While the nation remained riveted to the impeachment trial of Chief Justice Renato Corona for the third week on Monday, the National Statistical Coordination Board (NSCB) reported that the Philippines’ economy grew by only 3.7 percent last year, less than half of the 7.6 percent growth registered last year.
NSCB Secretary General Romulo Virola said the “relatively feeble” growth was posted “amidst the obstinate economic woes, the government under-spending on infrastructure in the second and third quarters, and the sustained decline in fishing.”
The 3.7-percent growth rate the Philippines registered in 2011 makes it the second slowest-growing economy among Southeast Asian nations, higher only than that of Thailand, which was severely affected by severe flooding that year.
The gloomy economic report followed an announcement in November by the Bangko Sentral ng Pilipinas that foreign direct investment to the Philippines in the first eight months of last year totaled only $810 million or a 19.2 decline from the $1-billion net inflows in the same period in 2010.
The NSCB report confirmed what respondents feared in a Pulse Asia survey released the other week where 45 percent believed the economy stagnated while 38 percent said the economy worsened in 2011, significantly up from 16 percent who believed the economy worsened in 2010.
On the same day the NSCB report was revealed, the Social Weather Station released survey results that showed the number of Filipino families that claimed they experienced involuntary hunger increased from 4.3 million to 4.5 million in September.
The Pulse Asia Survey on the people’s perception on the economy also showed that the approval rating on President Aquino’s performance in September 2011 slipped to 72 percent, down 5 percent from his 77-percent approval rating the month before. Pulse Asia said what seems to be weighing down on Aquino’s approval rating more than anything else was the economic factor.
While Pulse Asia noted that “disenchantment with the Aquino administration on selected national issues became more pronounced” in the latest survey, the sharpest rise (in terms of percentage points) in disapproval pertained to its efforts at “reducing the poverty of many Filipinos.”
Those who said the administration didn’t do well in this issue went up to 36 percent in November, from 21 percent in May. The percentage of people who disapproved of the government’s ability to create jobs rose to 21 percent from 11 percent. On controlling inflation, the percentage of those who disapproved rose to 37 percent, from 21 percent. On increasing workers’ pay, the disapproval rating increased to 25 percent, from 14 percent.
Clearly, while the people continue to believe in Aquino’s populist moves, such popularity is beginning to erode fast because of his apparent failure in improving the country’s economy and the economic condition of that segment of the population from whom Aquino claims full support and whose interest he claims to protect in his highly controversial moves, including his obsession to oust Corona and his decision to suspend public works contracts and projects that he feared were tainted by corruption.
Aquino’s paranoia has obviously resulted in government paralysis. For example, one of the reasons cited for the slow economic growth is government under-spending. Aquino gloated in his first few months of his administration that for the first time in years, the government was enjoying a budgetary surplus. One of the reasons for this surplus was the suspension of public construction spending, which according to former Budget Secretary Benjamin Diokno, contracted by a staggering 29.4 percent on a full-year basis.
A look at the quarter-by-quarter growth under Aquino shows that government spending has a big impact on the economy. From the 7.3-percent growth in the third quarter, which was a continuation of the growth from the Arroyo administration, the Philippine economy slid to 6.1 percent in the fourth quarter of 2010, then to 4.6 percent in the first quarter of 2011, 3.1 percent in the second quarter, before slightly recovering at 3.6 percent and 3.7 percent in the fourth when he finally increased infrastructure spending.
For more than one year, Aquino suspended nearly all public works contracts and projects because he feared that most of them were tainted by corruption. He also ordered cuts in the budgets of government agencies, which, in addition to the freeze in public works expenditures, resulted to a virtual economic standstill. Since there were no projects, investments were constricted, no jobs were created, and, naturally, economic growth declined.
Most economic experts blamed Aquino’s inaction for the country’s poor economic performance. Aquino obviously was consumed by his obsession to oust Corona and destroy all those he perceives to be blocking his reform agenda.
While the people supported him during the presidential election and continue to have faith in his reform agenda, Aquino cannot continue to make his anti-corruption efforts as an excuse for not attending to the other equally important mission he promised the people – to alleviate poverty and bring back the country to economic recovery.
Aquino has to find a way to pursuing his goal of “daang matuwid” while steering the economy to the right path. The government cannot hope to eradicate corruption if the people remain poor and hungry. Neither can he continue to expect support from a people gripped by hunger and poverty.
The slogan works both ways: “Kung walang corrupt, walang mahirap” is just as true as “Kung walang mahirap, walang corrupt.”