A good year

The upgrade in the Philippines’ credit outlook done last week by Standard and Poor’s was a fitting tribute to cap a very positive year for the economy. The year 2012 is indeed one that bolstered the hope in many that the nation is headed toward genuine and lasting progress.

Topping the string of good news was the surprising 7.1-percent growth in the economy as measured by the gross domestic product (GDP) in the third quarter, a significant jump from the 3.2-percent expansion in the same period last year and the fastest economic growth in the Asean region. This put the Philippines’ 9-month growth at 6.5 percent and on track to surpass the full-year target of 5-6 percent set by the National Economic and Development Authority.

The country’s gross international reserves (GIR) also hit an all-time high of $84.1 billion as of end-November, exceeding the $83-billion revised forecast of the Bangko Sentral ng Pilipinas. The GIR is an indicator of a country’s ability to pay its foreign obligations and imports.

Latest data from the National Statistics Office likewise showed that exports grew 22.8 percent in September—the fastest pace in nearly two years—to $4.78 billion from $3.89 billion a year ago. The Bangko Sentral has also noted that exports were expected to pick up in the coming months as indicated by the big increase in the sector’s build-to-book ratio, which indicated that new orders were much higher than before. Amid concerns of a global economic slowdown, Philippine exports for this year have remained resilient, with the cumulative merchandise exports for the first nine months of the year growing 7.2 percent to $40.07 billion from $37.38 billion in the same period in 2011.

Inflation as of November was also at an 8-month low of 2.8 percent—a significant decline from the previous month’s 3.1 percent. “The predominantly stable price regime so far this year augurs well for our economy that has been growing faster than anticipated. It also bodes well for the state of public spending, for this means that each peso the government spends is able to create more impact,” noted Budget Secretary Florencio B. Abad.

The country’s balance-of-payments (BOP) surplus as of end-November topped $2 billion, or nearly five times the $364 million posted a year ago. The BOP summarizes a country’s transactions with the rest of the world.

Foreign portfolio inflows reported by the Bangko Sentral for November also breached $1 billion, the highest level in two years and more than double the previous year’s $490.35 million. This has pushed the peso to nearly four-year highs of below 41 to a dollar. Last Dec. 6, the local currency posted its strongest close of 40.85 to $1 since 2008. The peso has so far gained about 7 percent against the greenback.

The Bureau of Internal Revenue, which has always been on the infamous list of agencies where corruption is rampant, also had a milestone: preliminary and unofficial tax collection as of Dec. 17 has exceeded the P1-trillion mark.

There was also $1.09 billion in net foreign direct investments (FDI) during the nine months to September. This figure is the more important investment indicator as these funds go to the so-called brick-and-mortar businesses that generate jobs and stay in the country for a long time. The 9-month level was about 40 percent higher than the $782 million generated last year.

On the investment front, it is worth mentioning that the Department of Trade and Industry has tallied 25 inbound business delegations from various countries so far this year from only 12 business missions that were welcomed by the Philippines in 2011.

But the year that is ending is not without its downside. An acute lack of infrastructure persists. The government needs to spend more on roads, bridges and ports. As an archipelago, the Philippines should have long had a modern transport system to make trade and commerce and travel to and from the different islands convenient for the people.

Still, the biggest challenge is how the Aquino administration can make economic growth truly inclusive, for the impoverished masses and the toiling middle class to feel the benefits of a prospering economy. Inclusive growth should go beyond giving cash to the poorest of the poor. It is about an employed citizenry enjoying the fruits of its labor—a peaceful community, adequate healthcare, convenient transport system, etc. This remains an elusive Christmas gift to the people.