[ANALYSIS] The poor quality of economic growth under Duterte

 

One of the high points of my college days was taking a course under “Mareng Winnie” Monsod called Development Economics. I learned there that economic growth is not the be-all and end-all of development. Growth is but a means to an end, not an end in itself.

 After all, growth can be antithetical to development in so many ways. The 1996 Human Development Report warned that growth can also be jobless, ruthless, voiceless, rootless, and futureless.

More than a decade later, this lesson has stuck with me, and it could not be a more appropriate lens through which we can (and should) assess the current state of the Philippine economy under Duterte, especially now that we’re past his midterm.

In this article we show that not only has the economy weakened in the past 3 years, but – more importantly – it’s also of poor quality.

Weaker growth

In the pre-SONA event organized by the government's economic managers, Finance Secretary Carlos Dominguez III trumpeted that the growth of the nation’s income – as measured by GDP or gross domestic product – clocked in at an “impressive” and “robust” 6.5% for the first 11 quarters of the Duterte administration.

But a closer look shows that growth has weakened. 

From 7.1% when Duterte came into office, growth has foundered to a dismal 5.6% in the first quarter of 2019, the lowest in 4 years (Figure 1). It’s also below the government’s target of 6% to 7%.

Government economists blame Congress’s failure to pass the 2019 budget on time, which set back many government infrastructure projects for the first third of 2019. In a way, Congress derailed Duterte’s own infrastructure project called Build, Build, Build. 

Note that 2019 is also an election year, and growth should be higher than normal. I shudder to think how much lower growth would’ve been last quarter had it not been for the elections. 

Threats to future growth also lurk nearby. 

For instance, we might soon feel the effects of the escalating trade tensions between the US and China.

Investors are also reportedly holding off their expansion in the Philippines – or flocking to more competitive counties like Vietnam – at least until the cloud of uncertainty surrounding the Trabaho bill is dispelled.

Poor-quality growth

Even more disturbing than its downtrend, economic growth has also been of poor quality. It’s been jobless, ruthless, voiceless, rootless, and futureless.

1) Jobless growth

Job creation in the past 3 years has been deplorable. 

Official data show that between 2016 and 2018 the Duterte administration saw only 81,000 new jobs each year. Since 2017, annual job growth averaged at just 0.2% (Figure 2).

The Palace dismissed this as a “mathematical impossibility” concocted by the economic think tank IBON Foundation. But the data in fact came from the Philippine Statistics Authority itself. 

 

Figure 2

 

2) Ruthless growth

Growth has also been ruthless since many of Duterte’s policies are anti-poor.

Luckily for the administration, the country’s poverty rate has gone down from a fourth to a fifth of the population – from the first half of 2015 to the same period in 2018.  

But runaway inflation last year (Figure 3), caused in part by the government’s rice mismanagement and the TRAIN lawalso impoverished Filipinos by reducing the amount of goods and services they could buy with their incomes. 

Figure 3

 

Duterte’s pet project – the war on drugs – has also killed tens of thousands of Filipinos, almost exclusively among the ranks of the poor. Is this government eradicating poverty by eradicating the poor?

It seems that the government is turning its back on the very idea of “inclusive growth.” In the recent pre-SONA forum, one slide said tellingly, “Our ultimate goal is to bring down poverty rates and create more opportunities for all law-abiding Filipinos” (emphasis mine).

This is hypocritical on two counts. First, inclusive growth is clearly stated as a goal in the Philippine Development Plan. Second, Socioeconomic Planning Secretary Ernesto Pernia himself coined the term “inclusive growth” in a paper published in 2000. 

3) Voiceless growth

Even if the economy continues to grow, the Filipino people’s ability to speak out and air their grievances has palpably shrunk. 

A large part of it is due to the climate of fear spawned by Duterte’s war on drugs. 

The situation is so bad that the United Nations Human Rights Commission is now calling for a probe on the war on drugs, concurrent with the “preliminary examination” of the International Criminal Court.

Checks and balances in government are all but gone. Duterte enjoys tremendous influence in the executive, legislative, and judiciary, which are supposed to check on one another. Duterte is also attacking independent constitutional agencies left and right, such as the Commission on Human Rights and the Ombudsman.

And then, of course, we’re all familiar with how the government is stifling independent media, with Rappler currently facing numerous legal battles and ABS-CBN risking the non-renewal of its franchise next year. 

4) Rootless growth

When growth impinges on minority groups or cultural identities, you might call it rootless growth.

For instance, more than two years since the Marawi siege, many Maranao evacuees still live in tent cities and cannot return to their homes. Rehabilitation was stalled largely because Chinese firms were vying to build a new Marawi, even without the consent of the Maranaos.

Meanwhile, the lives and communities of the Dumagats are now under threat from the Chinese-funded Kaliwa Dam project in Quezon. 

Although the dam is touted to be a major solution to Metro Manila’s water woes, the Dumagats were also not consulted even if their communities face inundation. Local government leaders were also “totally unaware” of the project until after the signing of the loan agreement with China.

5) Futureless growth

Finally, growth is unsustainable (or futureless) if pursued at the expense of the environment.

Perhaps the most glaring instance of this would be China’s aggressive expansion in the West Philippine Sea. Several reports repeatedly show their overfishing, their destruction of coral reefs, and their reclamation of new islands. 

Yet even with such environmental atrocities, Duterte refrains from invoking (even mentioning) our victory in the arbitral tribunal in 2016. In the wake of the recent boat ramming incident, Duterte also did not come to the defense of the Filipino fishermen, and even seems to be lawyering for the Chinese government. 

Where on earth is his famed “tapang at malasakit” (courage and compassion)?

It’s alarming enough that economic growth in the first 3 years of the Duterte administration has been trending down. Yet, at the same time, growth has been jobless, ruthless, voiceless, rootless, and futureless.

In other words, economic growth under Duterte bears all the hallmarks of bad growth. 

Disturbingly, it did not figure in the recent midterm and local elections, which were dominated by Duterte's candidates. Why?

Remember we’re just halfway through the Duterte administration. How much worse could things get? – Rappler.com

 

The author is a PhD candidate at the UP School of Economics. His views are independent of the views of his affiliations. Follow JC on Twitter (@jcpunongbayan) and Usapang Econ (usapangecon.com). 

 

 

 

JC Punongbayan

JC Punongbayan is a PhD candidate and teaching fellow at the UP School of Economics. His views are independent of the views of his affiliations.

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