Economic Crisis and Response in the Philippines
Encyclopedia
The Global Economic Crisis pulled countries down from around the globe to a recession
. Wide-ranging declines in many aspects of growth characterize the overall impact it had had on the global scale. Following the Asian economic crisis in 1997, the present global economic crisis imposes new challenges to the Philippines
as a developing country. Following are expositions of the macroeconomic impacts of the crisis in the Philippine setting, its implications in the prevalent poverty
scenario, and policies and programs undertaken by the government in response to the crisis.
, bailouts, foreclosure
s, and takeovers of financial institutions and national governments. During a period of housing and credit booms, banks encouraged lending to home owners by a considerably high amount without appropriate level of transparency and financial supervision. As interest rate
s rose in mid 2007, housing prices dropped extensively, and all institutions that borrowed and invested found themselves suffering significant losses. Financial institutions, insurance companies, and investment houses declared either declared bankruptcies or had to be rescued financially. Economies worldwide slowed during this period and entered to a recession.
The crisis, initially financial in nature, has now taken a full-blown economic and global scale affecting every country to the left and to the right of the United States
, and wreaking havoc in the level of both industrialized and developing nations.
n counterparts in terms of per capita GDP. What makes matters worse is the seemingly perennial impoverished state of its inhabitants, that is, in 2007, an absolute poverty incidence of 13.2 percent—higher than Indonesia
’s 7.7 and Vietnam
’s 8.4 percent—has been recorded, and thus giving further testimony of the unequal distribution of wealth that keeps growth and development a far reach for the Philippines.
, has been affected by the crisis in a decline in three aspects: exports, remittances from overseas Filipino
workers, and foreign direct investments. Heavily dependent on electronic and semiconductor exports, the Philippines has seen a downward trend in its export earnings as countries in demand of these exports are now in recession. The recession has also put to risk the jobs in the developed countries which include those where migrant worker
s are employed. Consequently, OFW remittances decreased and grew a meagre 3.3% in October 2008. Foreign direct investment
s (FDI) lowered because of investors losing confidence in the financial market. Lower FDIs mean slower economic growth.
volatility. However, following the effects of an increase in the foreign currency government bond spread, the Philippine stock market
was actually one of the least affected by the crisis with the main index of the stock market dropping only by 24 percent, a relatively low percentage change in comparison to those of other countries across Asia. Similarly, from the period between July 2008 and January 2009, the peso
devaluated only by 3 percent which explains why the peso was one of the currencies least affected by the crisis. This minimal effect on the stock market and the Philippine peso can be attributed to the recovery of asset prices across the Asia-Pacific region recovered in early 2009 as foreign portfolio investments surged.
Financially, the banking system in the Philippines has been relatively stable, because of reforms that were put in place since Asian financial crisis in 1997. Maintenance of high levels of loan to deposit ratios together with the decline of the ratio of nonperforming loans to total loans kept profitability of local banking generally high despite the crisis. To the country’s fortune, no meltdowns occurred as during the previous 1997 Asian crisis.
Fall in the growth rate
of personal consumption and expenditures and fixed investment
assail 2008. Personal consumption expenditure, the largest contributor to GDP growth, behaved a downward trend from a sharp drop from 5.8 percent in 2007 to 4.7 percent in 2008, and 3.7 percent in 2009. GDP
growth during fourth quarter of 2008 and first quarter of 2009 fell to 1.7 percent, a staggering fall from 5.7 percent average for the three previous years. Furthermore, a contraction of 29.2 percent in the manufacturing sector involving electricity, gas, water, trade and finance services. The service sector also had its share of downturns as growth in the fourth quarter and first quarters of 2008 and 2009, respectively, suffered from a meagre growth of 2.1 percent, a far contrast from the 6.7 percent average from the last three years. However, the Philippines has generally endured the least declines in comparison with other East Asian countries despite recorded declines. For instance, OFW remittances, though at a slower pace, still grew in the first half of 2009.
