Subsisting

Through it all - earthquakes, floods, typhoons and corruption scandals ~ the Philippine economy somehow manages to maintain its growth track.

- ALEX MAGNO

By most forecasts, we are expected to grow our GDP by 5.5 percent this year. That is lower than the range our economic team targeted, but it is higher than most other ASEAN economies.

According to the forecast, the Philippine economy will be the second best growth performer in the region. We are significantly behind Vietnam’s expected seven percent growth rate.

That said, 2026 might be a slower year for our economy. The cancellation of a substantial portion of public spending for infrastructure (all flood control projects are suspended) translates into a drop in public investments that will have ripple effects on other parts of the economy. Recall how our growth performance dropped sharply in 2011 after the Aquino II administration drastically cut back on infra spending.

All the corruption that accompanied our infra spending magnifies a vital point of our economy’s weakness. Compared to our neighbors, we suffer from an infrastructure crisis. Therefore, we have a weak logistics backbone that keeps costs of production and transport high. In turn, that makes our exports uncompetitive and transforms us into an import-dependent economy.

To say our economy is consumption-led is an understatement. The share of manufactures has been shrinking. Our agriculture is like a zombie.

With nearly stagnant productivity, it is understandable that our wages (high in comparison to some of our neighboring economies) are rapidly falling behind inflation. Well into the next generation, inadequate wages will continue to push the migration of some of our best workers.