10 things about the economy that the Duterte administration should admit

April 4, 2022

by IBON Foundation

The Duterte administration is holding an economic briefing tomorrow with the Department of Finance (DOF) and the Bangko Sentral ng Pilipinas (BSP).

The economic managers will most likely lead by hyping Philippine economic growth as rapid and among the highest in the region. They will claim successful COVID-19 response and creating the conditions for rapid post-pandemic growth.

They will also play up so-called reforms and make it seem that taxing the poor more and the rich less under its Tax Reform for Acceleration and Inclusion (TRAIN) and Corporate Recovery through Tax Incentives for Enterprises (CREATE) laws, investment liberalization and creating profitable opportunities for foreign capital, and rice liberalization that impoverished farmers are good things.

All this will seek to distract from how social and economic development have been set back by the Duterte administration even before the pandemic, with the last two years of poor COVID-19 response just making things even worse. Despite recent hyped economic growth:

  1. The Philippines has the third worst performing economy during the pandemic in Southeast Asia. The Philippine economy, measured by real gross domestic product (GDP), is still 4.5% smaller than before the pandemic in 2019 behind only Thailand (4.6% smaller) and Myanmar (15.8% smaller).[1] Other countries contracted by less or – like Vietnam, Lao PDR and Singapore – were even able to grow.
  2. The Philippines has the highest unemployment rate (7.4% in Q4 2021) compared to Indonesia (6.5% in Q3 2021), Malaysia (4.3% in Q4 2021), Vietnam (3.6% in Q4 2021), Thailand (2.3% in Q3 2021), and Singapore (2% in Q4 2021).[2]
  3. The Philippines has the highest inflation rate (3.9% in 2021) compared to Malaysia (2.5%), Singapore (2.3%), Indonesia (1.6%), Thailand (-0.1%) and Vietnam (-5.1%).[3]
  4. The Philippines has the biggest trade deficit (11% of GDP in 2021) compared to Thailand (0.7% surplus), Vietnam (1.4% surplus), Indonesia (3% surplus), Singapore (12.8% surplus), and Malaysia (16.3% surplus).[4]
  5. The Philippines has the biggest fiscal deficit (8.6% of GDP in 2021) compared to Malaysia (6.1%), Thailand (around 6.1% as of the first three quarters of 2021), Indonesia (4.6% in 2021), Singapore (1.5% surplus), and Vietnam (2.0% surplus).[5]
  6. Even before the pandemic, job generation was the worst of the last six (6) administrations in the past 36 years – average annual net employment creation of only 313,338 over the period 2016-2019 was already the worst in the post-Marcos era.[6] This only got worse upon the pandemic and especially after the administration’s protracted lockdowns.
  7. Between January 2020 and January 2022, unemployment grew more than employment –employment increased by only 1.1% (or by 475,000 to 43 million) while unemployment increased by 22.3% (or by 534,000 to 2.9 million).[7]
  8. This is set to be the only administration under which real wages declined in the last six (6) administrations and 36 years – the real wage in the National Capital Region (NCR) has fallen by 8.2% since the start of the Duterte administration, as of February 2022.[8]
  9. The Duterte administration did not prioritize COVID-19 response. Only Php616 billion was spent on COVID-19 response in 2020 and 2021 versus Php1.9 trillion for Build, Build, Build infrastructure and Php2.3 trillion for debt servicing (interest and principal).[9]
  10. The economy is at its weakest in 70 years – manufacturing has fallen to its smallest share of GDP (18.6% in 2020 and 19.2% in 2021) in 70 years and agriculture to its smallest (9.2% in 2019 and 9.6% in 2021) in history.[10]

[1] IBON estimates from data collected from World Bank and national statistical agencies.

[2] From data collated by Bangko Sentral ng Pilipinas (https://www.bsp.gov.ph/Statistics/Economic%20Indicators%20of%20Selected%20Countries/tab48_sas.aspx)

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] IBON computations from the Philippine Statistics Authority (PSA) Labor Force Survey data (various years).

[7] Ibid.

[8] IBON estimates from National Wages and Productivity Commission wage data and BSP inflation data.

[9] COVID-19 response, infrastructure spending and debt servicing data from Department of Budget and Management.

[10] National income data from PSA.