Should 4.9-percent growth be enough?
For an administration that came into office with high expectations of a better life from the people, particularly the poor, economic growth that ambles along rather than takes full strides should be a cause for worry as this isn’t likely to reduce poverty to a significant degree.
The lower-than-expected 4.9- percent growth in the first three months of this year, says the National Statistical Coordination Board, is due to two things: one, the drop in global trade and, two, underspending.
On the first, the Philippines can’t do much about, in the first place.
On the second, however, underspending simply means that the government may not have enough resources to fund vital infrastructure projects owing to weak tax collection. Or perhaps enormous public funds have been ending up surreptitiously in humongous private pockets.
The government said earlier it was aiming for a full-year gross domestic product growth rate of 7 percent to 8 percent. This year-end goal does not appear realistic at this point.
The bright spot in the lackluster economic landscape in the first quarter was the exceptional growth rate of 41.8 percent at current registered prices by the mining sector. At constant 2000 prices, mining and quarrying posted gross value added of P16.48 billion and P13.90 billion in the first quarter of 2011 and 2010, respectively, for a year-over-year growth rate of 18.6 percent.
Slower growth has taken place amid bearish business sentiment as local businessmen incurred higher operating costs due to rising oil prices in the global market, the political upheaval in the Middle East and North Africa, and the recent calamity in Japan, according to the latest Bangko Sentral ng Pilipinas (BSP) survey.
The BSP business-expectations survey, released on Thursday, showed that business optimism was likely to dip in the coming months, with next-quarter confidence index falling sharply to 33 percent from 59.4 percent in the previous quarter.
BSP Deputy Governor Diwa C. Guinigundo pointed out, however, that business sentiment remained positive at 31.8 percent even if the ranks of those with optimistic views on business as a whole have dwindled.
Businessmen cited the country’s “sound macroeconomic fundamentals, continued investment inflows and seasonal uptrend in demand during the summer and school opening in June” as the reasons for their favorable view of the macroeconomy, the BSP survey said.
But what should be of immediate concern to the Aquino administration is the common complaint of businessmen over “slow business procedures and fund disbursements for government construction projects.”
If the current government wants to arrest what one foreign think tank has described as “domestic inertia”—and make a big impact on poverty reduction—it would do well for it to review the overall business environment and find out precisely where the bottlenecks lie.
An economy hobbled by underperformance and pessimism doesn’t inspire much confidence; worse, it could push the popularity and trust ratings of the Aquino administration farther down.
