Economist agrees traffic due to booming economy, but...

MANILA, Philippines - The Aquino administration has found itself an ally in an economist from a world-renowned business school who on Thursday agreed that the heavy traffic in Metro Manila is a sign the economy is indeed booming.

But there’s a catch: the next president would have to contend with the rise in income by building better roads, bridges and other infrastructure to absorb the improving purchasing power of the more than 100 million Filipinos.

“You can see that as you go out, there’s is traffic jam because people have more power to buy cars and you go to the malls and you see people shopping,” Pedro Videla, chair of the economics department of IESE Business School in Spain, said.

“These are the little details that you see that prove that growth is having an effect on poverty,” he said after delivering a lecture in Makati City.

However, Videla, who himself got stuck in traffic on Tuesday night amid heavy downpour, explained that the same phenomenon suggests that the current administration has failed to anticipate such rise in the Filipinos’ type of living.

“That’s why it is crucial that when you choose the next president, for me, it has to be someone which will focus on the problems in infrastructure,” he explained.

“This is something that should be achieved,” Videla added.

Metro Manila, home to more than a fifth of the country’s population, constantly suffers from what seemed to be the new normal of heavy traffic, which last Tuesday was worsened by torrential rains that flooded the entire capital.

The hours-long downpour caught the government off-guard despite initial success along Epifanio de los Santos Avenue (EDSA)—infamous for its traffic congestion even after rush hour—where the police’s Highway Patrol Group has taken over to manage traffic from Monday.

If there’s any consolation, Videla said the daily traffic jam is a sign that most Filipinos are able to move out of poverty, thanks to years of fast economic growth under the current government.

While poverty has been trending down since the restoration of democracy in 1986, the trend is dipping “faster” under Aquino, whose anti-corruption platform has propelled the Philippine economy to more than 6-percent growth until 2014.

“The elasticity of growth to poverty is getting higher, meaning, the effect of growth to poverty is becoming more evident,” Videla explained. He said while different economic metrics might show different results, it is important to “look at what’s happening on the ground.”

“We feel it every time. We see the process (of reducing poverty) happening,” he pointed out.

The Philippines, Videla said, has benefited from its consumers whose financial capacities did not only improve through years of growth, but also through sustained inflows of remittances and business process outsourcing receipts.

The challenge now however is to “move beyond” consumption toward more investments, something the next government should focus on. Videla said while the current public-private partnership (PPP) initiative is laudable, it has its limitations.

The PPP is the Aquino administration’s centerpiece economic program that bids out infrastructure projects to private investors who, in turn, undertake their construction, operation and maintenance resulting in state savings. So far, 10 projects amounting to roughly $15 billion have been awarded.

“The private sector can only participate on these projects. It is very important that the government takes the lead,” Videla said.

The country has been Asia’s darling since Aquino took over in 2010, posting economic growth rates not seen in decades and record-high foreign investments hitting amid a slowdown in emerging markets and financial market volatility.

On his lecture, Videla said the Philippines is “mostly untouched” by the ongoing slowdown in China and the upcoming rate hike of the US Federal Reserve which is feared will siphon off capital from Asia.

On top of that, the current slump in oil prices is benefiting the country. Oil prices have gone down by more than 20 percent in the world market since June.

“The Philippines is mostly untouched by the shocks related to the world,” Videla said.