Last year, when we launched the Updated Philippine Development Plan 2011-2016, there was optimism about the country’s succeeding development direction. Following the realignment of strategies based on geographical considerations, we crafted and implemented new approaches which we deemed more responsive to the needs of sectors and areas where many of the poor reside and make a living. Given also the strong growth in 2012 and 2013, the expectations for 2014 were very high.
However, the country’s GDP growth for the first three quarters of last year somehow dampened optimism among various sectors. Despite this, the country still managed to grow above 6.0 percent for full-year 2014 following a robust growth in the last quarter. The growth was one of the fastest among the major emerging economies in Asia. The average growth in the past five years of the current administration was the fastest in 40 years. While the growth last year was slower than our target, this still affirms that the country is indeed on a higher growth path.
In terms of poverty, economic gains and increases in incomes during the past four years translated to a record 3-percentage point reduction of poverty incidence in the first half of 2013. However, the recently-released report of the Philippine Statistics Authority shows that poverty incidence among individuals rose to 25.8 in the first semester of 2014, which fell short of the target range of 23 to 25 percent for 2014 indicated in the Updated Plan. The reduction of poverty incidence in 2013 could have continued in 2014 were it not for the high food price inflation. In particular, for rice, the situation could have been avoided had we been able to take advantage of the favorable world market condition for rice.
In this context, we must say that the Philippine economy’s achievements in the past year were not met without challenges. As we have discussed in various fora, reforms in public financial management entailed major adjustments on the part of implementing agencies. These led to significant declines in government final consumption and public construction. GDP growth could have been higher by one percentage point if not for these adjustments.
Despite these impediments, the country continued to make strides in economic and social development. For one, employment numbers, especially the unemployment and underemployment rates, continuously improved during the course of 2014. Latest figures showed that 1.04 million new jobs were created in January 2015 from January 2014.
The Socioeconomic Report 2014 specifies more of these accomplishments. It also shows where we fall short of our PDP targets and calls attention to the gaps that must be addressed. The report nonetheless reaffirms the strategies identified in the PDP Midterm Update that remain relevant and have become even more compelling.
So in the last fifteen months of the current administration, mindful of various impediments, we will need to focus on a number of reforms that we deem critical.
First, we must guard against future spikes in food prices. As we have noted earlier, the gains from increased incomes were unfortunately negated by faster and higher inflation in food prices, especially of rice. Thus, there is a need to revisit the grains sector policy, particularly the quantitative restrictions or QRs on rice imports. The government needs to weigh the benefits of this policy deemed favorable to rice farmers, as we are seeing its negative impact on poor consumers and the Philippine economy as a whole. This in no way means that we are withdrawing support for farmers. On the contrary, we are pushing for a sounder package of policy reforms and programs to enhance agricultural productivity that will increase farmers’ incomes.
Second, we must reduce further the cost of doing business. While both domestic and foreign businesses remain optimistic, business prospects in 2015 are conservative. To address this and ensure a stable business environment, there is a pressing need to address infrastructure bottlenecks, port congestion, and power woes.
Third, we should strengthen support for the passage of anti-trust or competition law to improve the country’s business climate and competitiveness. This will encourage firms to innovate and improve the quality of goods and services that they provide.
Fourth, we need to ensure that there is a strengthened and reliable social protection in place so that people and businesses will have the confidence to adjust to changes brought about by various reforms being implemented. This also facilitates faster recovery among victims of disasters and calamities.
Finally, we should also revisit the National Disaster Risk Reduction and Management law to improve the coordination system and institutional arrangement in terms of disaster response management. More importantly, we must invest more in prevention and mitigation to build better and more resilient communities.
With only one and a half years remaining, the government is working double time in delivering the commitments of the current administration. However, let us remind ourselves that the task is not the government’s alone and that work should not end with the end of an administration. We need to continue the momentum of reforms in economy and governance, even as we face even greater challenges as we approach 2016. Thus, once again, we are encouraging everyone to work with us in traversing the last few miles, to protect our gains, and to deepen reforms that will deliver a better future for the people.