The bottom line of PNoy's last SONA

When President Benigno Aquino III delivered his last State of the Nation Address (SONA) on Monday, he depicted the Philippine economy as one of Asia's best, but zooming in on the figures and data to support such claim reveals some interesting inconsistencies. 

 

"The growth of our economy means a corresponding growth in government’s ability to care for and empower the citizenry to make the most of opportunities being created in the country," Aquino said.

 

The President noted that Philippines posted an average growth of 6.2 percent in gross domestic product (GDP) from 2010 to 2014, the fastest period of economic growth recorded in the past 40 years. 

 

"If we reach 6.8 percent this 2015, then we will have posted the fastest six-year average growth period in almost six decades," Aquino added.

 

Indeed, the Philippines remains among the fastest growing economies in Asia with the country's GDP expanding above 6.2 percent on average since 2010. The growth was even expected to reach 8 percent during Aquino's last two years as President. 

 

Several times, however, lending institutions and credit watchers have cut their respective growth projections. Standard & Poor's Financial Services, for one, slashed its 2014 and 2015 forecasts.

 

Most revisions to Philippine growth forecasts are linked to a slowdown in government spending, an issue the President failed to explain during his two-hour speech. 

 

Government investment particularly in infrastructure would make the Philippines competitive in the ASEAN Economic Community, said Jose Luis Yulo Jr., president of the Chamber of Commerce of the Philippines.

Investments
 

The economic growth on the back of sustained domestic consumption helped the country earn such titles as "Asia's Rising Tiger" and investment grades from global credit watchers under Aquino's watch.

 

"When we began, I did not think that we would immediately win back the global community’s confidence in the Philippines. I only thought of fixing the crooked system to prevent our people from sinking deeper into poverty," Aquino said. 

 

World Bank cited the Philippines' macroeconomic stability, sound and improving fiscal situation, anti-corruption drive and transparency when it called the country "Asia's Rising Tiger" in 2013. 

 

Moody's Analytics also dubbed Philippines as "Asia's Rising Star" around the same year for defying the global economic slowdown when it emerged as one of the world's fastest-growing economies. 

 

International credit watchers like Standard and Poor's Financial Services, Fitch Ratings and Moody's Investor Service have also upgraded their respective credit ratings on the Philippines to investment grades under the Aquino administration.

 

The credit ratings measure the capacity of a country to repay debts. S&P, for instance, assigns bankrupt states the lowest grade D while the highest AAA rating are given to those exhibiting the least credit risk.

 

"This is a signal to businessmen that it is worthwhile to invest in the Philippines... Now, with lower interest rates and more flexible debt payment schedules, more investors are finding it attractive to bet on the Philippines," said Aquino, citing an all-time high net foreign direct investments of $6.2 billion in 2014. 

 

However, available data from the Bangko Sentral ng Pilipinas show the amount of foreign investments in the Philippines remained among the lowest when compared to its Asian neighbors.

 

On average, the Philippines received $4.38 billion of foreign investments annually in the last three years. This is far from the $23.46 billion channeled to Indonesia and $13.35 billion to Thailand during the same period. 

 

"Though increasing, the share of investment in GDP was about 22 percent in 2014, which is still the lowest among neighboring countries," Japan's Rating and Investment Information Inc. noted when it affirmed the credit rating of the Philippines.

Manufacturing

 

The restored confidence of businessmen to invest in the Philippines also helped the manufacturing sector expand to 8 percent in the past five years from an annual 3 percent growth between 2001 and 2009, said Aquino. 

 

But the growth of manufacturing output was not consistent either. In 2010, the sector expanded by 11 percent and slowed to 5 percent in the next two years before accelerating to 10 percent in 2013.

 

The total number of all manufacturing establishments reached 16,269 in 2010, based on the Philippine Statistics Authority's Annual Survey of Philippine Business and Industry. The latest results from the 2012 survey show that there are now 25,064 manufacturing establishments in the country.

 

But the contribution of the sector to the country's overall output remained below 25 percent, according to World Bank figures. In 2013, the sector accounted for only 20 percent of the Philippine gross domestic product.

 

"Real wealth comes from manufacturing, comes from producing something... the creation of wealth, creation of goods and creation of ideas are important," Yulo said. – VS, GMA News