WE wrote in the middle of July that with the way things were going, the Aquino presidency would end with an economic whimper and not a bang. We have been worried for many months that conditions outside the control of the government would overtake all the grand plans and positive hopes for the future. We specifically cautioned that ignoring the economy for an emphasis on politics and the 2016 elections would not end well.
Unfortunately for the nation, our deep concerns are coming true.
At the beginning of 2015, the projection for economic growth was 7 percent. The latest forecast from Standard and Poor’s has been reduced to 5.6 percent. While this might seem like a meaningless number on a page, it represents a massive 20-percent reduction in the estimate.
The gross domestic product (GDP) in the Philippines was worth $284.58 billion in 2014. Had the economy grown by 7 percent, we would have added $57 billion to the economy. Instead, we will fall short by $11 billion. That is the equivalent of P5,000 less for every man, woman and child in the country.
That is P5,000 that will not contribute any taxes for government spending programs. That missing P5,000 will not be used to create more jobs. An additional P5,000 per person will not be available to attack poverty.
All the government press releases about what will happen in the future cannot counter the reality of what is happening today. For virtually every important statistics about the economy, the data is not good and still growing worse.
Exports are declining. Manufacturing and industrial production is not only lower than 2014, but has actually given up all the gains of 2014. Private- sector spending on expansion and new equipment has been falling all year. The trend of foreign direct investments is down 40 percent in the first half of 2015 from 2014.
A headline from a newspaper that is very supportive of the administration reads: Foreign direct investments reach $2.02B. The lead sentence is, Foreign direct investments [FDI] continued to enter the Philippines at a steady pace as stable macroeconomic fundamentals remained a major draw for multinationals. In another paper, the headline more realistically reads: FDI inflow plunges 40 percent to $2 B in . Are we honestly expected to believe that this is just a simple interpretation of the glass half-full, glass half-empty idea?
The administration is not in control of external developments. But it must be prepared to react to those developments and not be concentrating on other matters, particularly the game of politics.
We lift the following dialogue in the novel The Sun Also Rises by Ernest Hemingway: How did you go bankrupt? Bill asked. Two ways, Mike said. Gradually and then suddenly. What brought it on? Friends, said Mike. I had a lot of friends. False friends.
Politics is a false friend to economic growth. Perhaps the administration is going to suddenly realize that fact as a not-so-good economic year comes to an end.