Tuesday, August 19, 2008 Inflation not as bad as ’74; growth still in sight
THE country may be in crisis, but so is the rest of the world.
This, in essence, is what the national economic situation is, according to former Socioeconomic Planning aecretary Solita Monsod during her speech at the recent Corporate Social Responsibility (CSR) Conference 2008 held in Makati.
While oil prices have quadrupled and food, particularly rice, doubled in price since 2003, the country’s inflation is still projected at single figures, a far cry from the 30-percent rate during the last oil crisis in 1974.
Despite the spike in oil and food prices, Monsod said the National Economic and Development Authority (Neda) still projects inflation this year to end at 7.9 percent.
Growth forecasts (growth domestic product) may have been scaled down due to recent developments but these still remain positive.
The World Bank, in its World Economic Outlook, pegged the country’s gross domestic product (GDP) growth for this year at 5.2 while the University of the Philippines School of Economics sees it at 4.9 to 5.5 percent. The Neda estimates GDP growth at between 5.7 and 6.6.
Modest growth
The Philippines will still post a modest economic growth, Monsod said, because of globalization, which decreased the dependence of developing countries on the traditional economic powers.
Developing countries are now heavily trading with other developing countries, not just with the traditional economic powers like the United States.
“It’s no longer the case that when the US sneezes, we catch pneumonia. Now, when the US sneezes, we either sneeze harder or just catch a cold,” Monsod said.
“The country’s growth is relatively strong and we can say that we are no longer the basket case of Asia,” she added.
But while the country’s economic performance and forecasts may not be too dim, they’re not too rosy either.
The Philippines remains firmly entrenched among the group of slow growing countries—those that have posted an average of less than 2 percent annual growth rate during the last 43 years.
Factors
“However, while we are among the ‘slow growth’ countries, we had the highest average growth in the group making the Philippines the fastest growing among the slow growing countries,” Monsod said.
This slow growth rate is mainly due to several factors: deteriorating state of primary education; unresolved growth versus poverty conundrum; apparently unfavorable investment environment (not just foreign investment but local as well); weak institutions, questionable military loyalty to civilian institutions; culture of corruption; and politicking.
The actual pace of basic education participation has gone down during this decade and, at less than 85 percent, is still a long way off from the 100 percent targeted for 2015.
“There is a direct correlation between poverty and educational attainment, 80 percent of poor families are those whose heads have at most only an elementary education,” Monsod lamented.
Growth, however mini-scule, has also not trickled down to the majority of the population, which remains poor.
“In spite of our growth, we have not been doing well by our people. This is where the business community should come in. If government cannot do it (alleviate poverty), then business must help,” Monsod said.
She added an interesting tidbit on companies’ net surplus. She revealed that the net surplus of corporations in the national income accounts is almost twice the wages of its employees. She admonished business to put its surplus to good use.
“You (business) have a lot of surplus and therefore have a big responsibility to share that surplus elsewhere,” she said.
All in all, the former socioeconomic planning secretary believes that the country has nowhere to go but up, citing several factors: the country enjoys relatively strong economic growth; the oil and food crisis is not terminal; the Philippines has a strong civil society, and; the military hasn’t “crossed the line.”
Monsod said the food and oil crisis will soon “blow over.”
“The Philippines is not a failed state, it is just messy but not failed,” she said.
The CSR Conference 2008 is the seventh annual gathering of the League of Corporate Foundations, a membership association composed of over 70 operating and grant-making corporate foundations and corporations seeking to provide business solutions to social and environmental problems in the Philippines. (PR)
