The Philippine economy last quarter of this year grew 7.1% (based on 2000 price) compared the same quarter of 2011. According to the National Statistical and Coordination Board (NSCB), the growth was driven by the services sector with the robust performances of transport, storage and communication, financial inter mediation, and real estate, renting and business activities supported by the five consecutive quarters of sustained accelerated growth of the industry and the seemingly weather tolerant agriculture sector.
However, the press release and the NSCB themselves did not look at the bigger picture on the source or components of the economic growth of our economy not just during the last quarter but also with the previous years wherein the economic growth has been driven by the service sector (primarily BPO earnings and indirect OFW remittance spending) while manufacturing and especially the agriculture that could have stimulate more capital and jobs in our economy have been lagged behind.
Let us take the breakdown of the economic growth last quarter:
See, the economic growth was mainly based on industry and services while the agriculture was left behind.
Let us take the breakdown of the economic growth in agriculture last quarter:
See, the forestry and fishing output decreased from the third quarter of 2011 to the same quarter of this year.
Let us take the breakdown of the economic growth in industry last quarter:
See, mining and quarrying output decreased while the manufacturing growth was lagging behind in relative to the overall GDP growth from the third quarter of 2011 to the third quarter of this year.
Let us take the breakdown of the economic growth in services last quarter:
See, only the service sector gave our economy a significant growth while the agriculture and the industry especially manufacturing that should have been a key driver of our economic growth and would have provide jobs to millions of unemployed Filipinos in this stage of our economic development have been lagged behind.
We could see the better and bigger picture of the source of our economic growth if we take a look on the source of expenditures where the government spending component outgrowth the other components like household, capital formation, and current account (exports – imports):
See, if we look using the components of the Gross domestic product, we will realize that the government spending is one of the principal key drivers of our economic growth and development and that is not really a good habit to maintain by our government to spend further in our economy as the government when it spends tends to misappropriate the money to few benefactors whereas if we let the private sector (local or foreign) as one of the key drivers of our economy, there would be more economic growth multipliers for the rest of the economy as the private sector tends to be competitive in spending money and providing jobs and services to the people as they have to deal with other competitors for the consumers and workers.
In conclusion, the government needs to have structural economic reforms in order to assure that all sectors in our society will benefit the fruits of the economic growth not just the selected few people like improving our foreign investment regime through scrapping the 60/40 forced equity sharing in favor of a Filipino individuals or corporations in setting-up domestic-based firms, extracting natural resources, education, advertising, and media by foreigners that could stimulate further economic growth multiplier not just to millions of unemployed Filipinos but also to existing Filipino-owned businesses and the government like more know-how, technology, expertise, and government revenues for the government to use for social and infrastructure spending by the government; lessening the red tape in getting permits so that entrepreneurs will encourage to set-up their business not being wasted their capital of paying bribes to the government just to start a business; and rationalize the tax system like scrapping imposing the flat income tax system of 12.5% so that the workers and the consumers will have a more purchasing power to spend for services that would stimulate the economy further.