and low standards of living in the country. Thousands of Filipinos leave the country every day to seize better income opportunities and promise their children a better and secure future. Moreover, around five million of Filipino children are unable to go to school and are forced to work on the streets or in other various workplaces where they can find some food or other means to fill their appetites.
s before the 2008 economic crisis. Average income per capita was increasing while poverty incidence showed a downward trend. Average income per capita rose by 2% in 2007 and 2008, whereas poverty incidence dropped from 33.0% in 2006 to 31.8% in 2007 and 28.1% in 2008. Output growth plunged in 2009, causing real mean income to fall by 2.1%, resulting in an upward pressure on poverty incidence (grew by 1.6%). Most hit are households with associations to industry resulting in the average income to drop to levels below that of 2007. Similarly, wage and salary workers were hit significantly. Surprisingly, the poorest 20% did not suffer the same fate they suffered in crises past. Clearly, the global economic crisis put a halt on the highly promising growth trend of the Philippine economy and forced 2 million Filipinos into poverty.
According to recent studies (2009), close to 22% of the population reduced their spending, 11% used their existing savings for consumption, 5% pawned assets, 2% sold assets, 36% borrowed money and 5% defaulted on debts.
ii. Education
To reduce spending, households had to risk the quality of education
of their children. Some children were transferred from private to public schools, while some were withdrawn from school. Moreover, parents reduced the allowance of the students, and resorted to secondhand uniforms, shoes and books.
iii. Health
Coping strategies may have negative effects on their long-term health as these affected households commonly resort to self-medication
, or shift to seeing doctors in government health centers and hospital. Many households in the urban sector shifted to generic drugs while rural households tended to use herbal medicines.
President Benigno Aquino III
has plans to expand the Conditional Cash Transfer
(CCT) program from 1 to 2.3 million households, and several long term investments in education and healthcare. Also, last September 2010, Aquino met with US Secretary of State, Hillary Clinton, during the signing of the $434-million Millennium Challenge Corporation
(MCC) grant in New York. The MCC grant would fund infrastructure and rural development
programs in the Philippines to reduce poverty and spur economic growth.
The implementation of ERP is spearheaded by NEDA with the following specific aims:
Moreover, the Network of East Asian Think Tanks has recently proposed the establishment of the Asia Investment Infrastructure Fund (AIIF) to prioritize the funding of infrastructure projects in the region to support suffering industries. The AIIF, as well as multilateral institutions especially the Asian Development Bank
, also promotes greater domestic demand and intra-regional trade to offset the decline in exports to industrialized countries and narrow the development gap in the region.
for the Philippines in the years to come is promising, bearing in mind where she left off prior to the economic crisis. Nevertheless, it is still a tough challenge. Figures persistently reflect a Philippine poverty reduction campaign that pales in comparison with other ASEAN countries. In addition, a blistering population growth
rate sinks more Filipinos below the poverty threshold
placing the country’s laudable long term economic growth
under its shadow.
Taking into account that the Philippine economy has a significant reliance on remittances from Overseas Filipino Workers (OFWs), past threats demonstrated the resiliency of the Philippine economy despite external shocks. In spite of the disaster in Japan
(3rd largest market for Philippine exports) and the geopolitical tensions in West Asia, the Philippine economy looked unfazed. New York-based Global Source Partners stated, "The Philippine economy has already proven to be quite resilient in the face of varied external shocks in the past, especially bolstered by a strong external position and capable monetary management. This time should not be much different.”
The new administration of President Benigno “Noynoy” Aquino III faces three key constraints on Philippine growth:
Fortunately, the government offers various projects to loosen these restrictions. Data from the quarterly ING Investor Dashboard Survey showed stability in investor confidence for the Philippine economy over the first two quarters of 2010. She even scored a 157 in the third quarter of the same year. This is well on the higher percentiles of the “optimistic” range and a mere 3 points from the “very optimistic” level. These figures emerge in the midst of decrepit infrastructure and a lack of efficient institutions. Subsequently, the prospect of the Philippine economy improving into the “very optimistic” range is very bright. Presidential spokesman Edwin Lacierda declared that the Philippine economic competitiveness score improved from 56.526 the previous year to 63.291 in 2011 (based on The World Competitiveness Yearbook). Lacierda also boasts of infrastructure improvement projects of the Department of Public Works and Highways
scheduled to commence within one or two years. He attributes the stepping up of our competitiveness rating to the public-private partnership
(PPP) projects next year. These projects raise optimism for the post-crisis economy of the Philippines.
