How to double PH per capita income by 2027

Editorial

It was only last year that the per capita income in the Philippines hit the $2,000 mark.

 

While still a long way from the average incomes of other Asian countries, it was still a respectable figure that indicated the Philippines was finally creating a viable middle class.

The $2,000 per capita threshold is considered crucial for any developing nation. At this level, more consumers are said to purchase big ticket items such as homes and cars. Such purchases indicate faith in the country’s future.

Countries with a wide middle class are usually considered to be politically and economically more stable than states which have yawning gaps between the rich minority and the poor majority, with no middle class in between. This was what the Philippines was like not very long ago.

Nations with a large and strong middle class are thus able to attract long-term investments from both local and foreign sources.

Such countries are said to be ideal, or “a Goldilocks world, where everything is just right,” as Bangko Sentral ng Pilipinas Gov. Amando Tetangco Jr. aptly put it some time ago.

According to figures released by the National Economic and Development Authority, the Philippine economy must grow by no less than 6.7 percent per year so that the per capita income can double in 15 years.

In other words, with a little bit of luck and continued hard work and smart planning, the per capita income in the Philippines should hit $4,000 by 2027.

The 6.7 percent growth is far from impossible. In fact, it seems much easier now than, say, five or 10 years ago.

In the first half of this year, gross domestic product (GDP) growth was at 6.1 percent. For 2012, the growth is expected to be somewhere in the 6 percent level.

To climb to the desired 6.7 percent growth from the present 6 percent will require little more than additional pump priming. And of course, the people, specifically the business community, must believe that the government is not robbing them blind.

Today’s present $2,000 per capita income is only part of the picture of the country’s economic state. Sadly, it does not reflect the distribution of income or wealth. While there may be a growing middle class, there is still too big a percentage of the population that is poor.

They do not feel the growth of the economy, and consider themselves as being left behind because they do not have access to the windows of opportunity that others have availed of. One might even say that they consider themselves society’s victims.

They may not be so exceptionally poor that they are recipients of the government’s conditional cash transfer program, but neither are they earning enough to live in decent homes and eat three square meals a day.

The distribution of wealth is another issue that the government must also address. For now, it is enough that the per capita income in the Philippines is at a stage where greater growth is highly likely.

 

On the right path

There is no longer any question that the country is on the right track, thanks in part to the able stewardship of the economy by President Benigno Aquino 3rd. His no-nonsense anti-corruption campaign that began on Day One of his six-year term continues to bear fruit.

This is not to say that President Aquino has eradicated graft and corruption in the government. He hasn’t and he is not likely to do so during his presidency. Graft and corruption have become so ingrained in the public and private sectors that it will take nothing less than a miracle for corrupt practices to end.

Still, the economy is moving along steadily.

Among the latest positive signals is the shrinking of the country’s trade deficit. As of September, this year, the deficit was pegged at $483 million, down from $1.186 billion last year.

Figures released by the National Statistics Office state that imports rose by 3.6 percent to $5.26 billion, while exports went up by 22.8 percent to $4.78 billion year-on-year.

If this trend continues, the Philippines may soon reach a point where exports exceed imports, further boosting the country’s already healthy dollar reserves.

Last year, GDP growth was the highest in almost three and a half decades. This week, the stock exchange hit yet another peak. The local bourse has actually been hitting peak after peak ever since Mr. Aquino became president.

If he sets his mind to it, there is no reason why President Aquino cannot lead the country in attaining the targeted $4,000 per capita income in 15 years. It will not happen during his term, which ends in 2016. But in paving the way to lasting economic stability, he would be remembered as the leader who made a difference in the lives of every Filipino. Not just a difference, but a positive one.