The economic managers are overstating their performance and understating the economy’s problems. This isn’t a good starting point for finding solutions.
The economy in 2021 is still 4.5% smaller than in 2019 before the protracted lockdowns.
The government cannot be allowed to be so dismissive about how its fixation with lockdowns caused the worst economic collapse in the country’s history in 2020 and three years of lost economic output. Its repercussions are still being felt today.
The latest gross domestic product (GDP) figures confirm that we entered 2022 at just a little above 2018 levels or as if the economy had completely stagnated for the past three years.
This is from too many overly harsh lockdowns unmitigated by fiscal stimulus to boost families’ purchasing power and help small businesses reopen and stay afloat.
The 7.7% fourth quarter 2021 growth and 5.6% full year growth are high only in coming from the -8.3% growth (contraction) and -9.6% growth (contraction) in the same periods the year before, respectively. The administration shouldn’t pat itself on the back for growth performance that is mostly from easing protracted lockdowns – these didn’t have to be there to begin with if only the right public health measures were spent on from the beginning.
But even this seemingly rapid growth will be short-lived and start to fade after the first quarter of 2022. This is the last quarter which will be measured from a contraction in the same period the previous year.
ASEAN laggard
The full year 2021 GDP growth figures makes the Philippines among the fastest growing economies in ASEAN, perhaps second only to Singapore which is projected to grow 7.2% in 2021. But this is growth mostly in the country coming from the worst economic contraction in the region and, indeed, across the whole of Asia and the Pacific.
Filipinos are also not really feeling gains from that growth – the Phiippines has the highest unemployment rate (6.5% in November 2021) and inflation (4.5% in 2021) in ASEAN.
Unemployment rates are lower in Indonesia (6.5% in August 2021 – rounded off, but marginally lower to the second decimal place), Malaysia (4.3% in November), Vietnam (4% in 3rd quarter), Singapore (3.2% in November), and Thailand (2.3% in 3rd quarter). Inflation is much lower in Malaysia (3.2% in December), Singapore (2.3%), Indonesia (1.9%), Vietnam (1.8%), Brunei (1.8% in October), and Thailand (1.2%).
Jobless growth
The administration should also be more candid about the jobs crisis. The reported 2.9 million increase in employment in November 2021 from January 2020 before the pandemic cannot be taken at face value.
Not only is unemployment still higher at 3.2 million, the quality of the jobs created is very dubious. Net employment creation is mostly informal, low-income and low-earning.
Rural poverty must be hugely bloating – employment in agriculture grew 1.5 million to 11.2 million but the sector actually had -0.3% growth (contracted) in 2021. This means a hugely bloated agricultural workforce dividing a smaller amount of output between them.
The situation is similar in wholesale and retail trade. The number of employed here grew 1.4 million to 10 million which is a 16% increase compared to before the pandemic. But there was only 4.3% output growth in 2021 which implies generally lower average returns to working in the sector.
The last time the government reported average daily basic pay, agriculture and trade were already the two lowest earning specific subsectors (January 2018 data) so this has gotten worse.
Even the presumably welcome 8.6% growth in manufacturing in 2021 may not give as much benefits as it seems. The 3.4 million jobs here is still 266,000 less employed compared to before the pandemic.
It’s the same with reported growth in transportation and storage (6.3% in 2021) and in accommodation and food services (7.8%). Employment levels in these sectors are still 541,000 less (down to 2.9 million) and 494,000 less (down to 1.5 million), respectively, compared to before the pandemic.
Despite hyped reopening, the high unemployment – which we contend is even grossly underestimated – and worsening quality of work point to how so much more still needs to be done to help ordinary Filipinos beyond telling them that GDP growth figures “show an economy primed to breakout”. The economic managers are being insensitive in harping about achieving “upper-middle income country status in 2022” amid such worsening joblessness, poverty and economic distress.
