Research group IBON said that the Philippine economy is on\nits way to a third straight year of slowing economic growth under the Duterte\nadministration. The group said that while the economy registered higher growth\nin the third quarter of 2019, the factors behind this are too weak and unsustainable.<\/p>\n\n\n\n
The government recently reported 6.2% gross domestic product\n(GDP) growth in the third quarter of 2019. National Economic and Development\nAuthority (NEDA) secretary Ernesto Pernia said that this means the Philippine\neconomy is \u201csurging\u201d and was confident that the government could meet its 6% full-year\ngrowth target for 2019. <\/p>\n\n\n\n
IBON said however that annual economic growth has been\nslowing since the start of the Duterte administration, falling from 6.9% in\n2016, to 6.7% in 2017 and to 6.2% in 2018. The group said that GDP growth in the\nfourth quarter of 2019 would need to be at least 7.4% just to match growth in\n2018. <\/p>\n\n\n\n
In the last four decades, the economy was only able to\nachieve 7.4% growth in the fourth quarter just once (in 1989), said the group. IBON\nalso noted that the 6.2% third quarter growth spurt is higher than the 5.5% of\nthe previous quarter and 6% in third quarter 2018. However, it is much lower than\nits peak 7.2% first quarter 2017 growth.<\/p>\n\n\n\n
The third quarter growth was mainly due to increases in\nhousehold spending, construction and government spending. Household consumption\nrose by 5.9%, construction by 17.3%, and government spending by 9.6 percent.<\/p>\n\n\n\n
IBON said that while household spending was faster than the\n5.3% in the third quarter of 2018, this was still lower than the 5.7% average\nof the past decade. The group also said that higher household consumption was most\nlikely just driven by higher overseas Filipino worker (OFW) remittances this\nyear. But remittances have been slowing for years and the uptick is likely only\nmomentary. <\/p>\n\n\n\n
Construction accelerated from the 13.3% growth in the third\nquarter of last year. IBON said however that this short-term stimulus is only while\nconstruction is ongoing. Another question is how big and sustained infrastructure\nspending can be with government\u2019s Build Build Build program faltering. The\ngroup noted that infrastructure spending contracted to -4.3% in\nJanuary-September 2019 from 45.9% in the same period last year. Accumulating\ndebt could also be a problem if this reaches unpayable levels.<\/p>\n\n\n\n
IBON noted that the most important sources of domestic\ndemand and growth are showing signs of weakening. Agriculture momentarily\nrecovered with an increase of 3.1%, but it remains in long-term decline.<\/p>\n\n\n\n
The manufacturing sector\u2019s 2.4% growth is the slowest in 32\nquarters or since the 2% clip in the third quarter of 2011. Manufacturing has\nbeen stalling since the start of the year, said the group. This is because it has\nbecome overly foreign-dominated and export-dependent and is adversely affected\nby the slowing global economy and the US-China trade war.<\/p>\n\n\n\n
To reverse the economic slowdown, IBON said that the government\ncan boost growth in a way that is both beneficial to the people and more\nsustainable. There are redistributive measures that can be done right away and\nwill be felt by the people. <\/p>\n\n\n\n
These include immediate and meaningful wage hikes to spur\ngreater consumption especially among lower income communities. The wider\ninformal economy will be stimulated. Lowering consumption taxes will also\nincrease their spending power. Growth can be boosted by higher taxes on the wealthy\nand large corporations if the revenues are spent on expanding social and\neconomic services for the poor. <\/p>\n\n\n\n
But the most sustainable source of growth in the long-run is\ndeveloping domestic agriculture and building Filipino industry to create more\njobs and raise incomes in the country, said the group. ###<\/p>\n\n\n\n
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