‘Are we getting richer or less poor?’

THE Philippines reported its 2022 annual gross domestic product results for 2022 on Thursday. Consensus forecasts were for a 6.5 percent growth and the actual number was 7.6 percent. Quarter-on-quarter growth was projected at 1.5 percent and came in at 2.9 percent.

Of the nine countries (Taiwan, US, South Korea, Singapore, China, Cambodia, Vietnam, Congo, and the Philippines) that reported 2022 gross domestic product growth as of last Thursday, the Philippines’ 2022 growth was the highest. What can we make of this?

Capital Economics had this to say: “Growth slowed in Q4 [from Q3]. In y/y terms, the economy expanded by 7.2 percent in the fourth quarter after 7.6 percent growth in Q3.” With something as complex as a nation’s economy, the headline numbers must be subject to a deep-dive to understand the total situation.

We can talk about “revenge spending” coming out of the lockdowns and what the government/bsp could have/should have done to make the economy better. Some of the criticisms are completely justified and some are nothing more than perfect 20/20 hindsight. A few are from some people whose political candidates have not won an election since 2010. Everyone is entitled to and should express their own economic opinions. That is beneficial to the nation.

It’s been nearly 10 years since Forbes online columnist Jesse Colombo— recognized by The Times of London for warning about the US housing and credit bubble—wrote a series about different nations, including the Philippines, facing “economic bubbles.” Mr. Colombo has moved from expounding his bubble theory to preaching the “Gospel of Christ.” We wish him well in his new endeavor.

On November 21, 2013 he wrote, “Here’s Why the Philippines’ Economic Miracle Is Really A Bubble In Disguise.” Mr. Colombo’s conclusion was, “The Philippines’ economy is driven by a credit bubble which will most likely pop when China’s economic bubble pops and/or as global and local interest rates continue to rise. I expect the ultimate popping of the bubbles to cause another crisis that is similar to the 1997 Asian Financial Crisis.” That did not happen here or in New Zealand, Malaysia, Singapore, or Iceland, etc.

But what meaning does all this analysis have? The average car has roughly 30,000 parts if you count the nuts and bolts. The Philippine economy has roughly 110 million parts. How do we measure the success of the car? “The engine has great performance, but the seats feel like you are sitting on rocks.”

In reference to the latest GDP numbers, Ambassador Teodoro “Teddy Boy” Locsin Jr. asked, “Does it mean we’re getting richer or less poor?”

How do we measure the success of the economy? Is it by the sum of the parts or the individual parts? How do we measure a nation’s wealth to determine “richer/poorer”? Per capita GDP based on purchasing power? Percent in poverty? An increase/decrease in personal savings? Per capita net worth?

Maybe even by nutrition. The Global Hunger Index says that undernourishment as a percentage of the population has dropped from 18.7 percent in 2000 to 5.2 percent in 2022. This 5.2 percent is better than Vietnam, Mexico, Indonesia and Thailand. But our overall rank is lower when including childhood nutrition.

But maybe it’s only the rich getting richer.

World Bank: “The Philippines has made significant progress in reducing poverty, but income inequality has only recently begun to fall. Thanks to high growth rates and structural transformation, between 1985 and 2018 poverty fell by two-thirds. However, income inequality did not begin to decline until 2012. It is still high: The top 1 percent of earners together capture 17 percent of national income, with only 14 percent being shared by the bottom 50 percent.”

Which is more important, individual equality or individual prosperity? Obviously both matter. Yet, depending on your opinion on which factor is the priority, the answer to “are we getting richer or less poor?” is “yes”—depending on where you look.