By Cai U. Ordinario
Persistently low incomes and poverty have kept the spending of households low in the first quarter, according to Ibon Foundation Inc.
Ibon said this caused the disappointingly low economic growth of 5.2 percent in the January-to-March period, the lowest since the last quarter of 2011’s 3.8 percent.
“Slower growth in household spending is due to persistent low incomes and poverty that has not been addressed by recent years of increasingly exclusionary growth,” Ibon said.
Ibon added that the slower growth reflected the slowdown in compensation inflows and in remittances since 2014. Slower growth in exports, meanwhile, was due to a persistently sluggish global economy and unresolved economic issues in the advanced capitalist centers of the US, Europe and Japan.
Ibon said slower growth was due to the government reliance on a real estate, call center, low value-added export, and remittance-driven nature of growth under the Aquino administration.
“The administration has relied on relatively rapid growth rates as its main propaganda device for asserting good economic performance and consistently depended on these unsustainable sources for growth,” Ibon said.
To break this cycle of slow growth, Ibon said the administration must institute reforms that address the economy’s capacity to create jobs and provide meaningful household incomes.
Such reforms should include substantially increasing workers’ wages, farmers’ incomes by providing access to land, resources and capital, rural development and building dynamic Filipino industries.
“These are the economic fundamentals that the country lacks, making it follow a pattern of chronically weak growth,” Ibon said.
With the low economic growth in the first quarter, the government estimates that the economy must post an average of 7.5-percent growth in the second to fourth quarters.
Data from the Philippine Statistics Authority showed that public construction contracted 24.6 percent in the first quarter this year from a growth of 17.5 percent in the same period in 2014.
Apart from the contraction in construction spending, the economy also suffered from a contraction in net exports of 1.8 percent. This was largely due to the slowdown in both exports and imports growth to 1 percent and 4.6 percent, respectively.
On the production side, the agriculture sector only contributed 0.2 percentage points to gross domestic product growth despite posting a growth of 1.6 percent, higher than 0.1-percent growth in the first quarter of 2014.