On PH's growth 2019

Before, the main driver of high growth like 2016's 6.9% was household consumption (C, about 65% of GDP) growing high. Now the main driver of low growth like 2019 is high government consumption (G, about 12% of GDP) with double-digit growth in 2018-2019 but at the expense of C and investments (I) suffering low growth.

Indeed, capital formation or private I experienced contraction in 2019 while net exports (exports less imports) was crawling.

Philippines GDP growth by expenditures, %

Expenditure type	2016	2017	2018	2019
Household Consumption	7.1	5.9	5.6	5.8
Government consumption	9.0	7.0	12.8	10.5
Capital Formation (Investments)	24.5	9.4	13.9	-0.6
Exports	11.6	19.5	11.5	3.2
Less Imports	20.2	18.1	14.5	2.1
GDP	6.9	6.7	6.2	5.9

Source: Philippine Statistics Authority (PSA)

The last time there was contraction in private investments were in 2009 (-8.7%) and 2012 (-4.3%). So the 2019 growth is ironic: government spending was sizzling at +10.5% while private investment was contracting at -0.6%.

The Duterte administration’s high spending, high taxes, policy reversals in certain sectors is good for government but bad for private investment. This is clear in 2019.

This 2020 and beyond, we hope that government will step back from these economically regressive policies. Instead of more taxes, government should initiate tax cuts in many sectors. Like reducing the corporate income tax (CIT) to 20% in first year of implementation of the proposed CITIRA bill. And cutting VAT rate back to 10%, even 8% with little or zero exemption except raw agriculture and fishery products. Also abolish the travel tax, among others.