[Editorials of The Connection] How to sustain the gains?

 

By the time this editorial is written, President Benigno Simeon Aquino III, through the traditional State of the Nation Address (SONA), had reported the government’s accomplishments. Not surprisingly, he will boast the biggest story of 2011 that spilled over through the first six months of the current year, thanks to foreign analysts: positive reviews on the economy.

Today’s context is different: surprise, says global investment analysts, because the Philippines is an “emerging economy.” First quarter 2012 growth —6.4 percent— is, believe it or not, second to China in Asia. Although, whether Aquino had said it or not, 2011 gross domestic product growth performance —3.9 percent— is lower than the 25-year-record of 7.3 percent in 2010 (a year in which Aquino and his predecessor, Gloria Macapagal-Arroyo, technically share the credit).

There’s another context to the current Philippine economic story: developed countries are reeling from years-old economic crises, and China’s and India’s economies are cooling down, worrying investment analysts.

We then remember former presidents and how they bragged about record economic growth in their SONAs.

With humility and carrying a somber tone, the President’s late mother Corazon said in her 1988 SONA the country posted a 6.7 percent growth (in constant 1985 prices, the old format of government statisticians), the highest during the 1980s and during her six-year presidency. Her government tried its best to welcome then a market-oriented economy, and practice prudence in fiscal and monetary policies. Cory was trying to revive what she called a “dead economy”. After the 1987 record growth performance, economic growth plummeted in 1988.

In recent memory, we had Arroyo: In SONA 2005, Arroyo said that growth was at 6.1  percent, even if oil price hikes were a threat. But 2007 was Arroyo’s full crowning economic glory: the Philippines posted a 7.1 growth rate (still at constant 1985 prices), calling it that time “the strongest economic growth (performance) in a generation.” The following year, the global economic crisis almost dragged the country’s economy to nearly negative growth.

The Philippines has what some Filipino economists call a “boom-and-bust” economy. Simply put, a year of high economic performance is then followed up with a year of struggle. So if you want to make a graph of GDP growth rates since the 1980s, the Philippine economy —in a line graph— looks like a roller coaster. And when outsiders called the country “an emerging economy,” some economists raised eyebrows, not surprisingly. Surely, the “boom-and-bust” tag on Philippine economic growth was one of their reference points.

But beyond every Philippine president’s rhetoric in annual state of the nation addresses is the search for an answer to a question that’s posed every time the country records high economic performances: How to sustain the gains?

There have been usual economic prescriptions to same-old problems: accelerate the entry of more investments, bolster the provision of basic social services (especially education and health), increase taxation, boost local job generation, and what have you.

As for the current presidency, Noynoy Aquino’s trademark is curbing corruption and making that the trigger for economic growth and increased market confidence. Here we are reminded of what the late President Cory told the nation in the 1988 SONA: “I am tired of being taken to task for the thing above all others that I wanted to leave as a legacy: the example of a clean and honest government. To my fellow workers in government… let me say that unless the public sees results soon, it will be goodbye for you.”

To be fair, foreign investment analysts have lauded the anti-corruption efforts of Aquino III as contributory to the Philippines’ currently positive economic story. Now the question is how to see those anti-corruption efforts translate into more investments, jobs, and resources for this so-called “emerging economy,” and sustain these economic efforts over a streak of three-to-five years (or longer), like what China and India had done during the previous decade.

But American business cable channel CNBC is optimistic: in an economic analysis titled “The Best Countries for Long-Term Growth” (italics this newspaper’s emphasis) topping the list isn’t China, India: it’s the Philippines. Projected growth? seven percent. Size? by 2050, the world’s 46th biggest economy will become the 16th largest.

The current Aquino government is trying to prove what Cory Aquino envisioned: that democracy works as an economic formula. Sustaining the momentum, even beyond 2016 (assuming CNBC’s projections are correct), is the next and hardest step —and achieving that task will make the Philippines truly an “emerging economy.”

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