How do we compare?
It’s useful to check how we’re faring relative to our neighbors to know in which areas we are doing well, falling behind, or keeping pace with them. That helps us determine where we should focus urgent remedial actions. On economic indicators, there’s a usual mix of positive and negative news. The most essential comparison would be on my usual “PITIK” test, based on presyo (prices), trabaho (jobs) and kita (incomes).
On price stability, we’ve come a long way from last year, when surging rice prices and elevated oil prices sent our inflation rate peaking at 6.7 percent. In September, the general price level hardly moved from the previous month, at 0.9 percent, thanks to dropping prices of rice, which is the single most important item in the average Filipino family’s budget. As is now well known, we owe this to the opening of rice trade to remove government’s control over importation of the commodity, even as we kept a 35-percent import tariff that still makes our staple that much more expensive than in our neighbors. Because much of the imported rice stocks have obviously still been withheld from the market by importers, further drops in rice retail prices are to be expected—that is, if we don’t succumb to loud calls to reverse the liberalization at this point.
As of the third quarter (July-september), our average annual inflation rate has been 2.8 percent. Meanwhile, Malaysia has 0.6 percent, Indonesia 3.0 percent, Thailand 0.8 percent, Singapore 0.6 percent, and Vietnam 2.5 percent. Except for Indonesia, we are still seeing the fastest price increases among our comparable Asean neighbors, but since our inflation is on a downward path, I would judge our performance here to be generally at pace with our neighbors.
Turning to jobs performance, our 5.4-percent unemployment rate, even as it’s low by our historical standards, is still much higher than that in our neighbors. Thailand now has the lowest unemployment rate at 1 percent, while both Singapore and Vietnam have 2.2 percent, Malaysia 3.4 percent, and Indonesia 5.2 percent. Even with millions of Filipino workers deployed overseas, our ability to create jobs domestically continues to fall short of our neighbors’ performance, highlighting a persistent challenge that we must address. The key is to attract more private sector investments, whether domestic or foreign.
It is in overall growth in income and output where we’re better off than our peer neighbors, except for Vietnam, which has been seeing impressive growth in recent years, especially in the wake of the United States-china trade war. Our 5.5-percent gross domestic product (GDP) growth is faster than Singapore’s 0.1, Thailand’s 2.3, Malaysia’s 4.9, and Indonesia’s 5.0 percent. On the other hand, Vietnam has seen 7.3-percent growth in GDP, reflecting how it has won trade and investments that have diverted out of China due to the trade war (which has slowed China’s growth to 6.2 percent). The Philippines can still take pride, nonetheless, in being among the fastest-growing economies in the world today.
Where else are we doing better than our neighbors? One is foreign debt, now equivalent to only 23.4 percent of our GDP, whereas it’s 32.3 percent in Thailand, 36.8 percent in Indonesia, 46.5 percent in Vietnam, 62.6 percent in Malaysia, and 420.8 percent in Singapore. Hence, there remains much scope for us to look to foreign borrowings to finance our development.
Our international reserves, worth 9.2 months of our imports, are also at a comfortable level relative to our neighbors, with Vietnam having only 3.1 months’ worth, Malaysia with 5.9 months, Indonesia with 8.5 months, Singapore with 8.9 months, while Thailand has slightly more at 10.8 months. Our government revenues as a percent of GDP, at 18.6 percent, is better than Malaysia’s 16.7, Singapore’s 16.4 and Indonesia’s 13.8 percent, though less than in Thailand and Vietnam, where the ratios well exceed 20 percent.
All told, we now enjoy financial stability that we had not seen in decades, thanks to recent tax reforms, and skillful monetary management by the Bangko Sentral. They must be doing something right, and for stability’s sake, now is not the time to change course.