Mang Pandoy and the 7.6% GDP growth

The Philippine government reported the GDP grew by 7.6% in 2022, the highest in so many years and hinted as an achievement of the BBM presidency. Hinted, because BBM has been in office for only six months in 2022, and the 7.6% growth comes from the very low base in 2021 due to the pandemic. This was “base effect” growth; we really are just back to the pre-pandemic 2019 GDP. 2023 will be the start of the real GDP growth. Still, it’s a growth and it establishes a trajectory good for succeeding years if maintained. But, will this GDP growth improve lives of ordinary Filipinos, as represented by Mang Pandoy, the Filipino everyman?

The 2022 GDP growth was 70% consumption driven and 30% from investment and government expenditures. Revenge spending and the OFW/BPO revenues fueled consumers. On the supply side, services contributed most, then manufacturing, and agriculture contributing least. Weakness in manufacturing and agriculture was bad as supplies tightened and added to inflation along with increased consumer demand. It’s a tribute to the resilience of Filipinos that the economy is in a recovery.

The skewed distribution of income and wealth is a problem of many countries, that only rich Nordic countries with small populations have been able to have a more-balanced distribution. In a recent Philippine study, the richest nine families have more wealth than 50 million Filipinos. In another survey released just last week, 49% of Filipinos expect their living conditions will improve in 2023, 51% believe it will be the same or worsen. Obviously, the GDP recovery and further growth will benefit more, the 10% higher class and 30% upper middle class. The 20% lower middle class, the 20% lower class, and the 20% below the poverty level will not improve. Mang Pandoy is in this class and will still be poor.

Wealth and income distribution in the Philippines, which worsened during the martial law years up to 1986, was improving with high GDP growth rates during the Ramos, Arroyo, and PNoy administrations. High GDP growth after the EDSA Revolution was negated by the coup attempts but was jump-started by the liberalization policies of Ramos. The Duterte administration’s human rights and graft and corruption issues dampened domestic/foreign investments, and the pandemic slowed down GDP to a 4% average which increased poverty and distorted wealth/income distribution. It’s the task of the BBM administration to grow the GDP at 8% to 9% per year to improve income/wealth distribution for the next five years. Vietnam actually did that in 2023, their GDP/capita will surpass ours.

In the second half of 2022, after inheriting a ?13.4-trillion debt from the Duterte administration, BBM made many promises in line with the six-year development plan, but a lot of programs and projects are still to be implemented. 2023 and 2024 will be the years that the BBM administration will have to show initiatives and results.

A major component of economic development is the trust and confidence of the people in the government. Corruption including junkets, expensive parties, and other ostentatious government expenditures, instead of programs and projects, erodes trust and confidence. The protests on the expenses of BBM’s foreign trips with his families and cronies come from the aware and concerned middle class and lower class that cannot be bought during elections. The recent massive demonstrations in Sri Lanka on the expensive Independence Day celebration by the Rajapaksa family while the country is in economic crisis and negotiating an IMF bailout loan, is an illustration. The lack of independent actions from our senators and congressmen also don’t inspire trust and confidence. There’s a limit on what majority of the people will tolerate and no government wants to go there. It’s time for the BBM administration and the subservient legislators to shape up in 2023 and the following years.