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Tuesday, March 3, 2015

The Philippine Economic Boom: "Reforms Beget Rewards!" Cesar Purisima

  • The Philippines still remains the fastest-growing nation after China.
  • FinanceAsia ranked Finance Secretary Purisima first among the best of his counterparts, ahead of finance ministers of Singapore, China, and Japan, rounding Purisima’s 4-year tenure in the Cabinet’s highest ranks to a perfect 4, with recognitions earned for each year of service.
  • But the number of unemployed Filipinos has swelled to more than 12 million.
  • The high unemployment rate despite the high GDP growth may have contributed to the pessimistic outlook of Filipinos

  • Cesar V. Purisima is Finance Minister of the Year
    FinanceAsia awards Purisima his 5th citation
    Finance Secretary Cesar V. Purisima has been awarded for the fifth time as Finance Minister of the Year, with FinanceAsia recognizing his leadership in driving the turnaround story of the Philippines as head of President Benigno S. Aquino III’s team of economic managers. FinanceAsia ranked Purisima first among the best of his counterparts, ahead of finance ministers of Singapore, China, and Japan, rounding Purisima’s 4-year tenure in the Cabinet’s highest ranks to a perfect 4, with recognitions earned for each year of service.
    Purisima was lauded for steering the economy away from stagnation and towards broad-based growth, resulting in the Philippines reaching investment grade status from major credit rating agencies. Last quarter’s 6.9% GDP growth exceeded expectations and marked twelve straight quarters of above 5% GDP growth, comfortably putting the average quarterly growth rate under the Aquino administration at 6.02%.
    At the awards ceremony, Purisima said, “The award truly belongs to President Aquino and my colleagues in the Philippine cabinet because the economic growth and fiscal reforms are truly a team effort, proving that ‘Good Governance is Good Economics.’ We have proven yet again that the Philippine miracle is not a one-hit wonder. We’re here to stay, and we are ready to play big in the world stage.”
    Purisima added, “In 4 years, the Philippines has achieved what we set out to do: we grew at a 6% average and cut the deficit to an all-time low. Stocks are up 125% since we took office and foreign direct investments rose 64% from January to October 2014 alone.
    “We’ve checked every box, a feat deemed impossible by many. Less than 2 years before the end of this term, we are pushing for even more game-changing reforms. There is no shortage of impossible dreams for a Philippines filled with hope. We are raring and ready for more.”
    This award comes at an opportune time, as the Philippines hosts the 2015 APEC meetings calling for greater financial integration and transparency, as well as financing for resiliency and infrastructure around the region.
    FinanceAsia also cited Purisima’s role in pushing for Sin Tax Reform, credited for boosting the health budget by a staggering 57% from 2013 levels, with share of excise taxes collected the highest in 13 years.
    “Reforms beget rewards. This award strengthens our resolve to double down on reforms: rationalize fiscal incentives, modernize our revenue generating agencies, and engineer a competitive and equitable tax structure for all Filipinos,” Purisima said.
    This fifth citation marks the fourth consecutive year where Purisima has been acknowledged Finance Minister of the Year by various institutions. In 2011, he was recognized as the Finance Minister of the Year for Asia by Emerging Markets, while Euromoney gave him the distinction of Finance Minister of the Year for 2012. From DoF website

    The Philippines still remains the fastest-growing 
    nation after China.
    The world is expected to grow 3.2 percent in 2015 and 3.7 percent next year after expanding 3.3 percent in each of the past two years, according to a Bloomberg survey of economists. China, the Philippines, Kenya, India and Indonesia, which together make up about 16 percent of global gross domestic product, are all forecast to grow more than 5 percent in 2015. From Bloomberg News
    From CCTV America
    In 2014, the Philippines hosted the World Economic Forum on East Asia. In 2015, it will host the Asia-Pacific Economic Cooperation Summit. The country seems to be basking under the global spotlight as its economy continues to be one of Asia’s fastest-growing. Despite a slowdown in the last quarter, it’s had 11 straight quarters of unprecedented growth above five percent.
    President Benigno Aquino’s anti-corruption platform is widely credited for being able to bring back investor confidence. The stock market has been performing well and the service sector, particularly the call center industry, keeps expanding. But it’s the billions of dollars of remittances from Filipino workers overseas that remains the country’s economic backbone. All this is creating a new middle class with purchasing power foreign investors seem to be recognizing.
    The American Eagle Outfitters store is just one of several U.S. retailers who recently opened in Manila. And Swedish fashion giant H&M, Japanese budget clothing brand Uniqlo and even luxury cars like Lamborghini and Porsche are all now present in the Philippines. The surge in consumer spending, which accounts for about 70 percent of the country’s economy, is what economists believed will sustain economic growth even if investments slow down.
    The Philippine capital of Manila is undergoing the biggest upgrade to its road network in decades. However, there is a general feeling that the country’s infrastructure is still very much lagging behind. And that it’s unable to meet the needs of both a booming economy and a rapidly-growing population. There is a lack of an efficient public transport system.
    Experts said the economy losses billions of dollars each year because of traffic jams, outdated airports and overstretched ports. The Philippines also pays one of the most expensive electricity rates in Asia. All of this, as it’s still recovering from last year’s Super Typhoon Haiyan and continues to face the threat of natural disasters.
    Inflation is a disease that can wreck a society, Milton Friedman, the late Nobel laureate economist, once said. Add rising unemployment to the diagnosis, and his profession ascribes a rather non-technical term to the debilitating effect on people: misery. 
    That affliction this year will be most acute in Venezuela, Argentina, South Africa, Ukraine and Greece — the five most painful economies in which to live and work, according to Bloomberg survey data that make up the so-called misery index for 2015. (It's a simple equation: unemployment rate + change in the consumer price index = misery.) 
    In Ukraine's case, war will exact greater economic casualties. Tension with Russia-backed rebels will prolong joblessness in the eastern-European nation, and inflation won't offer much relief, the surveys showed. The one-two punch means Ukrainian consumers are set to be the fourth-saddest among 51 economies (including the euro area) based on forecasts for the misery measure.
    Adding to the agony is the relatively abysmal income growth that will fail to cushion Ukrainian households against the still-surging prices. 
    At $8,494 gross domestic product per capita this year, Ukraine only edges out the Philippines among the countries surveyed and measured with the International Monetary Fund's proxy for resident income.
    Unemployment probably will climb to 9.5 percent in Ukraine this year from its 8.9 percent rate as of the third quarter in 2014, the survey data show. Inflation is projected to rise at a 17.5 percent pace in 2015, compared with the 24.9 percent December year-over-year rate.
    The depressing expectations for Ukraine still aren't quite as bad as what the embattled nation faced in 2014, when it finished second in the misery index. The 2015 projections, dismal as they are, would make Ukraine bright enough to jump past South Africa and Argentina from last year's misery-index readings.
    The three countries that will probably see the most economic misery in 2015 — South Africa, Argentina and Venezuela — haven't budged much from their 2014 rankings, when they occupied three of the top four spots, the data showed.From Bloomberg News