A summary of the Philippine's need for inclusive growth despite "rosy" economic figures. The Philippine's GDP growth rate is not enough to alleviate poverty and unemployment at the (economic) rate we're going.

1. Growing Too Slow
Jojo P. Javier
The Philippine Economy

2. Growing Too Slow
The Philippine Economy
• Philippine Economic Landscape
• Growth is not Inclusive
• Living in a High Growth Neighborhood
• Arangkada’s 3RD Year Assessment

3. Philippine Economic Landscape

4. Philippine Economic Landscape
• 7.2% IS NOT ENOUGH
• The PDP targets 7-8% growth rate.
• Arangkada recommends a 9% annual GDP growth rate
but may be impossible in the short-run due to weak
external economic conditions.

5. Philippine Economic Landscape
We can get it above 8% by 2015-16 by:
• Increasing FDI.
• Recovery in exports.
• Higher spending in public infrastructure.
• Increase value-added growth drivers in
manufacturing, BPO and export agriculture.

6. Philippine Economic Landscape
57% Services
31% Industry
12% Agriculture

7. Philippine Economic Landscape

9. Philippine Growth Has Not Been
Inclusive

10. NCSB Official Philippine Poverty Statistics
Practically remained
unchanged from
2006 through 2012.
Poverty Profile

11. NCSB Official Philippine Poverty Statistics
Significant drop for
2013. 19.1 from 22.3
and 7.7 from 10.
Poverty Profile
19.1
7.7

12. Philippine Development Plan (PDP) 2011-2016
• Economic growth of an average of 7-8% until 2016
• Reduction in unemployment rate to 6.5-6.7% by 2016
• Reduction in incidence of income poverty to 18-20%
• Reduction in underemployment to 17% in 2016
• Reduction in incidence of multidimensional poverty
incidence (which looks at health, education, access to
water, sanitation, secure housing, etc.) to 16-18%
Reduction in incidence of income poverty to 18-20%
Source: Philippine Development Plan (2011)

13. Malaysia and
Indonesia have
nearly eliminated
poverty.
Indonesia and
Vietnam have
roughly reduced
poverty incidence
by 50% since 1990
ASEAN Poverty Profile

14. Despite the
country’s economic
growth, its share is
becoming smaller
compared to the
ASEAN 6 countries.
It’s a few points
above Vietnam
ASEAN-6 GDP Share

15. Vietnam is predicted
to surpass the
Philippines In terms of
GDP per Capita in
2014
Indonesia overtook
the Philippines in
2009.
ASEAN-6 GDP Per Capita

16. Lagged from 1981 –
2000 because of high
population growth
and political
instability.
Increased in the
current decade
because of inward
remittance flows.
Provided 4.4% of the
average annual GDP
growth.
ASEAN-6 GDP per Capita Growth

17. The Other Side of GDP per Capita
A rise in per capita GDP signals growth in the economy and tends to
translate as an increase in productivity.

18. The Other Side of GDP per Capita
A rise in population with unemployment left unchecked
decreases per capita GDP

19. ASEAN Unemployment Profile
Source: ASEAN Community in Figures (2013) p. 68
2013 – 7.3%
2014 (Q1) – 7.5%
In 2011, the increase in
wealth of the 40 richest
Filipinos was 76.5 % of
the Philippine GDP
growth.*
* Habito, Inquirer, June 26, 2012

20. ASEAN Population Profile
Singapore grows
through immigration.
Malaysia considers its
population too small.
Vietnam, Indonesia and
Thailand are below 2%.
The rest have
experienced declines
with the Philippines at
high rate of 2% per
year.

21. ASEAN Population Profile
BOON OR BANE?

22. Living in a High Growth Neighborhood

23. Living in a High Growth Neighborhood
Source: World Bank (2012)

24. Living in a High Growth Neighborhood

25. Living in a High Growth Neighborhood
• We need a growth rate of 11.6% to reach a PCI of US$ 12,000 in two decades.
• Population should decrease to 1.5%, at the same time, to accomplish this goal.

26. Living in a High Growth Neighborhood
At current growth rates:
• We would be as rich as China today in 25 years.
• We would reach income levels of Malaysia.
• We would reach a US$ 12,000 PCI in 70 years.

27. Living in a High Growth Neighborhood
In 2008 the World Bank released “The Growth Report: Strategies for Sustained Growth
and Inclusive Development” prepared by the Commission on Growth and Development,
chaired by Nobel Laureate Dr. Michael Spence.
The commission studied 13 economies that have grown in the post WWII period for 25
years or longer at an average annual rate of 7% in order to learn what they did to achieve
such high rates of growth.

