Two decades of growth

What bears highlighting in the release of the 2019 economic growth figure of 5.9 percent would be more than two decades of positive growth for the Philippines starting from 1999, including weathering the world’s economic crisis of 2008 that saw the US and most developed economies buckling under.

While our performance has been dotted with upward spikes and steep dips during the past 21 years, it has nevertheless demonstrated some innate sturdiness that promises sustainability in the next coming years, hopefully even when faced with any global economic setback.

A review of the last two decades deserves some attention.

Coming from a negative 0.577 percent growth in 1998, the fourth dip in red territory for the country from 1984 just before the Marcoses fled Malacañang Palace to seek political refuge in the US, the Philippine economy rebounded with a 3.082 percent growth.

In 1998, the first year of Joseph Estrada as president, the contraction of the economy was blamed on a severe drought during the first half of the year followed by two destructive typhoons in the second half that effectively clipped agricultural output by 6.7 percent.

Economic growth during the Estrada years would peak in 2000 at 4.411 percent before dropping to 2.894 percent the following year as business confidence was shaken by Estrada's impeachment and ensuing pro-Estrada street protests.

Taking over from the Estrada, Gloria Macapagal Arroyo managed to raise economic growth to 6.689 percent in 2004, almost at par with what the country enjoyed during the first year of the presidency of Corazon Aquino, wife of martyred Benigno Aquino Jr.

During the last full year of the Arroyo government in 2009, the Asian contagion of 2008 pulled down the Philippines’ economic growth to 1.194 percent. Two killer tropical storms, Ketsana and Parma, in September and October, respectively, plunged agricultural growth to just 0.1 percent.

Noynoy years

The euphoria of a 2010 national elections where Benigno “Noynoy” Aquino III was proclaimed president saw economic growth kick up to 7.632 percent, the highest for the country post the Marcos dictatorship. The optimism, however, would not be able to ignore fundamental weaknesses.

In 2011, Philippine economic growth slipped to 3.66 percent, widely missing the growth target of 4.5 percent to 5.5 percent. The tagged primary culprit was in the delays in government spending on crucial infrastructure.

The continued unraveling of the global financial crisis as well as natural calamities that hit hard on the automotive centers of Japan and Thailand to which the Philippines exported a sizeable amount of electronic goods, also weighted in.

In succeeding years, the seemingly resolute crackdown on corruption despite significant gaps in infrastructure spending resulted in the Aquino government regaining a firmer hold of its growth trajectory, posting a rate no lower than six percent.

For the first time in many years, the Philippines received a credit rating upgrade from all three credit rating agencies. Cited as reasons were the continued debt reduction, improved fiscal management, and investor demand.

The Philippines also saw its ranking among Asian countries rise as it continued to be regarded as one of the fastest growing economies in Asia, and often placing second to China.

Decelerating?

We’re seeing consistent high growth in the years of the Duterte administration, although on what seems to be on a deceleration path. Election year 2016 was the highest at 6.884 percent, followed by 6.678 percent in 2017, 6.244 percent in 2018, and 5.9 percent last year.

While economic growth fell to within the bandwidth that government planners had projected from 2016 to 2018, last year was the first time for the current economic team to see the gross domestic product figure go lower than projection.

The National Economic Development Authority noted that last year’s economic growth was the slowest since 2011’s 3.7 percent, blaming it on the late release of government funds earmarked for the administration’s flagship Build Build Build infrastructure program.

Still, 2019 ended with the Philippines posting a 10-year average growth rate of 6.3 percent, a feat that would still be admirable for a developing country that has boasted of a democratic platform against its competitors’ socialist or military governance fundamentals.

Economic watchers have raised the question of whether the Philippine economy is on a deceleration mode primarily because of business uncertainties spawned by the protracted discussions on the remaining packages of the proposed comprehensive tax reforms.

The proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA) has resulted in many businesses putting on hold their expansion plans. Likewise, prospective foreign investors are on a watch-and-see mode as the government continues to debate over the manner of reforms on investment incentives.

Recently, adding to this anxiety is the move of government to review previous contracts with alleged “onerous provisions.”

Projected rebound

This year and carrying through to 2022, the government is looking at a rebound in economic growth of between 6.5 to 7.5 percent. For 2020, Moody’s Analytics has already released its projection of a 6.7 percent growth from higher government spending and improved global economic health.

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