The Philippine Online Chronicles

continue From Part 1 of Dim economic prospects for 2012

Serious implications

These developments have serious implications for the Philippines. The slowdown in GDP growth last year and possible recession this year in the industrial world means a further weakening of demand for the country’s exports, which have already contracted for seven straight months (May to November) in 2011. From January to November 2011, exports have fallen by 5.6% compared to the same period in 2010, data from the National Statistics Office (NSO) show.

The jobs crisis facing the rich countries will also weigh down on the Philippine economy not only in terms of labor export and dollar remittances but also in terms of export of services such as through the outsourcing industry. President Barack Obama, who is facing a presidential contest this year where employment is among the focal issues, is promoting “insourcing” of jobs in an attempt to win over American workers who have been hit hard by prolonged joblessness.

If implemented, this will adversely affect the country’s business process outsourcing (BPO) sector, one of the growth areas identified by Aquino in his PDP and once described as recession-proof by economic managers. The BPO sector is said to employ about 600,000 workers and generates close to $10 billion in annual revenues. Note that our BPO sector is heavily dependent on the US market where about 80% of exports of Philippine BPO services go, according to a 2008 survey of the Bangko Sentral ng Pilipinas (BSP).

Due to the dim outlook for the global economy this year, even prospects for tourism are not as bright as government depicts it to be. Data from the United Nations World Tourism Organization (UNWTO) show that the growth of the global tourism industry is expected to further slow down to as low as 3% in 2012, after an anticipated growth of as much as 4.5% in 2011 and actual growth of 6.6% in 2010.

Set the facts straight

As for Aquino’s claim of a fruitful 2011, in particular the imaginary gains in poverty alleviation, it is necessary to set the facts straight. On the issue of increased budget for education and health, for instance, it has been pointed out that in reality, social services remained the lesser priority of government. In the 2012 national budget, Debt Service Expenditures (interest payments and principal amortization) are almost seven times the combined education and health budget that will directly benefit the poor.

Also, while the budget allocations for education and health appear to have increased, they are still way below the minimum amount to meet the pressing needs of the people. To illustrate, the Department of Health (DOH) budget is about P40 billion short of its estimated requirements while the Department of Education (DepEd) budget could only meet 27% of the backlog in classrooms; desk, 19%; and teachers, 13 percent.

The so-called savings have been achieved not mainly because of wiser spending but due to inadvertent factors such as the failure of the PPP program to take off last year that slowed down disbursements. Also, the country imported less rice in 2011 than the previous year, resulting in less public expenditure, mainly due to improved weather conditions (see reports by the Bureau of Agricultural Statistics here) and the over-importation of rice by the Arroyo administration in 2010. Aquino said government saved about P7 billion from less rice imports, which is almost 17% of the total savings.

In reality, not much has changed in the spending priorities of the current administration. As in the past, a huge portion of public funds continued to be siphoned off by payments for government debts. Since July 2010 up to November 2011, Aquino has spent 40.3% of total expenditures (including principal amortization) for debt servicing, not much of an improvement from Mrs. Gloria Arroyo’s 41.5% during her nine-year reign. In fact, in absolute terms, Aquino is spending more on debt servicing at P55.12 billion per month compared to Arroyo, who spent P48.18 billion per month.

Not shared by the people

Aside from short-term doles in the form of the conditional cash transfer (CCT) program, which was first implemented in the country by Arroyo, the Aquino administration has no poverty reduction program to speak of. Also, it has no job creation program apart from the unsustainable four-decade old labor export policy.

Combined with the distorted priorities in spending public resources and continued implementation of neoliberal policies that inflate the cost of living such as privatization and deregulation, the failure of Aquino to alleviate poverty and generate long-term livelihood has naturally resulted to worse poverty and hunger for a great portion of the population. Based on the surveys of the Social Weather Stations (SWS), for instance, the number of Filipinos who consider themselves poor increased to 51% of families in 2011, up from 48% in 2010 while the portion that experienced hunger remained at 19% in the past two years.

Thus, it is not surprising that the optimistic sentiment of Aquino and his economic managers are not shared by the people. In its latest survey released last January 8, the Pulse Asia reported that 45% of Filipinos feel that the economy did not improve from a year ago while 38% said that it has actually even deteriorated. In the year’s first week, consumers were greeted by news of substantial increases in water rates and oil prices (with another round of larger oil price hikes expected this week), further dampening the little optimism that the people have for the New Year.

Aquino may be reaping political brownie points from its seemingly heightened efforts to make Gloria Arroyo accountable, including the upcoming impeachment trial of Supreme Court (SC) Chief Justice Renato C. Corona. But as much as the people long to make Arroyo and her minions accountable for their many crimes, they will not be forever distracted by the impending intramurals at the Senate. And unless real reforms that will reverse the policies that destroyed jobs and livelihood; increased profits of big foreign and local businesses at the people’s expense; and made the country highly vulnerable to the global crisis, Aquino’s legitimacy will very soon be challenged.

Photo: Demolition at Corazon de Jesus from www.arkibongbayan.org. Some rights reserved.