19 January 1988
Reuters News
English
(c) 1988 Reuters Limited 

MANILA, Jan 19, Reuter – The Philippines has emerged from a tumultuous year with democracy apparently firmly in place after Monday’s local elections, but there is no euphoria among analysts over the country’s economic prospects. 

The economy has turned in its best growth in seven years, but the analysts said recovery may turn into stagnation unless Manila takes firm steps to tackle a daunting array of problems. 

They said that with the polls out of the way, no more elections due until 1992, and a two-year process of political consolidation complete, effective management of the still-unsteady economy now topped President Corazon Aquino’s agenda. 

“After this the expectation is that the full concentration will be focused on economic recovery,” said Aurelio Periquet, President of the Philippine Chamber of Commerce and Industry. “We have no more excuses.” 

The Philippines’ gross national product grew by an estimated 5.1 per cent last year after a small 1.5 per cent growth in 1986, a contraction of 10.6 per cent over 1985 and 1984, and a steady decline since 1980 when it grew by five percent. 

Periquet was cautious, saying: “A comparison with other developing countries in the region shows that our performance last year, respectable as it is, still ranks near the bottom.” 

Central Bank Governor Jose Fernandez told a businessmen’s meeting last week that much still needed to be done. “As we look ahead there is little doubt in my mind but that the overriding need for the economy is credible management,” he said. 

He noted that the Philippines’ 28.48 billion dollar foreign debt equalled 87 per cent of the gross national product, the sum total of goods and services produced in a country. 

Economic Planning Secretary Solita Monsod said earlier this month that debt servicing would gobble up 3.03 billion dollars in 1988, up from 2.9 billion last year, despite the rescheduling of about 14 billion dollars of debt in 1987. 

Manuel Montes, economics professor at the University of the Philippines, noted that growth in 1987 had been consumer-led, but investments needed to flow in at a faster pace this year. 

“Otherwise, the economy might overheat,” Montes said. 

Periquet echoed him, saying: “Rising consumer demand unmatched by a corresponding increase in industry’s productive capacity will eventually lead to inflation rather than real growth.” 

Finance secretary Vicente Jayme said earlier this month that the level of investments was a crucial element in the country’s targeted 1988 growth. 

“It is important in 1988 that confidence in the economy must be there to allow a significant increase in investments on the part of the private sector,” Jayme said. 

Referring to a military coup attempt five month ago that nearly toppled Aquino and is widely believed to have scared off many potential investors, he added: “All told I think unless something of the magnitude of the August 28 event takes place that 1988 will be a good year.” 

Board of Investment figures show that local investors poured in 202 million dollars in the January-October 1987 period,  while foreign investors, who adopted a wary wait-and-see posture, contributed only 125 million dollars. 

The analysts also noted that the country’s 1987 performance masked other major target shortfalls. 

Agriculture was hit by two big typhoons and a severe drought and expanded by only 0.7 per cent in 1987 against targeted growth of four per cent and 1986 growth of 3.7 percent. 

Meanwhile, the country’s exports shrank by 3.8 per cent against a targeted 5.4 per cent growth and 1986 growth of 21.8 per cent and imports soared by 20.7 per cent against a targeted 12.3 per cent and 1986 growth of 25.44 percent. 

Omar Cruz, senior economist at the independent Center for Research and Communication, said exports needed to grow by an average 15 per cent annually in the period up to 1992 if Manila wanted to meet its annual GNP growth target of 6.5 per cent. 

“If we’re willing to stop being sceptics and defeatist, we might just about hack it,” he added.