Recession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...
. Wide-ranging declines in many aspects of growth characterize the overall impact it had had on the global scale. Following the Asian economic crisis in 1997, the present global economic crisis imposes new challenges to the Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
as a developing country. Following are expositions of the macroeconomic impacts of the crisis in the Philippine setting, its implications in the prevalent poverty
Poverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
scenario, and policies and programs undertaken by the government in response to the crisis.
Overview of the Global Economic Crisis
The 2008 global economic crisis started upon the bursting of the US housing bubble, which was followed by bankruptciesBankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
, bailouts, foreclosure
Foreclosure
Foreclosure is the legal process by which a mortgage lender , or other lien holder, obtains a termination of a mortgage borrower 's equitable right of redemption, either by court order or by operation of law...
s, and takeovers of financial institutions and national governments. During a period of housing and credit booms, banks encouraged lending to home owners by a considerably high amount without appropriate level of transparency and financial supervision. As interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
s rose in mid 2007, housing prices dropped extensively, and all institutions that borrowed and invested found themselves suffering significant losses. Financial institutions, insurance companies, and investment houses declared either declared bankruptcies or had to be rescued financially. Economies worldwide slowed during this period and entered to a recession.
The crisis, initially financial in nature, has now taken a full-blown economic and global scale affecting every country to the left and to the right of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, and wreaking havoc in the level of both industrialized and developing nations.
The Philippine Situation before the Crisis
The Philippines has long been undermined with long-term structural problems such that sustainable economic development is yet to be a dream come true. According to the pages of Philippine economic history, the country has been dominated by a sequence of growth spurts, brief and mediocre, followed by shard to very-sharp, severe, and extended downturns—a cycle that came to be known as the boom-bust cycle. As such, economic growth record of the country has been disappointing in comparison with its East AsiaEast Asia
East Asia or Eastern Asia is a subregion of Asia that can be defined in either geographical or cultural terms...
n counterparts in terms of per capita GDP. What makes matters worse is the seemingly perennial impoverished state of its inhabitants, that is, in 2007, an absolute poverty incidence of 13.2 percent—higher than Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
’s 7.7 and Vietnam
Vietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...
’s 8.4 percent—has been recorded, and thus giving further testimony of the unequal distribution of wealth that keeps growth and development a far reach for the Philippines.
Macroeconomic Impacts of the Crisis
The Philippines, points Professor Diokno of the University of the PhilippinesUniversity of the Philippines
The ' is the national university of the Philippines. Founded in 1908 through Act No...
, has been affected by the crisis in a decline in three aspects: exports, remittances from overseas Filipino
Overseas Filipino
An Overseas Filipino is a person of Philippine origin who lives outside of the Philippines. This term applies both to people of Filipino ancestry who are citizens or residents of a different country and to those Filipino citizens abroad on a more temporary status.Most overseas Filipinos migrate to...
workers, and foreign direct investments. Heavily dependent on electronic and semiconductor exports, the Philippines has seen a downward trend in its export earnings as countries in demand of these exports are now in recession. The recession has also put to risk the jobs in the developed countries which include those where migrant worker
Migrant worker
The term migrant worker has different official meanings and connotations in different parts of the world. The United Nations' definition is broad, including any people working outside of their home country...
s are employed. Consequently, OFW remittances decreased and grew a meagre 3.3% in October 2008. Foreign direct investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
s (FDI) lowered because of investors losing confidence in the financial market. Lower FDIs mean slower economic growth.
