Good news, bad news
There is much to be pleased about in our economic performance in recent years, including the one just past. But as my title suggests, there’s as much to be worried about as well. Our situation sums up thus: Yes, we’ve come a long way and done quite well, but sadly still not quite well enough to even just narrow the gap with our neighbors.
By my usual PiTiK test (presyo, trabaho, kita or prices, jobs and incomes), 2016 was all good news. The past year saw relatively stable prices, with a full-year average inflation rate of 1.8 percent, which was only slightly worse than the previous year’s record 1.4 percent. Annual price increases had peaked at 9.3 percent in the last 10 years, and even briefly reached double digits at the height of the world financial crisis in 2008-2009.
Meanwhile, our unemployment rate dipped below 5 percent, the lowest I’ve seen in decades. Just three years before, the figure was above 7 percent, where it has persisted in most of the past 15 years. As for incomes, measured by gross domestic product, our 6.8-percent GDP growth rate eclipsed even that of China, erstwhile the fastest-growing economy in the entire continent.
All this starkly contrasts with our embarrassing history of trailing our comparable Asean neighbors in most key economic indicators, including export earnings and foreign direct investment inflows. We averaged less than $40 billion in annual export revenues in the past decade up to 2010, behind even Vietnam, which had already been averaging around $50 billion. We attracted a pathetic $1 billion in annual average FDI inflows in the same period, whereas Vietnam was already second to Singapore with well over $6 billion.
The good news is that, as of 2015, our export earnings for the year were already at $59 billion. (It was actually even higher at $62 billion the year before.) We had by then also achieved a six-fold expansion in annual FDI, reaching nearly $6 billion in the same year.
That was the good news. The bad news is, we still failed to catch up with our neighbors and are even farther behind them now, even as we’ve come a long way from our dismal historical record. Our export gap with our nearest rival used to be just about $10 billion ($40 billion vs. Vietnam’s $50 billion). Now it’s over $100 billion ($59 billion vs. Vietnam’s $162 billion)! And while we multiplied our annual FDI by a factor of six, against our comparable neighbors, we remain the lowest with our $5.8 billion being only half of Vietnam’s $11.8 billion!
Clearly, our best simply wasn’t good enough, and if we are to gainfully employ still more than 2 million jobless Filipinos, we need far more new investments, both foreign and domestic. One handicap we continue to have relative to our neighbors is our long-standing constitutional restrictions on foreign ownership in public utilities, advertising, mass media, educational institutions and others. On top of that, we have the highest tax rates compared to our neighbors. We need to act fast to get rid of these handicaps.
One attraction we supposedly have is a predominantly young population, due to our higher birth rate. While our neighbors will be seeing less working-age people serving more dependent elderly in the next 30 years, we are unique in entering a so-called “demographic sweet spot” where working-age Filipinos would far outnumber the dependent older population. That’s the good news.
That same good news could well be bad news if we consider an alarming statistic: One in every three (33.5 percent) young Filipinos below the age of five today is suffering from malnutrition-induced stunting. Stunting, which is most critically dependent on a child’s first 1,000 days, results in lifelong impairment of the child’s potential for brain and physical development.
We actually have a silent crisis, a demographic time bomb, if we don’t feed our youngest children enough, now. If we don’t act now, we will have a labor force with a sizable proportion of low productivity misfits, many likely to turn to crime—hardly a formula for future prosperity.
There’s simply so much more we need to do, both at the policy level and down at the ground level. And there’s no time to waste.
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