The Philippines has overcome external shocks and internal disasters to maintain impressive economic growth over the last few years. The next step now for the government is reducing inequality through job creation and poverty reduction
The Philippines has undergone a rapid transformation in recent years. Once known as “the sick man of Asia”, it is now one of the fastest growing economies in the region. While Super Typhoon Haiyan devastated parts of the country in November last year, it did not however steer the country off its course to becoming Asia’s next rising star; the South-East Asian nation made up of over 7,000 islands still managed to post economic growth of 7.2% in 2013.
At the wheel of the Indonesian ship is President Benigno Aquino III. Since taking power in 2010, he has implemented a wide-ranging reform agenda which has significantly improved governance and reduced corruption. The reforms implemented and currently being undertaken by the Aquino administration is one of the reasons behind the country’s robust economic growth.
“One key feature of the Philippine economic performance during the past half-century is the regularity of boom-bust growth, i.e., a period of economic boom followed by a crisis,” says Arsenio Balisacan, Secretary of the National Economic and Development Authority (NEDA). “The economic and political fundamentals required to sustain economic growth were missing every time we had economic growth. We believe now it’s different. President Aquino’s economic management and governance reforms, particularly his fight against corruption, have created a favorable climate for investment and sustainable growth.”
Secretary Balisacan goes on to explain that the Philippines has managed to achieve a remarkably solid level of growth for the last couple of years despite the downside developments in the global economy, as well as domestic challenges, particularly natural disasters such as Super Typhoon Haiyan.
The country is well on its way to achieving its development targets for 2016. Secretary Balisacan states that, “We are aiming for an average of 7 to 8% growth for the whole six-year term of President Aquino.This we achieve with strong macroeconomic fundamentals—healthy fiscal and external balances, price stability, etc. We expect to achieve as well significant improvements in social outcomes, especially in health, education, and social protection.”
While the country has enjoyed remarkable growth, there is still a high level of inequality and a large proportion of the population is still living below the poverty line. The big challenge, Secretary Balisacan says, is to reduce poverty and to create employment opportunities. “The updated Philippine Development Plan provides the framework and strategy for ensuring that our growth is sustainable and that it comes with strong job creation and poverty reduction,” he says.
The Philippines graduated to “middle-income” status in 2009, following in the footsteps of its more prosperous neighbours Thailand and Malaysia. But to reduce poverty to the relatively low levels seen in Thailand and Malaysia, Secretary Balisacan believes that the Philippines needs to maintain stable economic growth for decades to come, as its aforementioned neighbours have done.
“These two countries have achieved high levels of economic growth generally sustained for three to four decades. In contrast, we have been growing at the standard of our neighbors for just a couple of years. To ask for our poverty level to be comparable with our neighbors without us having a long history of economic growth and social investment is asking for miracle. What we do is that we facilitate the creation of growth opportunities, keep the growth at a high level in the next ten to twenty years, and sharpen the links between growth and poverty reduction.”
The key to poverty reduction of course is job creation, but how and in what areas are these jobs going to be created? The NEDA Secretary explains that the government has an ambitious plan to create “high quality jobs” by revitalizing the manufacturing sector, expanding tourism into new areas, linking small agriculture producers with the high value and global-supply chains, and creating a sound environment for massive investment in infrastructure and logistics. “In addition, we endeavor to maintain our position as a world leader in Business Process Management (BPM) and call-centers,” he says.