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By APD writer Melo M. Acuña
Manila,Jan.24(APD)- Private research group IBON said that the second year of slowing growth under President Rodrigo Duterte should be enough to “jolt it out of its complacency and denial.”
The think-tank said the downturn in the last two years and the poor prospects in 2019 should serve as wake-up call to begin the difficult but necessary reforms for genuinely inclusive growth and national development.
It will be recalled the Philippine Statistics Authority (PSA) reported a 6.2% annual growth in the country’s gross domestic product (GDP) for 2018 which was lower than government’s revised growth target of 6.5-6.9% for the year.
In a briefing this morning, Socioeconomic Planning Secretary Ernesto M. Pernia cited slowing agriculture and high inflation as among the main factors pulling back growth, while the main drivers were growth in construction, and trade and repair of motor vehicles, motorcycles, personal and household goods.
“Growth is slowing most of all because of the economy’s unsound fundamentals in backward agriculture and shallow industry,” said Sonny Africa, IBON executive director in a statement released late Thursday afternoon.
The agriculture sector registered just 0.8% growth in 2018 from 4% in 2017. This is the sector’s worst performance since its contraction in 2016. Africa believes the Duterte administration “seems to have little interest in reversing this trend.”
The 49.3 billion agriculture department budget for 2019 proposed by Congress is P1.4 billion less than the P50.7 billion in 2018 (in equivalent cash-based terms).
He added manufacturing growth slowed to 4.9% in 2018 from 8.4% the year before, which is the slowest since the 4.7% growth in 2011. Mr. Africa said this is due to weaker demand in domestic consumption and weaker exports amid the global economic slowdown. Manufacturing also remains shallow in being low value-added, foreign dominated, and dependent on foreign capital and technology.
Africa said recent rapid growth has relied on external short-term factors that are fading. Remittances are slowing, exports are falling and interest rates are rising. The real estate and consumer spending booms are also “petering out.”
IBON said growth in overseas remittances slowed from 5.0% in 2016 to 4.3% in 2017 to just 3.1% in the first ten months of 2018. Exports growth increased from 11.6% in 2016 to 19.5% in 2017, but then fell to 11.5% in 2018.
The benchmark overnight reverse repurchase (RRP) rate rose steeply from 3.0% in 2017 to 4.75% by end-2018, reversing the decade-long general decline in interest rates.
Mr. Africa said household consumption spending slowed from 7.1% growth in 2016 and 5.9% in 2017 to just 5.6% in 2018. The real estate boom is also tapering with 2016 growth of 8.9% in real estate, renting and business activities declining to 7.4% in 2017 and falling further to 4.8% in 2018.
Africa also said that household consumption spending markedly slowed from 7.1% growth in 2016 and 5.9% in 2017 to just 5.6% in 2018. The real estate boom is also tapering with 2016 growth of 8.9% in real estate, renting and business activities declining to 7.4% in 2017 and falling further to just 4.8% in 2018.
He said rising government spending and infrastructure offensive have not been enough to offset the reliance on waning external factors despite the government’s efforts to stimulate growth to its 7-8% target with even more spending. These are not enough amid “high disguised unemployment, low incomes, and the global slowdown this 2019.” Global GDP growth is estimated to slowdown from 3.1% in 2018 to 3.0% this year.
The number of employed increased by 162,000 from 41 million in 2016 to 41.2 million in 2018 according to the Philippine Statistics Authority (PSA). The average annual job creation was then only 81,000 in the period 2017-2018 which Africa described as the lowest level of job creation among post-Marcos governments.
Mr. Africa said the sooner the Duterte administration admits the failure of its neoliberal policies, the sooner measures that will spur domestic industries and benefit the Filipino people need to be implemented.
(ASIA PACIFIC DAILY)
