I was a college freshman in 1986 when the Edsa Revolution happened. I had little knowledge of the intricacies of the economy then, except for the price of galunggong and our struggling bag factory.
The price of galunggong or round scad was used by then Presidential candidate Corazon C. Aquino as a major campaign issue against incumbent Ferdinand Marcos. The ordinary man’s fish was the basic barometer of the economy then. Almost 30 years later, how has the Philippine economy changed and what has the revolution done to address core economic issues of that time?
Looking back at data, the core indicators of the economy in 1985 actually reflected a severe downturn that affected much of the populace. The downturn started in 1983 after the death of former Sen. Ninoy Aquino spiralling into an economic crisis. For two years, the Philippine economy declined by 7.3 percent. Inflation hit a high of 50 percent in 1984 and 23 percent in 1985 pushing lending rates to about 27 percent in 1984 and 28 percent in 1985. Unemployment rate was hitting 13 percent. The weak economy also experienced capital flight wherein the peso devaluated by 50 percent in 1984 and by another 11 percent in 1985 leaving a foreign exchange of only about $1 billion which can only pay two months of imports. The minimum wage was adjusted 8 times from 1983 to 1984 from 18 pesos per day to 37 pesos per day.
At this state of the economy, people were looking for a way out. We knew families who migrated to other countries. We also saw our own business collapse because of the rising cost of borrowing. We knew some people lost their jobs. In Chinatown, where I grew up, I have observed that while the Filipino-Chinese community continues to do their business they started to talk about politics a lot. This was the economy as I understood it then.
Almost 30 years later, the economy we currently face is so different from the one that I could say facilitated the revolution. When one could not afford basic necessities on the table; when businesses are being hammered by borrowing costs; when one’s job is uncertain of continuing—then a single political tipping event triggered that revolution.
Today, we are still faced with difficult economic issues—we have jobs, but they not are of quality; we have businesses but they are limited to a few sectors; we have growth but they too are limited in coverage. But our macro numbers are so much different today.
From an average growth of just about 4 percent in the last 40 years, we have crossed a higher growth path ensuring that we can grow at a minimum of 5.5 percent per year. Our inflation rates have hovered around the 3 to 4 percent range pushing interest rates to their lowest levels in the same 40 years. Our reserves have reached all time highs allowing us to cover about 12x our import bill.
The Edsa Revolution has contributed to this current structure of the economy in many ways. The successive governments used the framework of Edsa 1 to start expanding economic freedom in other sectors. Edsa 1 therefore is a continuing story of economic reforms for the last 29 years. There is no doubt that at current growth rates and economic environment, the country is in a situation wherein it cannot allow a reversal of the reform process. The economy has to be set free from politics so that it can reach a maturity that allows business predictability and competition by the rules.
Current reforms that seek to further level the playing field are already being observed, felt and perceived by foreign investors. The country is actually the most improved participant in many of the competitiveness rankings of countries in various aspects in the last 5 years. The most important testament to this is the Investment Grade bestowed upon us. This has netted about $6 billion in foreign direct investments last year which is way the usual $2 billion we received in the past.
Thus, the next part of the Edsa revolution story is how the Philippines significantly decreased poverty and made good inclusive growth. This will make the next President think twice about reversing many of the reforms already in place and are affecting the country. Whoever will lead us in 2016 is positioned to continue the reform process no matter what. The next challenge that needs to be done is to bring governance reforms at the local levels and make local government units engines of growth. The process of addressing national corruption has started but has not permeated localities. These are where the next revolution story should begin and these are where poverty eradication and inclusive growth can be made real. God bless the Philippines.
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Alvin P. Ang is a professor of the Ateneo de Manila University Economics Department and Senior Fellow of Eagle Watch.
1 comment
As a foreign guy visiting from Texas I am glad to see the persistent economic growth the phils has achieved in these past recent years but i dont see the logic why the author of this article still have to say “god bless the philippines” in the end its like copying god bless america but nonetheless i understand and noticed this country is deeply brainwashed by the catholic church and its continuous meddling in politics