Growth, joblessness, hunger

In its recent meeting, the Development Budget Coordination Committee revised upward its GDP growth forecasts to 5-6% for 2010. But in a surprise move, the committee forecasts that economic growth will accelerate to 7-8% in 2011 by “harnessing innovative public-private partnerships.” The rosy prognosis for 2011 goes against the forecasts of both the International Monetary Fund and the World Bank. Both institutions see a slowing, not accelerating, Philippine economy.

For 2010, the IMF’s revised GDP growth forecast of 6% is slower than Thailand’s 7% that was revised upward from 5.5%, Malaysia’s 6.7% up from 4.7%, Vietnam’s 6.5% up from 6%, and Indonesia’s 6%.

For 2011, the IMF projects the GDP of the Philippines would slow to only 4%.

This will be much lower than Vietnam’s 6.8%, Indonesia’s 6.2%, Malaysia’s 5.3%, and Thailand’s 4.5%.

Except for Vietnam, countries that belong to the ASEAN-5 bloc would grow at lower rates, consistent with the forecast of a slowing world economy.

The World Bank forecast the GDP of the Philippines to grow at a modest 4.4% this year and 4.0% in 2011 and 2012.

I share the more subdued forecasts of the IMF and the World Bank.

At the same time, I share the optimism that the Philippines could grow at about 7-8%. But that would come much later, perhaps during the final two years of the Aquino III presidency.

For this to happen, Aquino has to take bold measures to put the financial house in order, mend a divided nation into one, and restore the people’s trust in government and hope in the country’s future.

Crisis as opportunities

At the same time, he has to face two lingering and challenging crisis: joblessness and poverty. One of three workers in the labor force is either unemployed or underemployed.

Being unemployed is demeaning. It is the worst state that any able-bodied, willing individual could be in.

It could result in many undesirable outcomes: petty crimes, going into prostitution, domestic violence, hunger, and feeling of helplessness.

Fixing the joblessness problem is a serious, though rewarding, challenge for any government.

Adult unemployment is the twin brother of hunger, according to the Social Weather Stations survey results. This is because of the very weak social protection program. If one gets fired or fails to land a job, hunger would not be far behind.

The recent hunger survey results of the Social Weather Stations should be a wake-up call for the young Aquino administration. Not only has the high hunger incidence stubbornly persisted for almost a year now, its severity has worsened.

More than one of five households has experienced hunger at least once in the last three months. In the most recent June SWS survey results, 21.1% or equivalent to some 4 million families have experience involuntary hunger. This is marginally down from March’s 21.2% and December 2009’s record 24 percent.

The average incidence of involuntary hunger since 1998 has increased to 13.6%. The inescapable conclusion is that hunger has increased significantly since SWS started to collect hunger data, and it has stayed persistently high in recent years.

And here’s another evil twist. While overall hunger hardly changes, around one of five households, its severity has worsened.

Severe hunger (experiencing it “often” or “always”) has risen while moderate hunger (“only once” or “a few times”) has declined.

Severe hunger zoomed to 4.2%, equivalent to some 780,000 families, from 2.8% (530,000) previously.

By contrast, moderate hunger dropped to 16.9% (3.2 million families) from 18.4% (2.4 million families).

Questions and answers

The present state of affairs leads to the following questions.

First, how can there be so much hunger in our midst when the warehouses of the National Food Authority are bursting with imported rice? The NFA has to lease additional storage facilities for its oversized rice imports. What’s the use of all that imported rice if one of five Filipino families experience hunger?

Second, how can a country that has invested poorly and whose governance performance has deteriorated progressively over the years grow at 7.3%? Faulty statistics, theorized Professor Felipe Medalla of the University of the Philippines School of Economics. A big chunk of GDP growth is based on imputed output.

By the way, this perplexing phenomenon could lead to a perverse policy prescription: for the Philippines to grow faster, it has to invest less, be more corrupt, more politically unstable, and have a less reliable legal system.

Third, how can there be so much unemployment and underemployment, one of three of the work force, when the economy has expanded at 7.3%? Again, is it because of faulty statistics? Or is it a case of “jobless” growth?

The sectors and industries of the economy that are growing rapidly are capital-intensive and do not employ a lot of workers.

This anomalous situation has to be explained better. This calls for better and timelier labor statistics.

Jobs statistics, like consumer prices, should be gathered monthly rather than quarterly. Policymakers need more disaggregated and timely labor statistics to be able to address these twin problems of unemployment and hunger.  –By Benjamin E. Diokno, BUsinessworld