Over-dependence on Global Economy The growth of the Philippines economy drastically slowed to just 3.6%.the slowdown may have been due to the on-going global crisis, it was markedly slower in comparison to other South-East Asian neighbours. Economic performance figures indicated a contraction in exports and a drop in FDI. The administration further allowed the US to even more directly influence Philippine economic policy making in its self-interest, by entering in a Partnership for Growth (PfG). These partnerships will consequently further the dependence of the economy on the global economy, whereas a regional arrangement between less unequal Southeast Asian countries is potentially useful.
Greater attention has to be paid to addressing to the internal problems of the economy and enhancing domestic-oriented growth. A policy of removing structural impediments to growth has to be adopted with lesser focus on foreign investors and exporters. UnemploymentWithout a strong manufacturing industry or real Filipino industry, the economy will be unable to create enough decent paying jobs. Till then manufacturing or services will remain substandard, or of low value-addition. Steadily rising inflation has contributed to the erosion of the value of the minimum wage. Though the Aquino administration increased the minimum wage and announced cash dole-outs but lack of quality decent paying jobs and higher real wages continue to be a problem. The government’s policy to encourage foreign capital, even if in just low value-added assembly operations will continue to hinder real growth and development of the manufacturing sector. The Aquino administration needs to plan over the long-term, and prepare an industrialization program that encourages value-addition manufacturing or services and builds Filipino-owned industries. Misplaced Fiscal AusterityMisplaced austerity measures and an exaggerated concern about credit ratings contracts the economy, reduces demand and undermines future growth.
The proposed public private partnerships (PPPs) are a poor substitute to real investment and public expenditure, because the former are majorly driven by short-term profit while the latter play a vital role to create development. Import-Export Imbalance: Among the many economic problems faced by the Philippines, one is the imbalance of imports and exports. The negative trade is heavy and only counterbalanced by the service account surplus. Over the last two decades, Philippine exports have shifted from commodity-based products to manufactured goods. However, in the midst of the current global economic recession, the exports of electronics, garments and textiles are yet to reach a level of import neutralization. Decline of the Philippine Peso: The economic downturn has resulted in the devaluation of the Philippine peso and subsequently, a fall in the stock market. The fiscal conservatism strategy adopted by the Philippine government has yet to reflect a positive effect on acceleration of economic growth. 6% growth in the gross domestic product (GDP) in 2004 and 7.3% in 2007 has yet to accelerate to the linear GDP growth projected by the government.
