise of agrarian reform not just completion, but adequate support services, better disaster management because calamities are also a factor [on the country slow agricultural growth],” Baguilat said.
“The next administration should also focus on the construction of infrastructure such as irrigation and farm-to-market roads. The government should also increase the budget of these projects,” he added.
For his part, Hicap said the next government should prioritize the passage of the Genuine Agrarian Reform Bill that proposes free land distribution to poor farmers and bill providing free irrigation services for farmers.
“[Since the start of the 16th Congress], we call on the fulfillment of genuine land reform or free land distribution to farmers, so that there could be real development in the countryside that would spark off national industrialization for the benefit of all sectors of society,” Hicap said.
He added the government should also control the entry of imported agricultural products and support local products.
The party-list representative said industrialized countries each went through a stage of land reform that served as a prerequisite to industrial development.
“All developed countries, Europe, America, Japan, China, even Vietnam and others, implemented a genuine land-reform program as it is a precondition to economic development and also in many instances a part of the struggle against foreign aggression and control,” Hicap said.
House Committee on Climate Change Chairman and Party-list Rep. Rodel Batocabe of Ako Bicol, meanwhile, appealed to the national government to take serious action against climate change as it will surely affect the agricultural sector.
He said the next government should promulgate long-term policies aimed at helping vulnerable areas implement adaptation measures against climate change, including El Niño.
Citing the Philippine Atmospheric, Geophysical and Astronomical Services Administration and the Food Agriculture Organization (FAO), Batocabe warned of the worsening climate impacts of El Niño by February 2016. He said the FAO also warned that up to 47,111 affected farmers may need support for their farming activities in the next cropping season due to El Niño.
“There is indeed a failure in propping up growth in agriculture. Aside from climate change and natural disasters, we have not swiftly initiated the necessary adaptation and mitigation measures to cushion the adverse effects of climate change,” he said.
“Moreover, we may have allocated billions of funds to the agriculture sector, the ultimate question is whether or not we efficiently and effectively utilized said funds,” Batocabe added.
Image credits: Nonie Reyes