Elections are no longer a major factor in Philippine economic performance, economists said, allowing the country to stay away from “boom-bust” growth cycles seen in previous administrations.
Economists also said a GDP growth of more than 6 percent is now possible for the Philippines despite the absence of election spending.
National Economic and Development Authority (Neda) Undersecretary for National Planning and Policy Rosemarie G. Edillon said this can be attributed to the Duterte administration’s ability to continue the projects and programs of previous administrations.
Edillon added the departure from the strategy of previous administrations to “start with a clean slate” has allowed the Duterte administration to sustain a GDP growth of above 6 percent even after an election year.
“This [decision to] continue projects in the pipeline allowed us to avoid a very drastic [economic] slowdown [after elections],” she told the BusinessMirror at the sidelines of the National Income Accounts (NIA) briefing in Pasig City on Tuesday.
University of Asia and the Pacific economist Victor Abola said election-related economic growth was “accidental” or transitory and, as such, no longer considered a major factor in boosting GDP.
Abola added this can easily be seen in the 6.7-percent GDP growth posted in 2017 versus the 6.9-percent growth recorded in 2016, an election year. The GDP expansion in 2017 fell within the government’s target of 6.5 percent to 7.5 percent.
“We can easily grow 6.5 percent even without elections moving forward,” Abola told the BusinessMirror. “We’re not overheating and we’re making better use of our resources, that is why the Philippines is growing at a faster pace.”
The country’s dependence on election spending to boost economic growth has given rise to the so-called boom-and-bust cycles. Boom growth occurs during election years, while bust growth occurs in nonelection years.
During election years, consumption spending—a major growth driver—grows faster as politicians purchase more goods and services to run their campaigns.
Ateneo de Manila University EagleWatch senior research fellow Alvin Ang said the Philippines has already escape the boom-bust cycle of economic growth as early as 2000.
Proof of this, Ang said, is the fact that the 2009 global financial crisis did not severely affect Philippine economy.
In his speech at the NIA briefing, Socioeconomic Planning Secretary Ernesto M. Pernia said that, for the past eight quarters, growth has been stable at above 6 percent or better. Growth only slowed to 6.7 percent in 2017, from 6.9 percent in 2016.
In previous election years, such as in 2004 and 2005, from an average growth of 6.7 percent in 2004, growth slowed to 4.8 percent in 2005.
The same thing happened in 2010 and 2011. From an average growth of 7.6 percent in 2010, growth slowed to an average of only 3.7 percent.
“You can see that our decline is really very moderate at 0.2 percent of one percentage point. To me, this is a good performance, given the fact that it is already normal for post-election years to witness a decline in economic growth,” Pernia said.
However, in order to maintain the country’s current economic position, Edillon said succeeding administrations must continue the projects and programs of the Duterte administration.
To this end, Edillon said, the Neda is planning to continue project approvals to allow the next administration to “hit the ground running” and ensure national projects would be implemented and would contribute to economic growth.
Edillon added the current administration benefited from the approvals of the Neda Board toward the end of the previous administration in terms of building up the pipeline of projects to be implemented.
In November 2016 the Duterte administration launched the “Build, Build, Build” (3Bs) program which included 70 road, bridge, railway, bus-rapid transit projects, to the Philippines’s first subway, among others. The list of projects in the 3Bs included unfinished projects that were began by previous administrations.
Image credits: Taylor Weidman/Bloomberg