Prelim Reaction Paper on "ADB Sees Solid Philippine Growth in 2 Years"

ADB sees solid Philippine growth in 2 years

By EDU LOPEZ

April 6, 2011, 4:59pm

MANILA, Philippines -- The Philippine economy is likely to expand by 5 percent in 2011, rising to 5.3 percent in 2012 as growth would continue to be driven by investment and consumption.

In its latest Asian Development Outlook 2011 (ADO) released yesterday, the Asian Development Bank (ADB) is expecting that the 2011 growth rates would come on the back of strong economic recovery in 2010, when an upsurge in investment combined with buoyant private consumption to lift economic growth to 7.3 percent.

The ADB report said the domestic economy is set to post solid economic growth over the next two years as the government presses ahead with promised policy and governance reforms and public-private partnership projects.

The recovery in exports underpinned the robust investment last year, with consumer price inflation subdued at 3.8 percent.

The economic outlook for the next two years remains relatively upbeat even as ADO 2011 assumes that monetary policy will be gradually normalized, and that fiscal conditions will be less accommodating amid government commitments to trim the budget deficit.

Strong business sentiment in the wake of successful political transition in 2010, upgrades by credit rating agencies, and a high level of capacity utilization in the manufacturing sector point to robust momentum in private investment. Private consumption is expected to remain strong.

Together with rising fuel prices, robust recovery in aggregate demand will exert upward pressure on inflation, which is forecast to rise to 4.9% in 2011, before easing to 4.3% in 2012.

"Our outlook for the Philippines hinges on the government following through on its plans to reduce the fiscal deficit, and improve governance and the business environment. Jump-starting the planned public-private partnerships will give investment a strong boost," said Neeraj Jain, Country Director of ADB's Philippines Country Office.

Downside risks to forecasts are that global growth will be weaker than expected, remittance inflows will be disrupted, and oil and food price rises will exceed projections.

A lack of progress in the public-private partnership program or in plans to improve governance and public finances could undermine business confidence, the report said.

ADO 2011 also notes the ongoing problem of generating jobs, with the unemployment rate dipping only slightly last year to 7.3% and underemployment remaining high at around 20%, forcing many Filipinos to seek work overseas.

The lack of jobs has undermined efforts to reduce poverty, with the number of poor actually rising by over three million in the six years to 2009.

"Progress has been slower than hoped for on the Millennium Development Goals relating to poverty, maternal health and primary education," said Changyong Rhee, ADB's Chief Economist.

With the ongoing conflicts in various countries other than the Philippines, it's almost absurd to predict that our poverty-stricken country is approaching a brighter tomorrow. Realistically speaking, because of the ever increasing indigence we experience an interrelated web of dilemmas. Unemployment and underemployment is one. Sometimes, these are caused by the deteriorated quality of education, somehow attributed to poverty as well, in the country resulting in the incompetence of those who finish college or those who completed a degree or because of an escalated desire to earn a lot of money. Thus, these potential professionals resort to job options not parallel to their line of capabilities and those that don't offer them a sense of fulfillment. OFWs aren't unfamiliar to us anymore. Our country has been suffering what seems like a present-day imperialism concealed in friendly and mutual relations with other foreign countries, aside from the ever widening gap between the rich and the poor. Thus, instead of seeing "made in the Philippines" at the Mighty Bond tubule we keep in our toolboxes we see "made in China" when in fact, regardless of wherever factory this particular product was made, still Filipinos were employed to work for it. This, in turn, makes us lose more than we gain while the foreigners we trade with gain more than they lose. This barter costs not only a lot of money but also a lot of lives, a lot of hopes for a brightened future. Haven't we heard of the recent execution of the drug couriers arrested in China? Another agitating issue we're facing is, in fact, the Filipino's denial of individual fault and contempt towards other people besides their own selves, mostly the government. Corruption is apparent among our political leaders but isn't it present throughout the rest of the society as well? We were critical when P-Noy does something impractical, such as when he bought his car, but don't we unnecessarily spend a lot on trivial stuff? We fail to retain ill virtues and instead pass the blame on someone for an unfortunate fate.

Furthermore, even our neighbors are currently experiencing social depression today. This disrupts their economic activity eventually affecting ours, too. For it is in trade we enjoy the availability of Colgate in our nearby sari-sari stores and the Nutella we drool over just upon seeing its jar. It is in trade that still many cars run on our highways provided that oil-rich countries keep shipping fuel to us. It is inevitable for every country to economically interact with other countries because according to the 5th principle of economics: "Trade Makes Everyone Better Off." To a healthy extent, it is necessary for us to maintain relations with those beyond our frontiers. But with the catastrophes going on, the prices of fuel, which is a common commodity, skyrocket to the point of successive protests by public utility vehicle drivers. Considering instances as this, being faithful to the said possibilities of economic growth is not affirmative.


The proposed economic growth of the Philippines is both a pleasing and anxiety-provoking thing to know of. It gives the Filipino the hope to ascend from the low standard of life. Frankly speaking, foreseeing the Philippine economy much well is too soon. We have a lot to catch up on to. I think what determines our future as a nation depends if we strive hard both as an individual and as a group. It is up to us if inflation of commodities' prices motivate us to work harder or not, if we remain positive despite difficult times. It depends on us if we'll be able to earn bigger profit from our exports or not. The solution to unemployment and underemployment depends if we are zealous enough to inculcate the skills we should acquire for the careers we opted and patient enough to find the job which will satisfy our needs for survival and societal obligation. If we maintain a good outlook towards our economy, reaching a six percent economy expansion won't hurt. As the cliché goes: "Change is permanent." but it won't be always a bad change or a good change either but I believe persistence and discipline is the key towards improvement.