IT was reported on Friday that the Philippine economy grew only 5.3 percent in the third quarter (Q3) of this year. Judging from some of the commentaries about it, you would think that the end times were near.
A figure like that must be put in context. Finance Secretary Cesar V. Purisima was a notable voice of reason and common sense when he said, “The 5.3-percent growth in gross domestic product has put the Philippine economy on a record 11 straight quarters of above 5-percent economic growth.”
We must note at this point that forecasting these numbers by economists is often an educated guess, at best, and just a guess, at worst.
We could say we’re a little concerned about the Q3 growth, because it is part of a decreasing trend, with the numbers gradually falling throughout 2014. What we are more concerned about, however, is that some are hitting the panic button about this decrease as being attributable to reduced government spending.
Socioeconomic Planning Secretary Arsenio M. Balisacan put part of the “blame” on the reduction of pork-barrel spending that resulted from the Supreme Court’s unfavorable decision on the Disbursement Acceleration Program. To that, we say: If lower growth is a result of making it more difficult for government officials to reward themselves with public money, so be it and let’s move on.
Our greatest concern, however, is this: Some are looking at the government to “save” the economy through its spending. While public-works projects are an important part of the economy, and public spending is important, what’s even more so is the government better allowing the private sector to do its job.
How much more of a contribution to economic growth than public spending would be a better system of regulation that would take the Philippines off the list of the “World’s Worst Places to do Business”?
How much more of a contribution to economic growth than public spending would be a taxation system that leaves more money in the hands of people and businesses?
How much more of a contribution to economic growth than public spending would be a rationalization of investment incentives that would attract more foreign direct investments (FDI)? Note that, for 2013, the Philippines received 50 percent more FDI than Myanmar and 60 percent less than Vietnam.
But, as to the extent of the importance of government spending to the economy, it must be admitted that the Aquino administration has had implementation problems since its first days on the job. All the reasons, explanations and excuses may make some sense, but they do not justify its failures.
We say that “justice delayed is justice denied,” and that there is no reasonable excuse for that happening. We would add that “a project delayed is development denied,” for which there is no excuse, either.
Image credits: Jimbo Albano