President Marcos Jr. tells us that some issues were skipped in last month’s SONA because of time constraints. One of those issues, presumably, was how to save our economy from sinking even more.
The official tally put our second quarter GDP growth rate at a miserable 2.3 percent. This confirms the direst forecast of independent economists from the private sector.
At that pace of growth, the Philippines is now the slowest expanding economy among the ASEAN 6 – by a mile. Media reports say this is the worst performance of our economy in five years. But five years ago, we were in the midst of a pandemic and the whole society was on lockdown. Still, we managed to post growth that is only slightly less than the numbers we now see.
This is the worst performance of our economy since 2009, in the wake of the global financial crisis. But even that comparison will not be fair. In 2009, our economic fundamentals remained strong and ready to bounce back. Which we did.
The latest quarterly numbers is actually the weakest quarterly performance since 2000. We know what happened in the first months of 2001. The do-nothing Estrada presidency was ousted, allowing the country to somehow recover its bearings.
By comparison, our current performance is underpinned by weak fundamentals. Our gross international reserves have declined – suggesting we were burning foreign exchange to prop up the peso. Our manufacturing output dropped sharply, due principally to the collapse of public works spending. Our unemployment rate is inching up. Business confidence is shattered by the corruption scandal.
We are buried in debt. In four years, the Marcos II administration borrowed more money than the entirety of the Duterte administration. And the Duterte administration was fighting a pandemic.
Our debt-to-GDP ratio is now at 66 percent. The accepted prudential level is 60 percent. This will eventually reflect in the interest rate level of our debt. An even larger share of the national budget will go to debt service – thereby starving economic investments for many years to come.
The Duterte administration left office with the economy galloping at seven percent growth. Since Marcos Jr. took over, our growth rate descended consistently. In the second quarter of 2025, our growth rate descended to 5.4 percent. This last quarter, it is half that.
It is as if our economy is caught in a whirlpool. The descent of the growth rate is the trend. The momentum leads us to greater misery.
Discount the inflation rate from the nominal growth rate, our economy is actually contracting. We are not just trapped in stagflation. We are effectively in a recession.
Household consumption, accounting for two-thirds of the economy, slowed to 2.8 percent. Inflation is killing us.
Look at the numbers of other countries in our economic community. In the second quarter, Vietnam grew by 8.4 percent. All the rest, except us, are growing at well over five percent. It is only us effectively receding.
We will eat the dust of our major ASEAN neighbors. Our economy is not only the Sick Man of the ASEAN. Our economy is in intensive care. It should be, except that our government does not seem to care.
The comparative numbers are damning. All the economies in the region suffer from the fallout of Trump’s insane war against Iran. External adversity is not an excuse for our being in dire straits. Our government has failed us. Miserably. Utterly.
Break down the numbers. In the second quarter, investments (gross capital formation) shrunk by -9.2 percent. That is not a small number. This speaks volumes about business confidence in the manner this country is governed. More precisely, misgoverned.
Our industry contracted -2.4 percent. Construction slowed down massively at -13.9 percent. Mining industries shrunk by -9.8 percent.
Industry is the sector on which we depend so much to power into the future. It is shrinking.
Former finance secretary Gary Teves put out an analysis of the recently released GDP numbers. He drew up a list of what government can do to pull us out of this predicament.
Topping that list is holding accountable ranking officials implicated in the flood control mess. Those found guilty must be jailed and as much as possible of the stolen funds returned. Confidence that steps are taken to curb corruption needs to be restored.
Government must accelerate infra spending without sacrificing transparency and quality. Civil society groups must be enlisted in monitoring the projects.
Government needs to do better at addressing inflation. Beyond increasing the threshold for income taxes, government needs to address the supply side factors by raising agricultural productivity and improving our supply chains.
Government needs to relentlessly address issues concerning the ease and cost of doing business. This could be done through an aggressive campaign to digitalize government processes.
More effort is needed to manage fiscal resources prudently and transparently. A greater role for citizen participation in the budget process should be encouraged.
We need to sustain investments in agriculture and industry, especially in strengthening supply chain infrastructure that will minimize post-harvest losses. A more efficient supply chain will help curb price spikes.
The SONA, if it was forward-looking and in better touch with our economic realities, would have benefitted from discussing policies related to the above recommendations. Unfortunately, that speech was composed for applause lines and cheap popularity points.