10 Economic Problems of the Philippines
1. Over-dependence on Global Economy
The growth of the Philippines economy drastically slowed to just 3.6% in the first three quarters of 2011, which is significantly less than the 7%-8% growth targeted by administration's Philippine Development Plan (PDP). Though the slowdown may have been due to the ongoing global crisis, it was markedly slower in comparison to other South-East Asian neighbors. Economic performance figures indicated a contraction in exports and a drop in FDI. Though the remittances from overseas Filipinos to the country grew in the first ten months of 2011, however the compensation that overseas Filipinos received actually fell, in peso terms, due to an appreciating peso.
In 2011 the Aquino administration sought a FTA (Free Trade Agreement) with the EU and join the Trans-Pacific Partnership (TPP). The administration further allowed the US to even more directly influence Philippine economic policy making in its self-interest, by entering in a Partnership for Growth (PfG). These partnerships will consequently further the dependence of the economy on the global economy, whereas a regional arrangement between less unequal Southeast Asian countries is potentially useful. Greater attention has to be paid to addressing to the internal problems of the economy and enhancing domestic-oriented growth. A policy of removing structural impediments to growth has to be adopted with lesser focus on foreign investors and exporters.
2. Misplaced Fiscal Austerity
Practicing fiscal austerity just to get favorable credit ratings can be counterproductive. The Aquino administration, in 2011, pursued fiscal austerity and spent 2.1% less in the first 11 months than it did in the same period last year. This along with increased revenues brought down the fiscal deficit and subsequently international credit rating agencies Standard and Poor's, Moody's and Fitch upgraded the country's credit ratings and outlooks. In 2011 the government cut spending on economic services, including infrastructure, in the same vein did not fill in for shortfalls in education, health and housing sectors. As a result, over the first three quarters of 2011, income from public construction contracted by about 46% whereas government consumption reduced by a mere 1.7% in comparison to the same period last year.
Misplaced austerity measures and an exaggerated concern about credit ratings contracts the economy, reduces demand and undermines future growth. The proposed public private partnerships (PPPs) are a poor substitute to real investment and public expenditure, because the former are majorly driven by short-term profit while the latter play a vital role to create development.
These are just some of the economic challenges looming large over the Philippines. The country is facing significant decline in industrial production, gross domestic product, income and employment and sales. The Aquino presidency supposedly is getting the support of the people, as indicated by its high approval ratings, for the necessary economic measures that are in the general public interest. In 2011, the Aquino administration's policy choices to give greater weight to narrow foreign and domestic elite interests, unfortunately, underscores the challenge of pushing for real reform in 2012.
3. Import-Export Imbalance
The negative trade is heavy and only counterbalanced by the service account surplus. Over the last two decades, Philippine exports have shifted from commodity-based products to manufactured goods. In the midst of the current global economic recession, the exports of electronics, garments and textiles are yet to reach a level of import neutralization.We can solve it by apply a tax directly to consumer and every one confront the problem in their money and not in the check in to the country.
We need to improve more moral consumer philosophy. We need...
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