Crisis self-inflicted
If the slowdown continues, economists fear the Philippines will be among the first in the region to enter the feared stagflation.
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If the slowdown continues, economists fear the Philippines will be among the first in the region to enter the feared stagflation.
The recent economic numbers tell a brutal story: growth posted a lackluster 2.3 percent in the second half of the year, putting the Philippines in the familiar last place in the region for development.
Vietnam grew 8.39 percent. Foreign investment is pouring in. Samsung, Apple, and Intel keep expanding their footprint there. Malaysia grew 6 percent in the same quarter; Indonesia posted a strong 5.3-percent expansion.
Only Thailand, the perennial laggard, is expected to fall behind the Philippines. Forecasts point to growth near 1.7 percent for Thailand’s second quarter, a sharp slowdown from its own first quarter.
If the slowdown continues, economists fear the Philippines will be among the first in the region to enter the feared stagflation.
It is an economic condition where three things happen at once: stagnant (or slow/negative) growth, rising unemployment and high inflation.
Malacañang’s instinct is to point outward. Blame Russia and Ukraine or the standoff between Washington and Tehran, which are convenient stories to cover the fact that the collapse was made at home.
Three years ago, before Marcos took his oath, a fiscal roadmap was drawn up with modest targets — a budget deficit near three percent of gross domestic product by the end of his term and a debt-to-GDP ratio near 51 percent.
But the country has drifted far from those aspirations.
The recent drop in the numbers from an 8.1-percent GDP surge at the start of President Ferdinand Marcos Jr.’s term is not about the war in Europe or the Middle East but about the misallocation of the national budget.
It comes from wrong priorities, poor implementation of government programs and projects, and the vicious effects of corruption.
These are not acts of God; they reflect choices made by the country’s leaders. A government chooses how to spend, what to prioritize, and whom to hold accountable.
Now the administration enters its final stretch; two years remain of a six-year term, which is equivalent to the final trimester in the academe, the period of reckoning.
The 2027 national budget has just been submitted and it deserves scrutiny. At first glance, it is exceptionally tight.
Growth has slowed, which means higher borrowing that will cost more because of the weak outlook.
The horizon remains bleak, according to a veteran in the economic field.
Revenue assumptions look implausibly optimistic: a slower economy means less economic activity, yet the budget projects a rising tax take.
The administration also floated cuts to personal income tax.
While tax cuts are popular, they also cost money since no offsetting revenue measures have been announced. A government cannot cut taxes and keep on spending, or the fiscal deficit spirals.
Two years remain. The government must stop blaming Moscow and Tehran for problems made in Manila. It must face the numbers and give an honest accounting of where the money went: through which agencies, into whose pockets, and at whose expense.
The economy is not faltering solely because of forces beyond the Philippines’ control. It is being weakened by those entrusted with the budget who spent it badly, prioritized poorly and executed weakly. In most cases, public funds were stolen.
The fault lies at home, along the banks of the Pasig River, not abroad.