Impacts of Asset Markets, Financial Sector, and Real Sector
The freeze in liquidity in US and European financial markets reversed capital flows to developing countries and induced a rise in the price of risk which entailed a drop in equity prices and exchange rateExchange rate
In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
volatility. However, following the effects of an increase in the foreign currency government bond spread, the Philippine stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
was actually one of the least affected by the crisis with the main index of the stock market dropping only by 24 percent, a relatively low percentage change in comparison to those of other countries across Asia. Similarly, from the period between July 2008 and January 2009, the peso
Peso
The word peso was the name of a coin that originated in Spain and became of immense importance internationally...
devaluated only by 3 percent which explains why the peso was one of the currencies least affected by the crisis. This minimal effect on the stock market and the Philippine peso can be attributed to the recovery of asset prices across the Asia-Pacific region recovered in early 2009 as foreign portfolio investments surged.
Financially, the banking system in the Philippines has been relatively stable, because of reforms that were put in place since Asian financial crisis in 1997. Maintenance of high levels of loan to deposit ratios together with the decline of the ratio of nonperforming loans to total loans kept profitability of local banking generally high despite the crisis. To the country’s fortune, no meltdowns occurred as during the previous 1997 Asian crisis.
Fall in the growth rate
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
of personal consumption and expenditures and fixed investment
Fixed investment
Fixed investment in economics refers to investment in fixed capital, i.e., tangible capital goods , or to the replacement of depreciated capital goods which have been scrapped....
assail 2008. Personal consumption expenditure, the largest contributor to GDP growth, behaved a downward trend from a sharp drop from 5.8 percent in 2007 to 4.7 percent in 2008, and 3.7 percent in 2009. GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
growth during fourth quarter of 2008 and first quarter of 2009 fell to 1.7 percent, a staggering fall from 5.7 percent average for the three previous years. Furthermore, a contraction of 29.2 percent in the manufacturing sector involving electricity, gas, water, trade and finance services. The service sector also had its share of downturns as growth in the fourth quarter and first quarters of 2008 and 2009, respectively, suffered from a meagre growth of 2.1 percent, a far contrast from the 6.7 percent average from the last three years. However, the Philippines has generally endured the least declines in comparison with other East Asian countries despite recorded declines. For instance, OFW remittances, though at a slower pace, still grew in the first half of 2009.
Impact of fiscal deficit and external accounts
To counter adverse effects of the crisis, the Philippine government felt the need to increase its expenditures. Apart from government expenditure, of primary concern was the weak revenues generated by the government with fiscal deficit reaching P111.8 billion in the first quarter of 2009 as compared to P25.8 billion in the same period of the previous year. Despite suffering the least in terms of the stock exchange and financial markets among East Asian countries, the Philippines lagged in tax effort in comparison to other nations. Meanwhile, private sector flows in the external account declined and led to a net outflow of $708 million in 2009, a sharp turning away from a net inflow of $507 million in 2008. This eventually led to a fall in stock prices and depreciation or devaluation of the peso.Impacts on households and communities
An increasing number of the Filipino workforce has become frustrated due to unemploymentUnemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
and low standards of living in the country. Thousands of Filipinos leave the country every day to seize better income opportunities and promise their children a better and secure future. Moreover, around five million of Filipino children are unable to go to school and are forced to work on the streets or in other various workplaces where they can find some food or other means to fill their appetites.
Impacts on wealth and income and its distribution across different social divisions
The country was having sound economic indicatorEconomic indicator
An economic indicator is a statistic about the economy. Economic indicators allow analysis of economic performance and predictions of future performance. One application of economic indicators is the study of business cycles....
s before the 2008 economic crisis. Average income per capita was increasing while poverty incidence showed a downward trend. Average income per capita rose by 2% in 2007 and 2008, whereas poverty incidence dropped from 33.0% in 2006 to 31.8% in 2007 and 28.1% in 2008. Output growth plunged in 2009, causing real mean income to fall by 2.1%, resulting in an upward pressure on poverty incidence (grew by 1.6%). Most hit are households with associations to industry resulting in the average income to drop to levels below that of 2007. Similarly, wage and salary workers were hit significantly. Surprisingly, the poorest 20% did not suffer the same fate they suffered in crises past. Clearly, the global economic crisis put a halt on the highly promising growth trend of the Philippine economy and forced 2 million Filipinos into poverty.
