In the run-up to the Marcos Jr administration’s first State of the Nation Address (SONA), research group IBON said that the Philippines has among the highest unemployment and inflation rates in the region, underscoring the country’s worsening conditions and the urgent need for radical economic measures. The group said that the new government should recognize the grave economic situation and pose a correspondingly comprehensive program to address this.
Latest data available shows that the Philippines has the among the worst unemployment and inflation rates among Southeast Asian countries. As of May 2022, the Philippine unemployment rate is at 6%, followed by Indonesia (5.8%) and Malaysia (3.9%). Meanwhile, as of June 2022, the Philippines has the second highest inflation rate (6.1%) among the Association of Southeast Asian Nations 6 (ASEAN 6).
These are only among the latest indicators of the deteriorated state that the Duterte administration has left the economy in, and which the Marcos government should seriously address, IBON said.
The Philippines is also among the poorest performing economies compared to its neighbors. Its gross domestic product (GDP) had the biggest contraction of 9.6% in 2020 followed by Thailand and Malaysia, which contracted by 6.2% and 5.6%, respectively. The average annual GDP growth of 3.8% from 2016 to 2021 ranks the country 5th worst economic performer in the region before and during the pandemic.
The jobs crisis and inflation have worsened not just due to the past administration’s stringent lockdowns and refusal to substantially spend on social protection and economic stimulus, said the group. These are hugely due to the lack in production sectors that can provide steady employment and incomes and deliver the requirements of people’s welfare and national development, said IBON.
The shares of agriculture and manufacturing in the economy at 9.6% and 19.2% in 2021, respectively, are their smallest in history – in the case of manufacturing, in 70 years. This is due to the absence of any plan for domestic production and simply opening up the economy to foreign investments and products, IBON said. Agriculture is unprotected from imports liberalization. Manufacturing is foreign-investments- dominated.
IBON stressed that to solve these the Marcos government should discontinue the Duterte administration’s implementation of neoliberal policies that enriched oligarchs, immiserated the majority, and plundered resources.
IBON reiterated that, if Marcos Jr is yet to unveil a clear plan despite the urgency of the economic crisis, it should present urgent and structural solutions.
Immediate measures should be about providing prompt relief for the majority, said IBON. This can be in the form of cash assistance to households, substantial wage hike and subsidies, removing oil taxes, ensuring affordable and available transport, and supporting agricultural producers and micro, small and medium enterprises. These measures do not only strengthen aggregate demand but also help ensure supply response and mitigate further inflation.
The Marcos Jr administration should also focus on fixing spending priorities, said IBON. This can be done by realigning the budget for non-urgent infrastructure, debt service and military, and imposing billionaire tax. It should start expanding policy space by reviewing the pro-market and big business-friendly framework which has only made millions of Filipinos more vulnerable.
Strategic measures must be done to address weak agriculture and shallow industry underpinning Philippine socio-economic woes, IBON said. Bold measures that will truly develop agriculture and industry need to be identified, and the new administration can start with junking existing harmful policies such as the Rice Tariffication Law, expanded foreign investment liberalization such as in public utilities, and lopsided trade deals only favoring rich countries. IBON also stressed the need to institutionalize social protection while expanding public social services such as health, education and housing systems.
The newly-installed president is set to reveal his so-called economic transformation plan during the SONA. IBON said however that if this plan remains stuck in the same neoliberal mindset, the Filipino people will continue to suffer and bear the burden while big business and foreign investors keep reaping the benefits at the expense of genuine national progress.