President Rodrigo Duterte now has logged three and one half years in his office, plus another month and 19 days to be exact. What has happened to the economy during his watch, that is, from July 1, 2016 up to the present?
As a reference, we might wish to see also the performance of Gloria Arroyo in her nine and a half years of rule from January 20, 2001 to June 30, 2010 and Benigno Aquino III in his six years of rule from July 1, 2010 to June 30, 2016.
In Arroyo’s time the economy grew by 4.7 percent annually based on the quarterly GDP series prepared by the Philippine Statistics Authority (PSA). In Aquino’s time, it was 6.1 percent, which was 1.4 percentage points faster than that of Arroyo. In the last three and one half years under Duterte, the economy grew by 6.4 percent annually. This was 0.3 percentage points faster than that of Aquino.
Which President did well?
It is clear that Aquino did better in his six years than Arroyo with her nine and one half years. It is not clear, however, who did better between Aquino and Duterte since Duterte’s record is only for his initial three and one half years. However, if we compare Aquino’s performance in his last three and one half years to that of Duterte’s first three and one half years, we find that Duterte’s 6.4 percent annual growth performance is no better than that of Aquino, which also grew by 6.4 percent annually in the same period.
Arroyo’s last three and one half years in office only allowed her to grow the economy by 4.6 percent, lower than Aquino’s 5.9 percent annual growth rate in his first three and one half years in office. Coming from slower economic growth during the time of Arroyo, it must have been a big challenge to grow the economy faster during Aquino’s time.
Coming from Aquino’s faster economic growth rate, which surpassed the performance of all his predecessors starting from Diosdado Macapagal in the 1960s up to time of her daughter, Gloria, in the first decade of third millennium, Duterte should not have been hard put to maintain the trend or improve the performance of his predecessor.
In fact, in his first state of the nation address in 2016, Duterte said that “on the macroeconomic management, my administration will continue and maintain current macroeconomic policies, and even do better,” which he wished to achieve through “prudent fiscal and monetary policies that can help translate growth into more and better job creation and poverty reduction.” He also said, “By the end of my term, I hope – hope and pray – to hand over an economy that is much stronger, characterized by solid growth, low and stable inflation, dollar reserves, and robust fiscal position”.
Despite the president’s hope and the seemingly good performance of the economy in his initial three and a half years, it remains for us to see what is going to happen in his last two and a half years. This actually is a bit worrying now because if we look closely at the trend, the economy, which grew at 6.9 percent in 2016, started to lose steam in 2017 with economic growth going down to 6.7 percent and further down to 6.2 percent in 2018 and 5.9 percent in 2019.
In its January World Economic Outlook, the IMF projected global economic growth to rise from an estimated 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent for 2021. Such development may augur well for the country, which is dependent for almost 20 percent of its Gross National Income from the net inflow of OFW remittances and other incomes from abroad. This may not be true anymore given the new risk that now comes with the onset of coronavirus disease 2019 or COVID-19 that originated from China.
Already, the global economy is affected by the slowdown in travel and tourism from where most countries in the world depend directly and indirectly for about 10 percent of their GDP and 20 percent of employment. This is even not including yet the disruption in global supply chain due to slowdown in manufacturing activities in China as many companies allowed their workers to stay home to avoid being infected by the lethal virus.
China alone sends about 150 million people annually to travel around the world, the reason why the global spread of Covid19 is also greatly feared.
Having said these – the downward trend in Philippine GDP growth in the last three years and the onset of Covid19 – it might be harder this time for the Philippines to achieve 6.4 percent GDP growth rate in the next two and a half years, similar to was achieved in Duterte’s initial 3 and one half years.
However, there is a silver lining. If our GDP just grow in average by 6.0 percent annually from hereon and with our population growing at only at 1.5 percent annually, our per capita income, which is estimated at around USD 3,400 presently, will double in 15 to 16 years. That makes us on course to reach USD12,000, the minimum required for a nation to become part of the developed world, by 2049, the year when I will be 101 years old that I hope to reach, God willing.