The Aquino legacy: solid macroeconomy, healthy finances

First of a series

OF THE fact that the Philippine economy grew during the presidency of Benigno Aquino III, there is no doubt.

The numbers speak for themselves. The country’s gross domestic product—the value of goods and services produced locally—grew by an average of 5.8 percent in 2015, as a time when so-called emerging market and developed economies around the world were struggling to even just show decent growth.

Over the six years of the Aquino administration, GDP growth averaged 6.2 percent yearly, even peaking at 7.2 percent in 2013 when the country was the second fastest growing economy in Asia after China.

These impressive numbers raised the country’s profile overseas making it the darling of investors who started pouring their funds into the Philippine economy to take advantage of the momentum offered by a growing consumer market.

Most business leaders credit Aquino for restoring the confidence of investors— both foreign and local—in the Philippine economy. As a result, the country stands on firmer footing, better able to withstand even the most violent of economic shocks during the last six year.

“It’s clear that our macroeconomic fundamentals have improved,” said George Barcelon, president of the Philippine Chamber of Commerce and Industry, the country’s largest business organization by membership.

At the same time, Barcelon noted that the country’s credibility vis-a-vis the international financial community improved during Aquino’s six-year watch.

“I give him credit for that improvement,” the PCCI chief said, but declined to comment on what else he thought could have been achieved by the outgoing administration. “Let’s move on.”

What is now apparent is that Aquino’s economic decisions had to focus on some aspects which he felt were important, to the neglect of others.

“His focus right from the start was on ‘Daang Matuwid,’” said businessman and the International Chamber of Commerce’s Philippine chapter head Francis Chua, referring to anti-corruption slogan of the Aquino. “He wanted to leave a legacy of cleaning up corruption, so this had the effect of delaying projects.”

This was felt most severely in the domestic infrastructure scene which has traditionally been a large source of public and private sector corruption due to the large sums involved in building big-ticket projects. The effort of poring over every minor detail in contracts resulted in long delays in improving the country’s mass transit systems like Metro Manila’s commuter rail line, and the failure to build a new airport to replace the inadequate facilities of the Ninoy Aquino International Airport, for example.

Chua acknowledged that the focus on ensuring corruption-free contracts had adverse effects on the timely execution of these much-needed infrastructure projects.

“If you focus on one side, the other side will suffer, and that’s what happened,” he said.

Businessmen also noted improvements in the government’s finances under Aquino which transformed the Philippines from its previous status as a high credit risk to a country whose bonds are much sought after by international creditors thanks to the investment grade rating it achieved halfway through this administration’s term.

And amid the persistent criticism that topline growth achieved during the last six years failed to trickle down more meaningfully to the people who truly needed it, watchers agree that the improved macroeconomic fundamentals achieved by Aquino provide the incoming Duterte administration with fertile ground for finishing everything that was left unfinished or starting projects that should have been started.

“I am confident that the next President and his economic team can do even better,” Chua said.