YOU have probably seen one of those nature programs on television that show someone in the wilderness trying to make a fire by rubbing two sticks together. It is not as easy as depicted in the movies. In real life, it takes a lot of work and sweat to create enough friction that, in turn, produces enough heat to suddenly make the tinder combust.
Someone who did not understand what was going on would probably think that it was magic or a miracle. The same applies to how economies take off. It may look like economic growth suddenly happened, but it is the product of long, hard work.
In a story published in this paper, Catherine N. Pillas reported that Japanese officials who attended the International Symposium on the Service Industry at The Peninsula Manila hotel last week singled out the Philippines as an ideal location for Japanese businesses that seek to expand. Hideyuki Ohashi, deputy director general for information-technology strategy, commerce and information at the Japanese Ministry of Economy, Trade and Industry, mentioned the popularity of Japanese food and pop culture in the Philippines. He said further, “According to an International Monetary Fund prediction, the per-capita gross domestic product [GDP] in the Philippines will reach $3,000 in 2016.”
Ohashi’s statement got us thinking. All the Philippines’s bashers have been saying our economic growth in the last few years is due to free and easy credit, and that it is a bubble. Looking at our own monthly credit-card statement with a minimum of 36-percent annual interest, we wish we had some of the easy and cheap credit they keep talking about.
We sometimes tend to think that maybe these experts are correct, since they get paid to analyze economies like ours. But did our economy suddenly burst into life-giving flames by a miracle of credit or through hard work?
In 2001 our per-capita GDP was $961; in 2013 it was $2,754. The jump in the next two years to $3,000 is only a 9-percent increase. But from 2009 to this year, the increase was a massive 180 percent.
Looking at the numbers, the Philippine economy caught fire between 2003 and 2010, with the per-capita economy doubling and breaking above the elusive $2,000 to reach $2,135. The significant thing about that period was the government putting its fiscal house in order after having been a drag on the economy for decades with its unsustainable borrowing.
Once the fire took hold, it has been a relatively easy climb from $2,135 to $2,754 in 2013.
When you think about each Filipino producing an average economic output of P135,000 ($3,000), then Ohashi’s statements about Japanese investment makes a lot of sense. He concluded by saying, “The country’s [Philippines] consumption structure will change remarkably in the next two or three years.”
Image credits: Jimbo Albano