Philippines not ready amid looming global economic downturn
MANILA, Philippines—Independent think-tank IBON Foundation Friday said that the impeachment trial against Supreme Court Chief Justice Renato Corona would not be enough to solve the country’s problems of corruption.
IBON’s research head, Sonny Africa, said that the impeachment trial, currently the focus of the Aquino administration, was “distracting people from demanding for real change in the economic policies [of] the government to address what’s to come.”
Africa said that the World Bank (WB) and the International Monetary Fund (IMF) have both predicted “that 2012 would be a bad year for the global economy.”
“[The impeachment trial] doesn’t mean that the country’s problems are being solved. The country’s problems of poverty [and] underdevelopment go far beyond [former] President Arroyo; they go far beyond corruption,” he said in a press briefing just before the second day of their Annual Yearend “Birdtalk” Economic and Political briefing.
“The government doesn’t seem to be learning its lessons from the past,” Africa said. “It is unprepared for the economic downturn that is certain to come in 2012,” he said.
Africa expressed doubts regarding the government’s optimism that increased government spending, improved exports and foreign investments, and remittances from overseas Filipino workers (OFWs) would be able to sustain the economy this year.
Regarding increased government spending, Africa said that although the P1.8 trillion national budget for 2012 was bigger by 10 percent compared to 2011, only 13.3 percent of the gross domestic product (GDP) would go to non-debt spending.
Africa said that non-debt spending as a share of GDP was much higher, ranging from 15.6 percent to 17.1 percent, during 1996-2000, but it was still not able to save the economy during the Asian crisis at the time.
“Looking back on Philippine experience, at a time of a much milder crisis and much higher government spending, the economy was not able to be saved by government spending,” Africa said.
The country also cannot depend on exports and foreign investors because the country’s major export and investment partners are expected by the WB to have slow growth this year. Japan was expected to grow by 1.9 percent, the United States by just 2.2 percent, China by 8.4 percent (from 9.1 percent), and the European Union would contract by 0.3 percent.
“That’s very good reason to expect that exports and foreign investments will be very, very weak in 2012. So the government can’t be relying on [those],” Africa said.
Remittances from OFWs were also falling compared to the double-digit rates in the pre-crisis years. Total remittances from January to November 2011 grew by just 7.3 percent, while the rate was 8.2 percent in 2010. They were still very low compared to the 25 percent rate in 2005, 19.4 percent in 2006, 13.2 percent in 2007, and 13.7 percent in 2008.
“The clear trend is that the high remittance growth of the 1990s and early 2000s won’t be replicated … the signs are of slowing remittance growth,” Africa said. “We can expect that growth rate to keep slowing in the coming years.”
IBON believes that the economy can be improved by “increasing domestic demand through rapid and substantial income, asset and wealth redistribution as well as through developing local agriculture and real Filipino industry.” Specifically, IBON called for a large wage hike, free distribution of land, and protection and support to Filipino enterprises.
Africa said that although the Aquino government is presently enjoying high public approval because of its crusade against Arroyo and Corona who are perceived to be corrupt, the economy is still left unprepared to bear the looming global economic downturn.
“The government should learn its economic lessons from the past [and] substantial measures have to be taken in 2012 to give short-term relief and to improve the long-term economic prospects [of the country],” Africa said.
“If the government takes concrete steps to solve poverty, to increase employment, to redistribute land, to increase wages, and to create jobs through building Filipino industry, that will translate into approval ratings,” Africa said.
