Economic stuttering
Government and private economists did not expect the Philippine economy to post its slowest pace of growth since 2011 in the third quarter of this year. Many had forecast an expansion of 6 to 6.5 percent. So when the official number came in at 5.3 percent, focus shifted on where the blame should fall.
The Philippine Statistics Authority was quick to say that the services sector continued its downward trend that began in the first quarter while the industry sector’s growth slowed to 7.6 percent. Agriculture likewise suffered a 2.7-percent contraction in the third quarter,
reversing the gains of the previous quarters.
Economic Planning Secretary Arsenio Balisacan said the congestion at the ports until September affected the growth of exports and imports. He said there was sufficient evidence for this: Exports growth slowed to 9.8 percent in the third quarter from double-digit increases in the previous quarter and in the same period last year. Imports grew 5.8 percent during the June-to-September period, better than the 3.1 percent in the second quarter but way below the 17.3 percent posted a year ago. But while port congestion may have affected the flow of goods, isn’t external trade determined in large part by demand from overseas? Economic conditions in our major trading partners have remained uncertain; thus, imports from the Philippines and other countries have remained weak.
There were other “reasons” cited by economic officials for the growth slowdown. Balisacan pointed out that many agencies had been more careful in their disbursements under the more watchful eye of the Commission on Audit. Also, he said, the Supreme Court decision on the controversial Disbursement Acceleration Program had “chilling effects” on how government agencies spent their funds. The DAP, a stimulus program launched in 2011 to pump-prime the slowing economy, was declared unconstitutional by the high court. But this seemed an unlikely reason for the growth slowdown because the DAP involved only savings of government agencies.
The main problem is that the government was too slow in spending what has already been budgeted for this year. Spending by government agencies dropped by 2.6 percent year-on-year during the third quarter from a flat growth in the second quarter. In the nine months to September, the Aquino administration’s budget stood at a deficit of just P31.1 billion, or way below the ceiling of P266.25 billion for the entire year—indicating a very sharp slowdown in spending. And this continued at the start of the fourth quarter when growth in revenue collection in October again outpaced government spending, narrowing the deficit for the month to just P2.5 billion, or 71.4 percent below the program for the month. Total government spending during the January-to-October period was lower by P303 billion than the P1.9 trillion programmed for the 10-month period. The lower deficit at the beginning of the fourth quarter brought the 10-month shortfall to P33.6 billion, way below the P244 billion programmed from January to October.
Many expected the reconstruction of the Visayas areas devastated by Supertyphoon “Yolanda” in November 2013 to help lift economic growth this year. But not much was done on this front as well. Economists and analysts also expected the public-private partnership (PPP), the flagship infrastructure program of the Aquino administration, to also help lift economic growth. Again, not much was accomplished in that area.
We hope the delays in the PPP projects are not intentional. Pushing many of the infrastructure projects to 2015 may trigger the suspicion that those projects will be awarded in time for the campaign period for the 2016 presidential election, to in effect show that the Aquino administration is undertaking the much-needed airports, roads and other infrastructure projects to boost the economy—and the chances of its anointed candidate.
Government economists and officials can make all the excuses they want, but the fact remains that the administration is not spending as much as it should. With the slower-than-expected economic growth this year, we can only hope that the administration will seriously consider fast-tracking programs and projects that will truly boost development—the kind of development that will allow not only the rich but also the middle class and the poor to enjoy the fruits of economic growth.
