Slower Economy, Higher Prices in 2008 and the Sumilao Model

NEDA has just raised the bar of economic growth for the Philippines in 2008: from 6.1 to 6.7%. Compared this year, this is lower than the nearly 7% growth the economy achieved. NEDA's projection is still higher than the projected 6% growth of the World Bank, the International Monetary Fund and the Asian Development Bank.

Whether its 6% or 7%, there's one undeniable fact--the growth rate of the Philippines is catching up with its neighbours. However, there's a catch--slower growth, higher prices of commodities. And government is helpless to stem its rise.

It may be good news for foreign and local investors. It's surely bad news for 89 million Filipinos. Without a rise in pay, Filipinos will surely find 2008 as one of the hardest, if not the hardest year to date.

Government should form a task force that would address the issues Filipinos will confront in 2008. For example, with the rising strength of the peso, how many hundreds of thousands of Filipinos will join the under and unemployed? Will our export industries also catch up with their strong foreign counterparts? What safety nets would government setup to protect the poor?

The World Bank says agriculture is the best bet of the Philippines in 2008. Agriculture Secretary Arthur Yap should now plan ahead to make agriculture a prime engine for growth. The rise in agriculture production in 2007 is still not competitive because there's still a gap or a shortage between local and foreign demands. Food security levels are still not stable. Chinese agricultural products continue to flood the market, yes, threatening local agri companies. These and some other threats continue to affect millions of rural-based Filipinos, making them a fertile ground of insurgencies and terrorism.

Net of discussion

The agricultural sector is the poorest sector of Filipino society. Almost 65% of Filipinos still get their livelihood from the fatness of the land. Without a safety net, government will surely have their hands full containing pockets of resistance and dissent from the countrysides. It is not surprising that millions of Filipinos are dying due to hunger in the rural areas precisely because of the disparity in their incomes with that of the commodity prices. A stronger economy in the case of the Philippines does not mean a better life for the Filipino. In fact, we are the only country who continues to grow economically but slowly stagnate because the people who's supposed to benefit from these economic gains continue to be in the end of the bargain. Such inequality will eventually "catch up" with us in a form of a revolution.