The gross domestic product (GDP) grew by just 5.6% in the first quarter of 2019. That’s the slowest quarterly growth in four years.
Duterte’s economic managers are pinning the blame on the delayed passage of the 2019 national budget. What they do not say is that the slowdown this quarter is just a continuation of the overall trend of slowing economic growth since the Duterte administration took over in 2016. (See chart below)
Annual GDP growth rate averaged 6.9% in 2016, then slowed down to 6.7% in 2017, and further to 6.2% last year.
Not that the economy was in a better shape under Aquino and the previous regimes.
But the slowdown under Duterte shows that absent fundamental economic reforms to boost agricultural production and encourage manufacturing expansion that will create long-term, productive jobs; promote domestic consumption as growth driver (e.g., through substantial wage hikes and removal of onerous taxes); etc., the relatively rapid growth in the first half of 2010s is not sustainable.
What we have seen under Duterte so far is the further destruction of agriculture and rural livelihoods such as through the Rice Tariffication Law; continuation of the low wage policy to attract foreign investors; additional tax burden under the TRAIN Law, etc.
Duterte’s economic managers think that infrastructure spending (i.e., “Build, Build, Build”) will impact GDP figures positively. But this may be true only in the short term. As the program relies heavily on public debt, not to mention that most of the infrastructure will be privatized anyway, it will actually create more problems for the economy and the people in the long term. ###