More skewed growth

Did you know that our economy is even more Manila-centric now than it was 10 years ago? Our friends from Mindanao and the Visayas won’t be jumping for joy on this news, having long lamented that our economic activities are much too concentrated in Metro Manila and its surrounding provinces. Unfortunately, this geographically skewed nature of our economy actually got worse, not better, within the last 10 years. The evidence is in our Gross Regional Domestic Product (GRDP) accounts that provide the regional breakdown of the economy’s gross domestic product (GDP) which measures total output and incomes (see www.nscb.gov.ph). In 2001, Metro Manila and its surrounding provinces (comprising the National Capital Region, Central Luzon and Calabarzon) accounted for some 52.4 percent of our entire economy’s output and incomes. In 2011, this share was already 61.7 percent—almost 10 percentage points higher. So from just a little over half, the share now approaches two-thirds of our total economy.

I too was surprised when I saw the numbers. These are numbers that I used to track closely, especially in my past incarnation as the country’s chief economic planner. When President Ramos began his term in 1992, I had noted that 55.6 percent of our GDP was coming from Metro Manila along with Central and Southern Luzon, which at the time had not yet been split into Calabarzon (Cavite, Laguna, Batangas and Quezon) and Mimaropa (Mindoro, Marinduque, Romblon and Palawan). It was only after 2000 when GRDP figures for these two Southern Luzon sub-regions began to be reported separately, permitting me to single out Calabarzon in the comparison above.

I had called President Ramos’ attention to the fact that Mindanao only received 9 percent of the total infrastructure budget in 1992, prompting him to direct his Cabinet to deliberately boost the island’s budget shares. By 1995, we had more than tripled Mindanao’s infrastructure budget share to 29 percent. Notwithstanding this and other affirmative actions for Mindanao and the Visayas, I remember my disappointment at seeing how the GDP share of Metro Manila and Central and Southern Luzon had barely inched down to 55.4 percent upon Ramos’ exit in 1998.

Imagine my alarm, then, upon learning that the share has shot beyond 60 percent—even with Mimaropa now removed from the calculation! It’s bad enough that income distribution has remained highly skewed between our society’s rich and poor, something I recently wrote about (“Economic growth for all,” Inquirer, 6/26/12). Worse, the data also suggest that geographical income distribution has become even more skewed in favor of “imperial Manila” and its environs.

Still, there’s some positive news in the latest GRDP report. The Caraga Region in northeastern Mindanao, officially the poorest region in the country since 2006, actually grew the fastest among the regions in 2011. With a growth rate of 9.6 percent, the region grew two-and-a-half times faster than the overall national economy did (3.9 percent). Did poverty in the region go down as a result? We cannot tell readily from the data, as it would depend on how broadly based that brisk economic growth had been. One hopes that it wasn’t a case of growth largely enjoyed by the rich in that region. In contrast, the Autonomous Region in Muslim Mindanao (ARMM)—second poorest region next only to Caraga—had the opposite experience. Sadly, it lagged even farther behind, being the only region that contracted (-1.0 percent) in 2011 in the face of positive growth seen everywhere else in the country.

The next fastest growers were Central Visayas and Central Luzon, with 7.9- and 7.5-percent growth respectively, both far outpacing the overall economy’s growth as well. Still, both represented a substantial slowdown from even brisker double-digit growth in the year before (12.5- and 10.7-percent, respectively). This was a reflection of the overall economic slowdown provoked by tightened government spending and, especially, by the disruption of intermediate input supplies for our manufacturers coming from Japan and Thailand, both of which were beset by debilitating disasters in 2011. This effect was particularly severe for manufacturing center Calabarzon, which dramatically slowed down from 11.2-percent growth in 2010 to only 2.6 percent last year. In fact, 12 of the country’s 17 regions experienced slower growth last year.

Even with the overall slowdown, five regions managed to show even more dynamism compared to their previous year’s performance. Caraga led the way with its 9.6-percent growth from an already brisk 7.4-percent growth in 2010, driven primarily by the services and agriculture, fishery and forestry (AFF sectors). Western Visayas, propelled recently by rapid real estate development in Iloilo and hiked agricultural production, stepped up growth from 3.7 percent in 2010 to 5.5 percent last year. Cagayan Valley bounced back from a 1.1-percent decline in 2010—the only region that contracted then—to a hefty 5.4-percent growth driven mostly by AFF. Soccsksargen also sped up from 2 to 4 percent propelled by AFF and industry growth, while Mimaropa picked up momentum with its services and AFF sectors, with mining and quarrying also providing a boost.

The worst performance was seen in two Mindanao regions, with ARMM’s contraction and the Zamboanga Peninsula’s negligible 0.1-percent growth. Interestingly, Mindanao’s share in the infrastructure budget had gone down to 9 percent again in recent years. And with massive public investments about to be poured into flood control in Metro Manila, it’s hard to expect the ratio to improve anytime soon. –Cielito F. Habito, Philippine Daily Inquirer

E-mail: cielito.habito@gmail.com