Business World, 2 February 2016


The Philippine economy’s growth decelerated to 5.8% in 2015, the slowest economic expansion in the last four years. The 2015 actual growth was way below the administration’s rosy target of 7.0% to 8.0% growth in 2015, and it even missed the revised and ‘realistic’ target of 6%.

Growth in the last three years suggests, though statistically not conclusive, a downward trend: it was 7.1% in 2013, 6.1% in 2014, and 5.8% in 2015.

Expectedly, President Benigno S. C. Aquino III’s men desperately put a positive spin to this negative news. They boasted that the economy registered an average GDP growth of 6.2% from 2010 to 2015, the highest in the last four decades. Seriously?

They wrongly included the strong economic growth in 2010 as part of Mr. Aquino’s scorecard. However, since public policy works with a lag (sometimes nine months to a year and a half), Mr. Aquino can rightfully claim credit for the economy’s performance from 2011 to 2016, but not for 2010. The temptation to include 2010 as Mr. Aquino’s accomplishment is hard to resist since the economy grew the fastest — 7.6% — in recent history.

Put differently, it is reasonable to say that what Mr. Aquino did or didn’t do from July 1, 2010 to the end of 2010, has no immediate impact on the last half of 2010.

Considering that public policy works with a lag, I have computed the average GDP growth for each of the post-EDSA presidents. The results are shown in Table 2.

Indeed, the economic performance of President Aquino, in terms of average GDP is better than his predecessors. From 2011 to 2015, Mr. Aquino’s first five years, GDP growth averaged 5.9%, not 6.2% as claimed by administration spokesmen.

GDP growth averaged 3.5% during Mrs. Aquino’ term (1986-1992), 3.8% during Ramos’ term (1992-1998), 3.8% under Estrada’s truncated term (1999-2000), and 4.8% under Arroyo’s watch (2001-2010).

This does not necessarily mean that Mr. Aquino III is a better economic manager than his predecessors. In fact, the incumbent President is expected to do better than his predecessor, building on whatever reforms put in place by those who preceded him.


A reasonable way to judge performance is by comparing actual to planned targets. Targets are set by all administrations. These targets should be taken seriously because those in power, more than the outsiders, know the initial conditions, the country’s resource endowments, the available technology, the capability of its people, and they have the best information on the short-term, medium-term, and long-term challenges.

In its original plan, Mr. Aquino III promised that the economy will be on an upward trajectory: that the economy will grow by 7% to 8% in 2015 and by 7.5% to 8.5% in 2016. The 2015 target was missed and there is a strong likelihood that the 2016 target would me missed too.

By the way, this is not to say that GDP is the best measure of the health of economies. In a recent meeting at Davos, three leading economists and academics agree that GDP is a poor way of measuring the health of economies and they urgently urge the need to find a new measure.

Speaking on separate occasions, IMF Head Christine Lagarde, Nobel Prize Winner in Economic Science Joseph Stiglitz, and Massachusetts Institute of Technology professor Erik Brynjolfsson argued that as the world changes, so too should the way we measure progress.

Indeed, how can one number — GDP growth rate — represent the well-being of 100 million Filipinos? The quality of growth, the source of growth, and how it is shared is important.

If higher premium were to be placed on the welfare of the poor, the inclusivity of the growth process is of great moment. Here, the performance of agriculture matters: if robust, then growth may be inclusive; if weak, then growth may be exclusive.

Sadly, Mr. Aquino failed miserably in boosting agricultural output. It has the second poorest record in agricultural output, next only to President Ramos.

On Aquino’s penultimate year, agriculture output was practically flat (0.2%) which casts doubts on the inclusiveness of the overall economic expansion. What a pity. Among the three sectors, agriculture has the highest impact on the lives of the poor: more than one-third of the labor force is employed in the sector, and more than half of the poor reside in rural, agricultural communities.

In addition, the declining contribution of the industrial sector to growth should worry policy makers, since the sector provides a meaningful share of decent jobs. Unfortunately, the industrial sector is on a distinctly progressive decline: from a peak growth of 9.2% in 2013, it decelerated to 7.9% in 2014, then it slowed further to 5.9% in 2015.

Now, back to agriculture.

The current administration’s neglect of agriculture is indisputable: from 2011 to 2015, the sector grew by only 1.6%, way below population growth rate. This record is the second poorest among past five presidents. Agriculture grew, on average, by 6.5% during Estrada’s truncated term, 2.9% under Arroyo’s, 2.1% under Corazon Aquino’s, and 0.8% under Ramos’.

No doubt, this neglect of agriculture has been a major drag on the government’s war against poverty.

In the Philippine setting, the inconvenient truth is that growth can’t be truly inclusive for as long as agriculture and the rural sector are left behind.