Neda dreams of 6.7% growth

The Philippine economy must post an average annual growth rate of 6.7 percent for the per capita income to increase by two-fold after 15 years, National Economic and Development Authority (NEDA) director general Arsenio Balisacan said.

Balisacan said during the Philippines Inclusive Business Forum organized by the Asian Development Bank that one of the reasons poverty reduction has been slow and lagging is because the country has not experienced sustained and high growth over a long period.

(Observers asked for comment were one in saying “don’t we know that”)

“For instance, if we want real per capita incomes to increase two-fold in 15 years, then we must grow by 6.7 percent annually, during that period” Balisacan said.

According to the 2009 Family Income and Expenditure Survey, the country’s per capita income for all income groups is P43,538.

Balisacan said that over the past decade, the Philippines’ average annual growth is 4.7 percent.

“During the period 2000 to 2009, the proportion of poor Filipinos seemed to have only plateaued, when this should have gone down given the continuous economic growth at the time. This is why we term this period as our ‘lost decade,” Balisacan said.

Balisacan said that the country suffers from high income inequality, which indicates that economic gains have not been broadly distributed across the different sectors of the population.

Unequal

“Opportunities remain unequal, in terms of access to health and education services, market infrastructure and the like,” Balisacan said.

He added that while the Philippines has a commendable economic growth, low and stable inflation, sound macroeconomic fundamentals, and high consumer and business optimism, the unemployment rate as of July 2012 was 7 percent.

The NEDA chief said that the unemployment rate has been at this level for about two years now.

“We have not been creating jobs fast enough. The higher growth was perhaps supported by stretching the capacity of the current workforce, and not by increasing the workforce,” Balisacan said.

Balisacan also cited the up tick in the underemployment rate, which rose to 22.7 percent in July, the highest recorded in six years.

“For these workers they would still want to work some more but could not find anything to do that pays a wage, the only possible reason for them to want more work is because their present job is not enough to meet their needs and wants,” he said.

Constraints

Balisacan said that one of the major constraints to generating more high quality jobs is the lack of investments.

He said that in the 70s and 80s, there was neglect in the development of the manufacturing and agriculture sectors.

“That lead to a situation where these industries did not expand, and therefore did not create much employment opportunities that were needed by our rapidly growing labor force,” Balisacan said. He added that infrastructure development in the Philippines is already five to 20 years behind other countries in the Southeast Asian region, such as Thailand and Indonesia.

“It would take a while to really get a substantial improvement before we see this high underemployment (rate) come down because we need to sustain increases in investment,” Balisacan said.

Strategies

The NEDA chief said that in order to achieve sustained and inclusive growth which would eventually lead to poverty reduction, the government has several strategies, as stated in the Philippine Development Plan.

Balisacan said that the Aquino administration is working on massive infrastructure development, human development and human capital formation, direct poverty relief, and employment generation.

“All these strategies are anchored on the principle of good governance. Note that for inclusive growth, huge amounts of public resources will have to be directed to the poor and marginalized sectors,” Balisacan said. –ANGELA CELIS, Malaya