28. Living in a High Growth Neighborhood
Four of these countries are our
neighbors – Indonesia, Malaysia,
Singapore and Thailand.
In addition to this small group of
13 economies, the Commission
judged that India and Vietnam
were “on their way” to increasing
the group.

29. Living in a High Growth Neighborhood
What did the rapid growers do
right?
• Fully exploited the world
economy.
• Maintained macroeconomic
stability.
• Mustered high rates of saving
and investment.
• Let markets allocate resources
• Had committed, credible, and
capable governments.

30. Living in a High Growth Neighborhood
These are the Philippines’ medium-
term policy challenges according to
a study by the Organization for
Economic Cooperation and
Development titled “Economic
Outlook for Southeast Asia, China
and India 2014”
Source: Economic Outlook for South East Asia, China and India 2014 – Beyond the Middle Income Trap (2014) p. 8

31. Living in a High Growth Neighborhood
• Job creation also needs to be bolstered through reforms to foster a more
favourable business and investment climate, particularly for the small and
medium-sized enterprises which contribute so much to employment.
• A weak job-creating capacity that has led to chronically high unemployment and –
even more significantly –under-employment has been a critical contributory
factor in persistent poverty and inequality.
Source: Economic Outlook for South East Asia, China and India 2014 – Beyond the Middle Income Trap (2014) p. 11

32. Living in a High Growth Neighborhood
• The Philippines’ poorest island grouping, Mindanao, has been largely overlooked
by rural development policies. To help Mindanao capitalize on its natural assets,
invigorate its economy, and lift its people out of poverty, rural development
needs to focus on improving agricultural productivity and the island’s woeful
transport infrastructure.
• The Philippines is one of the countries most prone to natural disasters in the
world. Serious aggravating factors are environmental degradation, climate change
and uncontrolled urbanization. Reforms to improve disaster management and to
foster environmentally sustainable growth will be essential to improving and
sustaining the country’s development.
Source: Economic Outlook for South East Asia, China and India 2014 – Beyond the Middle Income Trap (2014) p. 11

33. Arankada’s 3RD Anniversary Assessment
• The succeeding administrations should consider planning and
implementing the doubling of GDP growth rates to 9% within three years
as a high priority goal. This has to be supported by a long-term industry
policy.
• Job creation in the private sector should be considered a high priority, to
reduce unemployment and underemployment by 50% and to give
Filipinos more alternatives than working abroad.
• FDI should be targeted to reach over US$7 billion a year in three to four
years. It should also be measured in terms of job creation and exports
(products and services) generated.
Not Ongoing
Started
Substantial Progress
CompletedSource: Arangkada – Third Anniversary Assessment (2014) pp 25-30

34. Arankada’s 3RD Anniversary Assessment
• An export target of US$ 100 billion in five to six years should be set, with
more diversified exports and new markets
• Adequate funds should be made available for the international
promotion of Philippine exports, inward investments, tourism, medical
travel and retirement programs.
• A significant share of remittances should be channeled into productive
investments in the domestic economy through bonds and other funds -
Not ongoing.
Not Ongoing
Started
Substantial Progress
CompletedSource: Arangkada – Third Anniversary Assessment (2014) pp 25-30

35. Arankada’s 3RD Anniversary Assessment
• Double the funds available for physical and social infrastructure, civil
service quality improvement, investment, tourism and trade promotion,
and other growth-promoting expenditures through less government
misspending, better tax collection and selectively increasing the EVAT
before other taxes.
• Public and private sectors should organize a Special Experts Group
comprising economic, business, labor and government leaders to
recommend key reforms to make the economy grow at least 9%.
Not Ongoing
Started
Substantial Progress
CompletedSource: Arangkada – Third Anniversary Assessment (2014) pp 25-30

36. “The Philippines is no longer the sick man of East Asia but its
rising tiger. The latest GDP growth rate bolsters his assessment
and is welcome news. The challenge for the administration is to
make sure the benefits of growth will be enjoyed not just by a
privileged few but by all Filipinos.”
World Bank Country Director Motoo Konishi
The challenge is to translate solid economic growth into poverty
reduction by generating more and better jobs.
ADB. 2014. Asian Development Outlook 2014. Manila
There Is Still More Work Ahead of Us……

37. Thank You
Jojo P. Javier MIM, MBA
Doctor of Business Adminstration
Letran Graduate School of Business