The end of remittance-led growth?
December 16, 2011 at 12:07
This is a re-posted opinion piece.
The country’s dismal growth figures for the third quarter came as a shock even to the most sympathetic economics observers. Third-quarter GDP grew at only 3.2%, gross national income rose at a worse 1.6% owing to a negative contribution from remittances, and per-capita income actually fell. The GDP growth rate for three quarters is 3.6%, and given current trends, the economy needs to grow more than 5% in the last quarter for growth in the entire year to reach even four 4% — obviously highly unlikely.
The disappointment is due not only to the contrast with 2010, a banner year of recovery, whose momentum people expected would be maintained; not only because people hoped political optimism and the trust in the new administration would be mirrored in steady economic advance; but also because growth in other countries has managed to be resilient despite global uncertainties — our quondam poor cousins Indonesia and Vietnam are slated to grow at 6-7% even in a bad year such as this.
Pundits tend to lay the blame on the Aquino administration for its alleged slow spending — as if more spending was all that was needed to accelerate growth. But considering government consumption makes up all of 10% of GDP, its slump reduced the three-quarter growth rate by at most two-tenths of 1%. Even the 10% drop in construction knocked off only about eight-tenths of 1%. The real killer was net exports (exports less imports), which went from being a small plus (adding 0.36 percentage point to growth in the first three quarters of 2010) to being a net detractor (slashing growth by 3.8 percentage points in the three quarters of 2011). If exports had at worst simply stagnated and imports remained the same, the three-quarter growth rate would have been closer to 5.5% rather than its actual 3.6%.
To read the full story, click here.
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By: Emmanuel S. De Dios – Introspective
Source: Business World, Dec. 11, 2011
