At a Crossroads: Progress or more of the same?

IN A SERIES of articles and presentations, members of the Economic team have expressed their (the government's) views regarding how fast the Philippine economy can grow and the prospects going until 2050. With all our deference to the Secretaries, we offer a constructive reply and comments in this letter. For reasons of space, we do not touch upon “everything.” We focus on three key themes: () why the Philippine economy cannot grow at 6-8% and sustain this rate; (ii) why our GDP in 2050 will not be $2 trillion; and, (iii) the role of the government.

- Jesus Felipe, Mariel Monica Sauler, Gerardo Largoza, Susan Kurdli, Alellie Sobrevifias, and Christopher James Cabuay

We want to make it clear that our interests are identical to those of the Philippine administrations, the present one, as well as past and future: we want the Philippines to move forward, progress, and develop, not just from an economic point of view but also along social dimensions, as fast as possible.

We also stress that our overall assessment of the economy is that it is “doing fine.” The Philippine economy has a myriad of problems, but it is moving forward. There is no economy in the world that does not have problems, and governments are always criticized. It is impossible to please everybody.

Having said this, let’s not exaggerate the fiesta, what the government often does. Our disagreements with the administration lie in how well we are doing and in how we understand progress happens. These are important disagreements.

Our arguments do not mean that we are negative about the economy. We just believe that we need to infuse a greater sense of realism into the discourse of how the economy is doing and how far it can go. We do understand what a high-level position in government requires and the messages that have to be sent. Yet, going into irrational exuberance when it is very difficult to justify it does not do any good. Public policy is also about realism. Overenthusiasm raises expectations. If these are not met, millions of Filipinos will be disillusioned. It is also about credibility.

Reality check 1: Today’s GNI per capita (what the Philippine Development Plan 2023-2028 uses) is about $4,300. We are still a lower middle-income economy.

Reality check 2: Our neighbors, Thailand, Indonesia, China, and Vietnam, all with significantly lower income per capita than the Philippines not long ago, have overtaken us.

I. UNDERSTANDING GROWTH