A Study of the Philippine Economy During the Administration of President Benigno Aquino III
Development of Exchange Rate, Growth Rate, Inflation and External Debt
The economic performance of the Aquino Administration was compared to the performance of Arroyo Administration. The researcher utilized the government reports, independent reviews by members of the academe, developmental institutions, and other relevant resources to guide the analyses.
Table of Contents
Results and Discussions
This research paper describes and explores the economic performance of the Philippines during the Aquino Administration based on selected economic indicators such as the exchange rate, growth rate, inflation, and external debt. The economic performance of the Aquino Administration was compared to the performance of Arroyo Administration. The researcher utilized the government reports, independent reviews by members of the academe, developmental institutions, and other relevant resources to guide the analyses.
Keywords: Philippine Economic Indicators, Philippine Economic Performance, and Aquino Administration
The economic performance of the Philippines varies from one administration to another. However, the Philippine economic transformation launched in 2010 was effective; Economic growth is robust, public finances are being consolidated, and institutional framework is improving. The Philippines was one of the fastest-growing economies, with an annual real GDP growth rate averaging 4.50 percent since 2000. In 2005, the Aquino Administration under the Presidency of Benigno Aquino III, the country was among the top 30 fastest-growing economies worldwide due to strong domestic economic policies and the aftermath of the rapid growth of Chinese economy. In addition, the Philippine managed to maintain a much stronger rate in 2015 as compared to other ASEAN member states. (BNP Paribas, 2016; World Bank Group, 2017)
As the Aquino administration focused on the domestic economic activities, net exports remained to be a source of weakness for the Philippine economy due to its heavy dependence on the performance of its high-technology sector which is more vulnerable to demand shocks in high-technology value chains.
The net exports of the country had trade deficits in 2016 as the rapid expansion of imports outpaced export growth. In the face of weak external environment of the Philippines, it won several sovereign credit upgrades from Moody’s and Fitch that made the country’s debt investment grade. This was due to successful fiscal reforms which reduced the fiscal deficit substantially (due to enactment of the ‘sin’ taxes against cigarettes and alcohol products) as well as foreign investors’ perceived improvement in governance and sincere efforts to fight corruption. Hence, business confidence boomed even as the global economy remained lackluster. (Lim, 2016)
In assessing the economic performance of the government administration, one of the ways is to determine the overall growth, the fiscal and monetary policy, economic indicators such as foreign exchange rate, inflation rate, debt, and investment. Another way to is to point out the opportunities for improvement and gaps in the performance. With this, the objective of the research study is to understand and assessed the economic performance of Aquino Administration (Benigno Aquino III).
This study assessed the economic performance through the selected economic indicators of the Aquino Administration from year 2010 - 2016
The researcher employed a desk review of existing journals, reports, studies, and accounts and assessment of the performance of selected economic indicators of the Aquino Administration. The researcher assessed the selected economic indicators that include Growth Rate, Exchange rate, Inflation rate, Liquidity Rate, and the External Debt of the Philippines from year 2010 – 2016. The researcher also compared selected variables to the previous GMA Administration as a benchmark of economic performance.
Results and Discussions
To begin the assessment, the researcher looked at the nature and quality of the economic indicators of the Arroyo Administration (2005 – 2010) and Aquino Administration (2011 – 2016)
Table 1: Exchange Rates from 2006– 2015 (USD – PHP)
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Source: Author compiled from Bangko Sentral ng Pilipinas (2005 – 2010) and Ofx.com (2011 – 2016)
Table 1 shows that during the Arroyo Administration, the US Dollar – Philippine Peso exchange rate from 2005 to 2010 was appreciated from Php 55.09 – Php 45.11. However, the drastic decline was recorded during 2006 to 2008 that was influenced by the global financial crisis, followed by a relatively substantial depreciation in year 2009, and another phase of appreciate in 2010. (BSP, n.d)
The exchange rate of Aquino Administration in 2012 shows that the Philippine Peso plummeted until his last year of Presidency. In 2016, the Philippine peso depreciated to its lowest level in ten (10) years in the context of a volatile foreign-exchange market.
Uncertainty surrounding national elections in the Philippines and the United States, as well as the U.K.’s prospective withdrawal from the European Union, combined with volatile global crude oil prices, have contributed to an unpredictable foreign-exchange market since early 2016.
In November , the Philippine peso passed the PHP/ US$50.00 mark as investors priced-in the prospect of an interest rate increase by the U.S. Federal Reserve. The currency depreciation was largely a regional phenomenon, with currencies in neighboring economies such as Malaysia, Indonesia, Singapore, and Thailand also weakening in November.
(World Bank Group, 2017)
Table 2: Average Weighted Growth Rates and Share Contribution of Expenditure Items to GDP Growth (In Percentage)
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Source: (Bangko Sentral ng Pilipinas, 2015)
Table 2 shows that the weighted growth rates in household consumption, government consumption expenditures, and fixed capital formation were higher during the Aquino Administration. On the other hand, the export growth and the net export growth were higher during Arroyo’s Administration as compared to Aquino Administration. This means that the Aquino administration’s growth performance is dependent more on domestic economic growth and domestic demand rather than external demand.