Brighter days ahead

THAT PHRASE just about sums up Finance Secretary Cesar Purisima’s assessment of the Philippine economy after six years under President Aquino. And he has a point. Gross domestic product grew 6.9 percent in the first quarter of 2016, the fastest among the top five members of the Asean. It outpaced China’s for the first time in 27 years and, despite the global economic weakness, was the highest quarterly growth in nearly three years and the 17th consecutive quarter of above-5-percent GDP expansion.

Driving growth for the quarter was fixed capital formation—or investments—which expanded by 25.5 percent, the highest in almost six years and a clear sign of investor confidence. Other official data all point to the huge macroeconomic accomplishment of President Aquino and his team: a current account surplus estimated at $8.9 billion, or 3 percent of GDP; a record low debt-to-GDP ratio of 44.8 percent in 2015; a foreign debt share of only 15.6 percent of GDP; longer debt maturities currently at 10 years; a heavy domestic borrowing bias at 58 percent in 2015; and a lower weighted average interest rate of 5.1 percent as of end-March 2016.

Consumer optimism was also at an all-time high in the first quarter, reflected in part by the 7-percent jump in household consumption that was buoyed by negligible inflation and a 10-year-low unemployment of 5.8 percent. Sales of vehicles and condominium units also surged, benefiting from an investment-grade credit rating that led to lower interest rates. Tourism has bloomed, with arrivals expanding 15.1 percent this year. The BPO industry continued to grow robustly and now employs 1.3 million Filipinos and accounts for 8 percent of GDP. Overseas Filipino workers remained steadfast in sending billions of dollars to their beneficiaries at home, helping fuel consumption spending.

Clearly, the Aquino administration is passing a vibrant economy to the incoming administration of Rodrigo Duterte. The six-year average growth of 6.2 percent under Mr. Aquino was the fastest streak since 1978. During the past six years, the administration boosted spending on education by 125 percent, social services by 166 percent, health by 336 percent, and infrastructure by 360 percent.

The incoming administration must sustain these economic gains. It can start by not tinkering with monetary stability and fiscal discipline, which have been the hallmarks of the incumbent. It will be best served by letting the monetary authorities decide what’s best for the local financial system, and the executives who will take up the top posts in budget and finance will do well to exhibit the same passion for fiscal discipline.

There are other areas that the incoming administration can focus on. On further boosting investor confidence, it can do better by acting with dispatch on Duterte’s plan to relax restrictions on foreign ownership, which have been used by inefficient local investors to the detriment of consumers. Despite the gains in employment, underemployment remains a big problem, and job satisfaction is a big issue especially among those living on the minimum wage and finding it hard to make ends meet. Raising wages soon should be in order. Infrastructure spending deserves special attention, with a focus needed on how to speed up the public-private partnership program.

More importantly, the incoming administration has to make good on its promise to address the people’s common problems that seem to have been neglected by the incumbent. Much needs to be done to uplift the poor (the poverty rate remains at more than 20 percent), peace and order appear to be a low priority (in the first half of 2015, the Philippine National Police reported a 46-percent increase in the number of crimes committed nationwide), and the travails of ordinary people such as the horrendous traffic situation and inadequate public transportation are relegated to the sidelines.

Such neglect was validated by the results of the recent national elections, which should have resulted in the administration candidate winning the presidency if indeed the benefits of economic growth had trickled down to the public at large. But it was won by the tough-talking mayor of Davao City who ran on the promise of stamping out crime if elected president.

Economically speaking, Purisima is correct to say that the Philippines is in a much better place than when President Aquino and his team took over. We agree with him. If the presumptive President-elect plays his cards right, brighter days are indeed ahead for Asia’s bright spot.