Research group IBON said that the economy is on its third year of slowing growth under the Duterte administration, and the slowest in eight years. This shows that government’s market-oriented policies are failing and its claimed economic gains are myths, said the group.
The Philippine Statistics Authority (PSA) reported 5.9% annual growth in gross domestic product (GDP) for 2019, missing government’s revised target of 6-7% growth for the year. Government attributed this to the delayed 2019 budget and election ban on infrastructure in the first half of 2019 and slowing agriculture due to weather-related factors like El Niño.
IBON countered government’s claim that the budget delay and ban on infrastructure pulled back growth last year, noting that the economy was already slowing prior to this. From 6.9% in 2016, the country’s growth in GDP slowed to 6.7% in 2017 and 6.2% in 2018. The 5.9% in 2019 marks the third year of economic slowdown under the Duterte administration. This is also the slowest growth in eight years or since the 3.7% in 2011, the group said.
IBON said that the economic slowdown is really due to the lack of strong foundation in agriculture and Filipino industry – made worse by government’s faulty market-oriented policies.
Growth in the agriculture sector dropped from 4% in 2017 to 0.9% in 2018, then slightly increased to 1.5% in 2019, the group said. Yet government continues its neglect and low prioritization of agriculture as reflected in the national budget. Agriculture’s share in the 2020 budget is just 3.5% – the lowest since 2004 at 3.3 percent.
Meanwhile, growth in manufacturing drastically declined from 8.4% in 2017 to 4.9% in 2018 and just 3.8% in 2019. The group said this is because domestic consumption and exports have weakened amid a protracted crisis and increasing protectionism in the global economy. Manufacturing is low value-added and overly dependent on foreign capital and technology, and produces for the world market.
IBON said that instead, government has relied on temporary external factors to drive growth, but these are weakening. For instance, overseas remittances are growing at a slower rate, decreasing from 5% in 2016 to 4.3% in 2017 and 3.1% in 2018. This rose to 4.6% in the first ten months of 2019 but is not likely to surpass the 2016 growth rate. Growth in exports are also falling from 19.7% to 13.4% in 2018 and just 3.2% in 2019.
The consumer spending and real estate booms that for a time fueled growth are also losing steam. Household consumption registered 7.1% growth in 2016 but dropped to 5.9% in 2017, 5.6% in 2018 and slightly grew to 5.8% in 2019. Real, estate, renting and business activities decreased from 8.9% growth in 2016 to 7.4% in 2017, 4.8% in 2018, and further fell to 3.7% in 2019.
IBON said that government has been attempting to boost a lackluster economy through more government spending and its infrastructure program. But this was not enough to stimulate growth. For instance, construction drastically fell from 14.9% growth in 2018 to just 7.7% in 2019.
IBON said that the country’s economic situation will worsen as long as government pushes policies that favor big business interests. It should admit its failure and take on real reforms needed to strengthen and develop agriculture and domestic industries and turn around the country’s flagging economy, the group said. ###