Philippine Economic Performance: A Comparative Analysis
Those in my generation have witnessed the decline of our economy in recent years. We have gone from being the top economy in Southeast Asia in the 1970s to now being the worst among our Asean-6 peers, which include Indonesia, Malaysia, Singapore, Thailand, and Vietnam. It is alarming to note that this trend of economic deterioration persists today. Let’s explore some key economic indicators and measures that highlight this issue.
For comprehensive data on the economic indicators of selected countries, including the Asean-6, you can visit the Bangko Sentral ng Pilipinas website and navigate to the “Statistics” tab. One particularly useful resource is the table of economic indicators, which provides insights into our performance compared to our neighboring countries.
Indicators: Prices, Jobs, and Incomes
First, let’s examine the rising prices in the Philippines. In the second quarter, our average inflation rate was 5.8 percent, surpassing Singapore’s 4.1 percent, Indonesia’s 3.2 percent, Vietnam’s 2.5 percent, Malaysia’s 1.8 percent, and Thailand’s 0.6 percent. It is clear that our inflation rate is driven by factors beyond global price hikes. The main culprit is our government’s mismanagement of the agriculture and food sector, leading to soaring food prices. To exacerbate the issue, the government has yet to address the market tightness by easing food imports.
Second, we consistently face a high unemployment rate, currently at 4.8 percent, second only to Indonesia’s 5.5 percent. Our rate is significantly higher than Malaysia’s 3.5 percent, Vietnam’s 2.3 percent, Singapore’s 1.6 percent, and Thailand’s 1.0 percent, despite millions of Filipinos finding employment abroad. This reality highlights the need for more job opportunities within our country, as overseas work is not a sustainable solution.
Economic Growth and Foreign Direct Investments
Third, our economy has experienced relatively faster growth compared to our peers. Even with a second-quarter slowdown to 4.3 percent, we outperformed Vietnam’s 4.1 percent, Malaysia’s 3.2 percent, Thailand’s 1.8 percent, and Singapore’s measly 0.5 percent growth (although Indonesia takes the lead with 5.2 percent). However, this growth is primarily a result of rebounding from a severe pandemic-induced contraction, rather than indicative of a strong economy.
Fourth, foreign direct investments (FDI) in the Philippines remain considerably low compared to our neighboring countries. Last year, we received $9.4 billion in FDI, falling behind Thailand’s $10.2 billion, Malaysia’s $15 billion, Vietnam’s $17.9 billion, Indonesia’s $21.4 billion, and Singapore’s staggering $140.8 billion. Furthermore, our FDI inflows have declined by 20% this year, while some of our neighbors have seen an increase. The lack of job-creating FDI contributes to the increasing number of Filipinos seeking opportunities abroad.
Export Performance
Fifth, our export numbers are notably lower compared to our neighbors. This can be attributed to our struggle in attracting FDI, as most of our neighbors’ dynamic exports come from foreign companies that we struggle to attract. Additionally, our export gap with neighboring countries continues to widen over time. In 2020, our merchandise earnings amounted to a mere $79 billion, while Thailand reached $287 billion, Indonesia $292 billion, Malaysia $353 billion, Vietnam $372 billion, and Singapore a whopping $515 billion. Our agricultural exports are particularly disappointing, earning only $7.5 billion compared to Vietnam’s $53.2 billion, Thailand’s $37 billion, and Malaysia’s $25.7 billion.
The statistics clearly indicate that we have fallen far behind our neighbors, making it difficult to envision a path towards catching up. There are fundamental issues that need urgent attention, especially in the areas of education and combating child malnutrition and stunting. Without immediate action, the prospects for our next generation to turn our country’s economy around are discouraging.
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