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‘Davos glow’ on 7.2% growth fades
Publication Date : 05-06-2014
The so-called “Davos glow” of the Philippines as the “rising star” at the World Economic Forum on East Asia held in Manila on May 21-23 dissipated within hours of the last cocktail party celebrating the country’s growth as “one of the greatest economic comeback stories” in recent times.
The WEF based in Davos, Switzerland, claimed that the Philippines might soon be one of the strongest Southeast Asian economies. Its senior director, Sushant Palakurthi Rao, said the WEF had been paying attention to the country’s rise from being the “sick man of Asia” since President Aquino took office.
Citing a recent survey on Doing Business by the International Finance Corporation, Rao said the Philippines was the best improved economy, having moved up 30 notches in the rankings since 2009. “It has definitely captured the attention of the global community,” he said.
In his speech to the WEF on May 22, Mr. Aquino regaled an international audience with a seven-page catalogue of his accomplishments that read like a preview of his State of the Nation Address in July, the start of the twilight of his presidency.
He repeated the tiresome formula for economic progress summed up with the simplistic nostrum: “We have always said that good governance is good economics, and the results of our reforms, with the results on the economic end, are proving us right. In 2013, our economy grew by 7.2 percent—making us one of the fastest growing countries. This we achieved despite the seemingly endless succession of natural and manmade disasters that hit our country last year.”
From 2010 to 2013, Aquino said, the WEF drastically improved its outlook on the Philippines. During that period, according to the outlook, the Philippines’ competitiveness rankings moved 26 places—from 85th to 59th. He said the Philippines is set to build on this momentum and become even more competitive, as the manufacturing sector continues its revival, and as “we continue to increase our infrastructure spending—more than doubling it, from 200 billion pesos (US$4.56 billion) in 2011 to more than 400 billion pesos (more than $9 billion) in 2014.”
The Philippines was selected to host the WEF on East Asia for the first time in 23 years on the strength of its 7.2-per cent gross domestic product growth in 2013 and claims by the Aquino administration of success in its anticorruption campaign. But this assessment of key elements of its economic turnaround was not without critics in the WEF summit.
A report came out at the close of the conference, claiming that despite widely applauded economic gains, the Philippines became less globally competitive in 2013 due to governance problems, including corruption. Yahoo Southeast Asia Newsroom online reported that the Philippines slipped four places in the annual competitiveness rankings released by a Switzerland-based school, almost negating the five-notch leap it made in 2012.
The Philippines was ranked 42nd in the international Institute for Management Development (IMD) World Competitiveness Yearbook 2013, up from 38th in 2012. According to the Yearbook, the ranking was a net improvement of one notch in two years for the Philippines in the list, which ranked 60 countries based on economic data and opinion surveys.
The Philippines posted declines in all four pillars used, the Yearbook pointed out, but it slipped two places to ranking 59th in infrastructure, and six to 37th in economic performance. Steeper drops were recorded in terms of government efficiency (nine notches, to 40th) and business efficiency (eight places, to 27th).
The report snapped the string of accolades the Philippines has been receiving due to its stellar economic growth of 7.2 per cent in 2013 despite a gloomy global environment.
In analysis accompanying the rankings, the IMD attributed the decline partly to slower export and cooling stock markets, factors which also affected other countries. “Nevertheless, several factors influencing the ranking decline of the Philippines are specific—poor infrastructure, a looming power crisis, and high-profile corruption accusations…” the IMD said.
The “high-profile corruption accusations” did not escape the attention of the IMD, as well as that of the close to 1,000 government officials and top corporate policymakers who participated in the WEF Manila conference. These also served to strip Philippine officials of their claim that the Philippines’ turnaround was a good model of an economy that was set to become the next Asian economic “miracle” due to its strong growth performance.
Rao of the WEF had echoed claims by Philippine officials that the government’s anticorruption drive was one of the key drivers of the country’s economic growth in 2013. He said that more than the Philippines’ economic strides, its fight against corruption and for good governance had become a “benchmark” for many countries.
But against all these glowing testimonials for the Philippine approach of growth without corruption, the conference participants received a more sordid picture of corruption taking place behind the propaganda—from scandals surrounding the diversion of millions of pesos in public works funds to fictitious projects by racketeering syndicates which had gained access to the pork barrel funds allocated to members of Congress.
Throughout the WEF sessions, the delegates feasted on these media reports that swamped the news stream, competing with reports of the conference proceedings.
These allegations of corruption are certain to have left in the delegates strong doubts on the credibility of the administration’s good-governance claim.