San Pedro: Bullish Economic Growth

THE National Statistical Coordination Board (NSCB) has it that economic growth was robust in the second quarter and will sustain its momentum. In the first quarter, economic growth reached 6.4 percent anchored on benign inflation and good performance of the services and manufacturing sectors.

The NSCB noted that the leading economic indicator (LEI) increased in the second quarter, posting 0.125 from a revised 0.064 in the first quarter.

“After a decline in the third quarter of 2011, the LEI has accelerated three quarters in a row, strongly indicating a continuation of the positive outlook for the country’s economy,” according to the NSCB report. The positive outlook was anchored on the economic reforms instituted by the Aquino administration.

Seven out of the 11 economic indicators contributed positively and these include: visitor arrivals, number of new businesses, stock-price index, money supply, wholesale price index, hotel occupancy rate and terms of trade index. The Philippines posted some 3.9 million visitor arrivals in 2011 and that number is expected to increase this year as the government entices more Filipinos and foreigners to visit the country under the theme “It’s More Fun in the Philippines.” Recently, Tourism Secretary Ramon Jimenez has unveiled a P266-billion National Tourism Development Plan aimed at increasing foreign tourist arrivals at 10 million and local tourist to 35.5 million by 2016.

In 2011, Malaysia recorded 25 million tourist arrivals; seconded by Thailand with 19 million. The “Lion State” of Singapore had 13.2 million, followed by Indonesia with 7.6 million and Vietnam after adopting “Doi Moi” or openness in its now largely capitalist-based economy had 6 million tourists.

The Philippines is at the bottom of the list with 3.9 million tourists, but still tourism is one of the leading economic indicators because it supports another indicator – hotel occupancy rate.

The NSCB, however, said that combined share of positive contributors for the second quarter decreased to 78.9 percent from 82.1 percent in the first quarter.

“The negative contributors were consumer-price index, foreign-exchange rate, total merchandise imports and electric-energy consumption. The negative contributors accounted for 21.1 percent of total contribution,” according to NSCB.

The Leading Economic Indicator System (LEIS) was developed jointly by NSCB and the National Economic and Development Authority (NEDA) to serve as a basis for the short-term forecasting of the macroeconomic activity in the country. NSCB has since been compiling data for the 11 identified leading economic indicators and generating the Composite Leading Economic Indicator on a quarterly basis.

The LEIS closely monitors the economic indicators if they move upward or downward before the actual expansion or contraction of overall economic activity.

The economic monitoring system is largely based on an empirical observation that the cycles of economic data series are related to the cycles of total business activity. For example, these economic generators expand when business is growing and contract when business is dwindling. The LEIS provides information on the country’s economic performance.