Not worth the brag
Two economic stories highlighted the past week—one, the stellar growth of the country’s gross domestic product or GDP; the other, the 50 Filipino families and individuals in the Forbes list of the world’s wealthiest for 2014.
The Aquino administration delighted in announcing that the economy expanded by 6.4 percent in the second quarter of 2014, faster than what many private economists had expected.
The expansion was driven by industry (which grew by 7.8 percent), services (6 percent), and agriculture (3.6 percent) even as government spending declined.
All subsectors of services, which constitute the biggest sector of the economy and account for 57 percent of GDP, posted solid growth, particularly real estate; trade and repair service; transportation, storage and communication; and banking. All industry subsectors, led by manufacturing, utilities, mining and quarrying and construction, also contributed to the robust economic growth.
In the private sector, the 50 wealthiest individuals and families in the Philippines—led for the seventh year in a row by retail tycoon Henry Sy of the SM group—saw their fortunes rise double the speed of domestic economic growth. Their combined net worth expanded by 12 percent—to $74 billion; that is P3.23 trillion in Philippine currency or 28 percent of the country’s GDP. Aside from Sy, who was estimated to have increased his net worth by $700 million to $12.7 billion in just a year, the others “riding high on the country’s prosperity” include taipan Lucio Tan ($6.1 billion), port and casino tycoon Enrique Razon Jr. ($5.2 billion), former senator Manuel Villar ($1.46 billion, up $410 million from a year ago), and David Consunji, founder of DMCI Holdings (he added more than $1 billion to his net worth, bringing it to $3.9 billion).
To be sure, the vigorous economic growth is making the rich richer. Unfortunately, it has not been inclusive, it has not generated enough new jobs, and it has hardly, if at all, improved the sorry structure of the Philippine economy. Latest estimates still place the poverty incidence at 25 percent.
Even to the burgeoning middle class, the two events hardly matter with the prices of basic goods and services rising fast and interest rates beginning to head north, portending of higher amortization on housing loans. Consumer prices jumped 4.9 percent in July from a year ago, the fastest pace since October 2011. Inflation more than doubled in less than a year, and this many have blamed on Supertyphoon “Yolanda” (which devastated the Visayas in November last year) and on the continued truck ban in the City of Manila that had reportedly increased the cost of transporting goods.
The Bangko Sentral ng Pilipinas, on the other hand, raised its benchmark interest rate to 3.75 percent in July from a record low. Earlier, it increased the rate on special deposit accounts (the money parked by banks at BSP vaults) and raised twice the reserve requirement ratio (the percentage of deposits that banks cannot lend out). These moves are meant to lessen the supply of money to contain inflation. This, however, will also result in higher interest rates for housing, car and other consumer loans.
Then again, working people continue to contend with the monstrous traffic around Metro Manila, with the overloaded and unstable Metro railway system not providing any relief to the congestion. They also have to worry about the higher crime rate and a seemingly worsening local peace and order situation. And there is the looming shortage in power supply (read: frequent brownouts) this summer of 2015.
In the face of all this, legislators are busy debating whether or not to extend the term of President Aquino, while others in government are preoccupied with getting publicity via the globally trending fund-raising “ice bucket challenge.”
With one in every four Filipinos living in poverty and the working class struggling to cope with the ever-increasing cost of living, the administration’s brag about having so many billionaires in the Forbes list or having Asia’s fastest-growing economy sounds nothing more than vapid talk to most Filipinos.
We’re not saying it should get all the blame for this flawed economic structure. The private sector has to do its part in making the fruits of economic growth trickle down to those who need them most. With the rise in the wealthiest’s fortunes outpacing the country’s economic growth rate, increasing the wages of their rank-and-file employees would be a good starting point. Perhaps a simple check would surprise them to see that many of their lowest-paid employees are part of the 25 percent of the poor population.
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