Time to deliver

Are Filipinos dreaming, or are they experiencing something that economic statistics cannot capture? The latest survey conducted by the Social Weather Stations found a growing number of Filipinos saying their lives had improved during the previous 12 months. While still more people—32 percent of respondents—said their quality of life had worsened, 26 percent said it had improved, up from 22 percent three months earlier in June. Looking ahead to the next 12 months, 39 percent expected a better quality of life, higher by 3 percentage points from the 36 percent in June, while the percentage of those who expected it to worsen remained at 9. This made for a “very high” net optimism level of +30 percent, higher than the +27 percent level in June and 24 percent in March, according to SWS.

Businessmen apparently share this optimistic outlook.  The Business Expectation Survey of the Bangko Sentral ng Pilipinas for the fourth quarter showed the business confidence index rising to 38.7 percent from 34.1 percent in the third quarter. A BSP official said the rise in the business confidence index could be traced to anticipation of higher consumer demand during the harvest and Christmas seasons, higher remittances from overseas Filipino workers and sound economic fundamentals.

Economic statistics, however, indicate that both the average Filipino and the businessman may have little reason to feel better about their lives, much less to expect an even better year ahead. The year has been marked by a progressive deceleration in the rate of growth, with growth in gross domestic product slowing down to 4.9 percent in the first quarter, 3.4 percent in the second quarter and 3.2 percent in the third quarter, way lower than the 3.8 to 4.8 percent GDP growth forecast for the quarter of the National Economic and Development Authority. Year on year, the GDP growth for the first nine months was recorded at a very disappointing 3.6 percent, less than half the 8 percent growth that the government was aiming for at the start of the year. To achieve the government’s much-reduced target of 4.5 percent GDP growth for the whole year, the economy would have to grow by 6.9 percent in the last quarter of the year, according to the National Statistical Coordination Board. Estimates by private economists and financial institutions, however, place the full-year GDP growth at between 3.5 percent and 4 percent.

Socioeconomic Planning Secretary Cayetano Paderanga said the “modest performance” of the economy was caused by typhoons which damaged crops, the global economic slowdown caused by worries over the huge debts of several European countries and the weakness of the US economy and the “contraction of the construction sector amid stricter project reviews for public construction projects.”

These are the same excuses heard from government officials, and true enough there is nothing government can do to change some of them. For instance, nobody expects the Philippines to do anything that would improve the financial condition of Greece or push the US economy to higher levels of growth. Neither is there an instant solution to the heavy dependence on electronics of our export sector, although diversification should be started soon. But certainly there is much government can do to speed up the implementation of its centerpiece public-private partnership program as well as its own infrastructure projects. Where once the government had to scale down its construction program for lack of funds, now that it has the money it is too slow in spending it. Of course, the government can never be too careful in safeguarding the people’s money and ensuring it is spent wisely, but fiscal prudence should not lead to economic paralysis. Now that the government has put its financial house in order, it should devote its full attention to fixing the economy.

Optimism such as the one being expressed by businessmen and ordinary people alike is good for the the country’s economic health. But it could burst easily. The slowdown in GDP growth has gone on for far too long and should be cause for alarm. It is time for the country’s economic managers to deliver on their promise to provide the stimulus that would push the economy to faster rates of growth.