From 2011 to 2015, the Philippines witnessed unprecedented economic growth driven by a surge in investments and strong consumption. The country’s gross domestic product expanded by a compounded average growth rate (CAGR) of 5.8% from 2011 to 2015—more than double the world’s economic growth rate (2.8% CAGR). During the first quarter of 2016, the country outpaced the growth of economic powerhouse China, 7% to 6.7%, making it the fastest growing economy among 11 Asian countries.
However, critics of the Philippine growth narrative point out that that the growth is not inclusive—only the elite benefit from the economic expansion. According to Filipino economist Cielito Habito, the increased wealth of the 40 richest Filipino families in 2012 was equal to 76.5% of the country’s GDP growth at that time. Louise Montemar, a political science professor from De La Salle University says it best in an interview with the Atlantic— “[the] country dances to[the] tune of the tiny elite.”
While the elite reap the benefits of the thriving macro-economy, the poor remain to be poor. As of the first quarter of 2015, more than a quarter of Filipinos lived below the poverty line. In the same article published by the Atlantic, Josefa Ramirez, a 31-year old who earns Php 123 per day selling bottles, said that she does not feel the growth. “I didn’t know [the economy was growing]. For me, things feel the same as they always did.”
This systemic inequality in terms of wealth distribution was perhaps what propelled the electoral victory of President Rodrigo Duterte, who promised to solve the problems that truly pressed the poor majority. His administration was marked by the launch of a ten-point socio-economic agenda, which aimed to “promote rural and value chain development” and “improve social protection programs.” The government plans to reform the tax bracket system to further protect the bottom 50% of households as well as to accelerate infrastructure spending to improve the poor’s access to basic needs.
The demeanor of the president however has spooked investors and has put the nation’s foreign relations at a question. On October 19, President Duterte announced “his separation from the United States,” claiming military and economic separation from the country where almost 40% of overseas Filipino remittances come from. He also challenged the European Union, which contributed Php 6.3 billion in foreign aid to the victims of Typhoon Yolanda, to withdraw its financial support from the Philippines.
The question raised is whether the government will be able to successfully alleviate poverty and promote inclusive economic development should the dynamics with these key foreign partners be cut. What will be the net effect for the poor given fiscal reforms and at the same time a pulling out of US bloc investments?
Yet even if this new administration manages to succeed in initiating inclusive economic growth without our Western partners, what do we make of a narrative stained by the blood of 4,726 human lives killed in a brutal, anti-poor Drug War?
The Philippine growth story is a narrative to be continued. Whether or not the new administration will truly champion the poor the narrative has left out remains to be seen.
