Despite the International Monetary Fund’s (IMF) optimistic outlook on the Philippine economy, local research group IBON Foundation Inc. said the country’s economic growth remains “shallow and unsustainable.”
IBON said the slowdown in the Philippine economy in 2014 indicated that the sources of economic growth are unsustainable and narrow-based. It added that, even with expectations that public spending and remittance flows will be high, this is not an assurance that growth is inclusive.
“The shallow and speculative sources of economic growth are not sustainable, and this was seen in the economy slowing down in 2014. Government spending has also been lower and even if this is increased, it will still not address the main reasons for the economic slowdown. The group also noted the slowdown in overseas Filipino workers’ [OFWs] remittance growth, which is no longer seeing the peak high double-digit growth rates of the past decades,” Ibon said.
IBON said that, prior to the Philippines, countries like Brazil, Russia, India, China and South Africa (also known as BRICS) have, likewise, been hyped by the IMF and other agencies as among the world’s fastest-developing economies.
However, IBON said, recent economic trends in these countries show slowing growth, stagnant wages and massive capital outflows, as well as intensive plunder of their natural resources.
“This is because these countries have not undergone fundamental economic reforms and were merely hyped to draw in speculative foreign capital,” IBON said.
IBON said the national government must look beyond the hype given by multilateral institutions, like the IMF. It also criticized the IMF for “only serving the interests of developed countries and global corporations.”
In its biannual Regional Economic Outlook (REO) report released this week, the IMF forecast the Philippine economy to grow despite global challenges.
The REO stated the country’s firm currency, strong OFW’s remittances, earnings from the outsourcing and tourism sectors, stable government spending, etc., all serve to protect the Philippine economy from volatile global conditions.
In 2014 the Philippine economy posted a growth of 6.1 percent, the slowest since 2011, when the economy posted a full-year economic growth of 3.7 percent.
The National Economic and Development Authority (Neda) said the slower full-year economic growth was largely due to the lackluster economic performance in the first three quarters of the year. The country’s gross domestic product growth in the first to third quarters was significantly affected by the government’s underspending.
However, a recovery in government spending in the last quarter of 2014 boosted growth in the fourth quarter to 6.9 percent, an estimate that was above market expectations.
The full-year economic growth in 2014 placed the Philippines as the second fastest-growing economy in Asia, and the country’s fourth-quarter growth placed the country as the third fastest-growing economy in Asia during the period.
The fastest-growing economy in Asia in terms of full-year and fourth-quarter growth was the People’s Republic of China, with a growth of 7.4 percent and 7.3 percent, respectively.