Think tank criticizes jobless growth
The fall of Philippine stocks and the peso amid the uncertainty in the global economy highlights the need for the Philippines to attract job-generating foreign direct investments to achieve inclusive economic growth, private think tank Stratbase Research Institute said Tuesday.
Stocks slumped over the past four weeks, with the Philippine Stock Exchange index wiping out a 22-percent gain from the peak of 7,403.65 on May 15, after the US Federal Reserve indicated it was ready to end the bond-buying stimulus program that diverted funds to emerging markets such as the Philippines in the past.
The index closed at 5,789.06 on Tuesday, its lowest in six months.
The stock market slump also pulled down the value of the peso to the 43-per-dollar territory, the lowest in nearly two years, as investors fled the Philippine market in search of safe haven for their capital.
Stratbase Research Institute president Victor Andres Manhit said the best protection for stock investments was solid economic growth fuelled by job-generating investments, which the Philippines lacked.
Manhit, in the latest issue of online newsletter Spark, said foreign direct investments going to the Philippines was the smallest in Southeast Asia, depriving millions of jobless Filipinos of employment opportunities.
Unemployment rate in the Philippines also climbed to a two-year high of 7.5 percent in April 2013, he added, as three million Filipinos of working age had no jobs while another 7.25 million considered themselves underemployed.
Manhit said despite the Aquino administration’s inclusive growth strategy, the economic growth over the past two years was described by many as “jobless growth”.
“A key indicator in this regard is employment and job statistics suggest that all may not be too rosy still for the country,” he said.
“We are supposed to be the second fastest growing economy in the region just behind China but the official jobless rates of our neighbors are much lower. Thailand’s [unemployment rate] is 0.7 percent; Singapore, 2.1 percent; Malaysia, 3 percent; South Korea, 3.8 percent; China, 4 percent; and Taiwan, 4.2 percent,” he said.
Manhit said the 7.8-percent economic growth in the first quarter was driven by remittances and consumer spending, and not by investments and manufacturing.
He said the manufacturing sector shrank in 2012 to its lowest level, as a percentage of the economy in 60 years while the agriculture sector was now just a tenth of the gross domestic product.
“All the basic economic sectors, except services, are not being as productive. In a country whose poorest and most of the population are tied to and dependent on agriculture, fisheries and manufacturing, this should be a most alarming concern,” Manhit said.
Manhit said the share of manufacturing in GDP fell to 22 percent in 2012 while agriculture’s share shrank to 11 percent.
He said the recently held elections provided an opportunity to advance economic reforms to encourage more investments in manufacturing and agriculture.
He said the with increased influence of President Aquino over the Senate and the House of Representatives, he “now has a greater opportunity to address pending issues on reforms that will increase investments, directly generate jobs and sustain the economic momentum.”
Manhit said opening the economy to foreign investments and improving the manufacturing and agriculture sectors would generate thousands of jobs.
He said President Aquino should take advantage of his popularity to “hasten reform legislation and direct other capitals toward productive restructuring of the national economy.”
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