Without adjusting for inflation, the economy is now more than twice as big, at about P19 trillion, compared with P9 trillion in 2010. Photo from ABS-CBN News
Culture Spotlight

The 2010s is the most prosperous the Philippine economy has ever been

The 2010s was the decade when growth was fueled not only by Filipinos outside the Philippines, but also by those who stayed behind
Felipe Salvosa II | Dec 30 2019

Here’s one great reason to toast the decade that’s about to end: It’s the most prosperous the Philippine economy has ever been. Growth in gross domestic product (GDP), noted the economist Arsenio Balisacan, averaged 6.3 percent in the 2010s, the fastest since the 1960s. Without adjusting for inflation, the economy is now more than twice as big, at about P19 trillion, compared with P9 trillion in 2010.

The stock market went boom and bust but nevertheless reflected this trend. In the 2010s, Philippine Stock Exchange Index grew 2.5 times to above 7,800, a much faster clip than when the blue-chip index expanded twice to just above 3,000 by the end of the 2000s.

It’s not so difficult to account for the economic expansion. Imagine Bonifacio Global City with fewer skyscrapers (and less road traffic) prior to 2010, when Philippines, Inc. was headquartered either in Makati or Ortigas.

But how did growth and prosperity happen?

It would be difficult to write the narrative without crediting overseas Filipino workers (OFWs), whose remittances have historically fueled domestic consumption, the biggest component of GDP. By the end of the decade OFWs would have pumped a cumulative $250 billion into the Philippine economy, with the annual take expanding to about $30 billion this year from just $18.8 billion in 2010.

By the end of the decade OFWs would have pumped a cumulative $250 billion into the Philippine economy.

In previous decades, OFW money kept the economy afloat during crisis periods. OFWs at the same time symbolized the Philippine economy’s shortcomings, particularly the lack of opportunities that precisely drove Filipinos to seek opportunities elsewhere.

But the 2010s was the decade when growth was fueled not only by Filipinos outside the Philippines, but also by those who stayed behind.

For the most part of the decade, government somehow got its act together through policies that boosted business and consumer confidence and encouraged investments and spending.

A regime of low interest rates, low inflation, and banking stability deserves a lot of credit. The Bangko Sentral ng Pilipinas kept its policy rate between 3 to 4 percent throughout most of the 2010s, ushering in an era of cheaper credit.

Higher tax collections beefed up the national budget — from P1.3 trillion in 2010 to P3.8 trillion in 2019 — allowing the government to spend more on public works, health, education and cash transfers for the poor. The country’s sovereign credit ratings reached investment grade in 2013 after the Aquino government hiked taxes on “sin” products. The Duterte government scored another upgrade six years later.

In 2010, the Philippines overtook India to become the call center capital of the world.

The result was an unprecedented economic expansion. In a nutshell: Filipinos found jobs, and better-paying ones. Somehow, and all of a sudden, the legions of business, law, computer and comms graduates produced by Manila’s universities have somewhere to go to, and it’s not the Middle East or Hong Kong or Singapore.

While they certainly did not begin operations in the 2010s, it was the period when IT, call centers and business process outsourcing took off and became employers of choice. Industry revenues exceeded $25 billion annually and rivalled OFW remittances. In 2010, the Philippines overtook India to become the call center capital of the world.

Somehow, and all of a sudden, the legions of business, law, computer and comms graduates produced by Manila’s universities have somewhere to go to, and it’s not the Middle East or Hong Kong or Singapore.

The jobless rate, in fact, dropped to the lowest on record, 5.1 percent, in 2019, from 7.3 percent in 2010.

It was the decade when CPAs and MBAs, and the IT people between them, worked New York or London shifts, bought cars and condos for their kids, and went on holiday in Japan for the sakura festival or Norway to see the northern lights.

Car assemblers sold 168,490 units in 2010. Today, the auto sector has expanded significantly, vehicle importers are releasing sales figures apart from local assemblers. The Chamber of Automotive Manufacturers of the Philippines, Inc. and the Truck Manufacturers Association expect to sell more than 390,000 vehicles this year, while the Association of Vehicle Importers and Distributors expects to sell more than 90,000.

International air passenger traffic, according to data from the Civil Aeronautics Board, more than doubled to 29 million passengers in a span of 10 years, limited only by inadequate airport infrastructure.

More Filipinos are coming home to condos than ever before to escape the monstrous traffic that has become the unfortunate consequence of the economic boom.

In the previous decade, the Housing and Land Use Regulatory Board approved 695 condo projects covering barely 200,000 units. In the 2010s, 1,551 projects got licenses, covering more than 700,000 units. Condos are everywhere: on top of shopping malls, around universities and airports, in the middle of the business district, and on just about any open space developers could get hold of.

John Gokongwei, Lucio Tan, and Henry Sy

Property has been so lucrative that there are more real estate developers in the Top 10 of the Forbes list of richest Filipinos: the Sy and Gokongwei families whose patriarchs passed away this year, the Zobel family, Lucio Tan and Andrew Tan, and the brown taipan Manny Villar, who had made it his life’s goal to join the elite circle of dollar billionaires since losing his bid for the presidency at the beginning of the decade. The rich, as exemplified by Villar, became richer.

How about the poor? At the end of the previous decade, 26.3 percent of Filipinos (23.3 million, or some 4 million families) were considered poor, based on official poverty estimates. We close the decade with poverty incidence at a record low of 16.6 percent.

It’s definitely a huge reduction, and we must have done something right, but there are still 17.6 million poor Filipinos, or 3 million families. The challenge for the next decade is to sustain the ongoing boom, lift millions more out of poverty, and never look back.

 

Photos from ABS-CBN News