Remembering ‘Aquinomics’

An economist like me would naturally best remember the late president Benigno Simeon Aquino III, aka P-Noy, for what his leadership of the country achieved for the economy. We called it “Aquinomics” then, to describe his administration’s approach and strategy in steering and managing the economy. They say the proof of the pudding is in the eating, and from where I stand, I can assert that no other Philippine president in recent memory matched the positive economic advances achieved under P-Noy’s six-year leadership in 2010-2016—not even the president in whose Cabinet I served, proud as I am about the economic dynamism the Ramos presidency achieved in the 1990s.

My own informed perspective comes from over three decades of giving regular economic briefings to various audiences, both from within government (during my Neda years from 1990-1998), and much more from outside (from 1998 to the present). Doing so requires poring closely over various economic statistics coming out of public and private institutions, and data and analyses from economic researchers, both in and out of the country. I have also written this column for the last 18 years, and being focused mostly on the economy, I could attest that it was during the time of Aquinomics that my articles and my briefings were most dominantly positive in observations, analyses, and commentaries I made—quite unlike the other presidencies I wrote and spoke within.

What distinguished Aquinomics? It was an economic agenda defined not so much by a theoretical philosophy (as in Reaganomics’ supply-side focus that challenged the orthodoxy of demand-side focused Keynesian economics in the 1980s), but more by the kind of economic environment and business climate it fostered. Early in his term, the hallmark of the P-Noy-led economy was a dramatic turnaround in private sector confidence the country hadn’t seen since the 1990s, which translated into surging investment growth. After averaging a lethargic 3.4 percent annual growth since 2004, gross capital formation zoomed to grow by 30.5 percent in 2010 as Aquino came into office. That confidence seemed inspired by wide expectations of good governance, signaled by his professed “Daang Matuwid” philosophy. The resulting accelerated investment growth was to be sustained throughout his six-year presidency, with an annual average growth rate (14 percent) twice faster than that of the overall economy, and mostly driven by domestic private investment. There was in fact a marked increase in the contribution of investment to overall GDP growth that happened within Aquino’s watch, a departure from our history of an overly consumption-dominated economic growth.

Aquinomics was also about fiscal responsibility. At the outset, his government sought to clean up public works projects of erstwhile massive leakages, causing an undesired but inevitable decline in public construction spending that nearly halved economic growth to 3.9 percent in 2011. Thus was born the much-maligned Disbursement Acceleration Program that helped restore GDP growth beyond 7 percent by the latter half of 2012, by which time fund leakages in infrastructure projects had been largely plugged. It was also his fiscal managers’ prudent debt management that earned our country successive credit rating upgrades, and helped put government finances on the solid footing it was in by the time the pandemic hit us last year.

Most lasting of Aquinomics’ legacies were game-changing legislative reforms, foremost of which were the Philippine Competition Act and the Customs Modernization and Tariff Act. The former was a long-needed and long-pending measure that had languished in Congress since the 1980s, and a key instrument toward a more inclusive economy. More inclusive growth was indeed a crucial legacy of Aquinomics in general: Poverty incidence of families fell significantly from 19.7 percent in 2012 to 16.5 percent in 2015—the steepest drop seen within the 3-year intervals between the triennial family income and expenditure surveys since the 1990s.

God bless P-Noy’s soul. Thanks to him, many millions of Filipinos saw their lives get better.

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