Coping strategies
i. FinancesAccording to recent studies (2009), close to 22% of the population reduced their spending, 11% used their existing savings for consumption, 5% pawned assets, 2% sold assets, 36% borrowed money and 5% defaulted on debts.
ii. Education
To reduce spending, households had to risk the quality of education
Education
Education in its broadest, general sense is the means through which the aims and habits of a group of people lives on from one generation to the next. Generally, it occurs through any experience that has a formative effect on the way one thinks, feels, or acts...
of their children. Some children were transferred from private to public schools, while some were withdrawn from school. Moreover, parents reduced the allowance of the students, and resorted to secondhand uniforms, shoes and books.
iii. Health
Coping strategies may have negative effects on their long-term health as these affected households commonly resort to self-medication
Self-medication
Self-medication is a term used to describe the use of drugs or other self-soothing forms of behavior to treat untreated and often undiagnosed mental distress, stress and anxiety, including mental illnesses and/or psychological trauma...
, or shift to seeing doctors in government health centers and hospital. Many households in the urban sector shifted to generic drugs while rural households tended to use herbal medicines.
Efforts of poverty alleviation, reduction, eradication
The Medium-Term Philippine Development Plan (MTPDP) was implemented during the Ramos Administration and later on continued by the following administrations to help reduce poverty in the country and improve on the economic welfare of the Filipinos. The Ramos Administration (1993–1998) targeted to reduce poverty from 39.2% in 1991 to about 30% by 1998. The Estrada Administration (1999–2004) then targeted to reduce poverty incidence from 32% in 1997 to 25-28% by 2004, while the Arroyo government targeted to reduce poverty to 17% by creating 10 million jobs but this promise was not fulfilled by the administration. As for the current Aquino Administration, the 2011-2016 MTDPD is still being drafted.President Benigno Aquino III
Benigno Aquino III
Benigno Simeon Cojuangco Aquino III , also known as Noynoy Aquino or PNoy, is a Filipino politician who has been the 15th and current President of the Philippines since June 2010....
has plans to expand the Conditional Cash Transfer
Conditional Cash Transfer
Conditional cash transfer programs aim to reduce poverty by making welfare programs conditional upon the receivers' actions. The government only transfers the money to persons who meet certain criteria...
(CCT) program from 1 to 2.3 million households, and several long term investments in education and healthcare. Also, last September 2010, Aquino met with US Secretary of State, Hillary Clinton, during the signing of the $434-million Millennium Challenge Corporation
Millennium Challenge Corporation
The Millennium Challenge Corporation is a bilateral United States foreign aid agency created by the George W. Bush administration in 2004, applying a new philosophy towards foreign aid.-Background and formation:...
(MCC) grant in New York. The MCC grant would fund infrastructure and rural development
Rural development
Rural development in general denotes economic development and community development actions and initiatives taken to improve the standard of living in non-urban neighbourhoods, remote villages and the countryside...
programs in the Philippines to reduce poverty and spur economic growth.
Macroeconomic and Social Protection programs
To respond to the recent financial crisis, the Philippine government, through the Department of Finance and National Economic and Development Authority (NEDA), crafted a PhP 330-billion fiscal package, formally known as the Economic Resiliency Plan (ERP). The ERP is geared towards the stimulation of the economy through tax cuts, increased government spending, and public-private sector projects that can also prepare the country for the eventual upturn of the global economy.The implementation of ERP is spearheaded by NEDA with the following specific aims:
- To ensure sustainable growth, attaining the higher end of the growth rates;
- To save and create as many jobs as possible;
- To protect the most vulnerable sectors: the poorest of the poor, returning OFWs, and workers in export industries;
- To ensure low and stable prices to supports consumer spendingConsumer spendingConsumer spending or consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level...
; and - To enhance competitiveness in preparation for the global rebound.
Regional responses
Poverty incidence remains to be one of the highest in the region with the continued low domestic private investment. To overcome legal, political and institutional constraints, regional financial cooperation must be encouraged. The ASEAN+3 financial cooperation can promote further the development of domestic financial markets to facilitate the intermediation of Asian savings within the region, as well as attract foreign investment. Such alternative sources of funding would reduce Asia’s reliance on foreign currency borrowing and along with, the risk exposure of the region to maturity and currency mismatches.Moreover, the Network of East Asian Think Tanks has recently proposed the establishment of the Asia Investment Infrastructure Fund (AIIF) to prioritize the funding of infrastructure projects in the region to support suffering industries. The AIIF, as well as multilateral institutions especially the Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
, also promotes greater domestic demand and intra-regional trade to offset the decline in exports to industrialized countries and narrow the development gap in the region.
Prospects for Growth in the Future
Poverty reductionPoverty reduction
Poverty is the state of human beings who are poor. That is, they have little or no material means of surviving—little or no food, shelter, clothes, healthcare, education, and other physical means of living and improving one's life....
for the Philippines in the years to come is promising, bearing in mind where she left off prior to the economic crisis. Nevertheless, it is still a tough challenge. Figures persistently reflect a Philippine poverty reduction campaign that pales in comparison with other ASEAN countries. In addition, a blistering population growth
Population growth
Population growth is the change in a population over time, and can be quantified as the change in the number of individuals of any species in a population using "per unit time" for measurement....
rate sinks more Filipinos below the poverty threshold
Poverty threshold
The poverty threshold, or poverty line, is the minimum level of income deemed necessary to achieve an adequate standard of living in a given country...
placing the country’s laudable long term economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
under its shadow.
Taking into account that the Philippine economy has a significant reliance on remittances from Overseas Filipino Workers (OFWs), past threats demonstrated the resiliency of the Philippine economy despite external shocks. In spite of the disaster in Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
(3rd largest market for Philippine exports) and the geopolitical tensions in West Asia, the Philippine economy looked unfazed. New York-based Global Source Partners stated, "The Philippine economy has already proven to be quite resilient in the face of varied external shocks in the past, especially bolstered by a strong external position and capable monetary management. This time should not be much different.”
The new administration of President Benigno “Noynoy” Aquino III faces three key constraints on Philippine growth:
- Tight fiscal situation due to weak revenue generation
- Poor infrastructureInfrastructureInfrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
(i.e. transportation, power, etc.) - Pessimism in investment resulting from corruption and political instability
Fortunately, the government offers various projects to loosen these restrictions. Data from the quarterly ING Investor Dashboard Survey showed stability in investor confidence for the Philippine economy over the first two quarters of 2010. She even scored a 157 in the third quarter of the same year. This is well on the higher percentiles of the “optimistic” range and a mere 3 points from the “very optimistic” level. These figures emerge in the midst of decrepit infrastructure and a lack of efficient institutions. Subsequently, the prospect of the Philippine economy improving into the “very optimistic” range is very bright. Presidential spokesman Edwin Lacierda declared that the Philippine economic competitiveness score improved from 56.526 the previous year to 63.291 in 2011 (based on The World Competitiveness Yearbook). Lacierda also boasts of infrastructure improvement projects of the Department of Public Works and Highways
Department of Public Works and Highways (Philippines)
The Philippines’ Department of Public Works and Highways , abbreviated as DPWH, is the executive department of the Philippine government responsible for all safety of projects in the field of public works...
scheduled to commence within one or two years. He attributes the stepping up of our competitiveness rating to the public-private partnership
Public-private partnership
Public–private partnership describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies...
(PPP) projects next year. These projects raise optimism for the post-crisis economy of the Philippines.