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Friday, August 31, 2007
Gov't reports economic growth in 2nd quarter
MANILA -- The Philippine economy grew 7.5 percent in the second quarter compared to a year ago, the fastest rate in two decades, President Gloria Macapagal Arroyo said Thursday.
"Our economic plan is working. Today we have the latest glowing indicators to show it," a beaming Arroyo told a nationally televised news conference on the better-than-expected data.
Arroyo Watch: Sun.Star blog on President Arroyo
She said gross national product, which includes income from abroad, rose 8.3 percent for the second quarter from a year ago.
First-quarter economic growth, excluding the overseas income, was revised upward to 7.1 percent from the original 6.9 percent, pushing first-half GDP to an average 7.3 percent from a year ago, she added.
"We're confident of meeting our full year growth forecast of 6.1 percent to 6.7 percent," Arroyo said. The Philippines has defied expectations by increasing revenues, cracking down on tax cheats, strengthening the peso, boosting the stock market, balancing the budget, prepaying its debts and creating more jobs, she said.
The services sector remained the economy's linchpin, registering strong growth of 8.4 percent, while industry posted 8 percent growth, said Estrella Domingo, assistant secretary general of the National Statistical Coordination Board.
Arroyo said newfound money for investment has allowed the economy to increase its growth pace.
"While our economy has reached a new level of maturity and stability with one of the strongest macro-economic fundamentals in two decades, we should not rest, but push forward and sustain the momentum," she said.
Arroyo said revenue and deficit targets must be achieved to maintain investor and creditor confidence and keep the flow of low-interest capital strong.
Tax and customs agencies must hit their targets, she said, and business concerns over power costs and red tape must be addressed, while investments in small and medium industries, tourism and infrastructure must be intensified.
"The upturn is a telling sign for us that the full year official target of 6.1-6.7 percent GDP growth is quite attainable, notwithstanding some uncertainties. On the external front, the continued weakness of the US economy and volatile oil prices continue to pose downside risks. Nonetheless, the steady economic expansion in Europe and Japan, as well as the fairly strong performance of other Asian economies, are positive developments. On the domestic front, the effects of the prolonged dry-spell may drag the performance of agriculture in the second half," Economic and Planning Secretary Augusto Santos said.
The second quarter growth also reflects the continued stronger demand for labor, pushing the unemployment rate lower to 7.4 percent in the April labor force survey from 8.2 percent the year before, he added.
Santos said the government must push for policies to sustain macroeconomic stability, modernize agriculture and effectively transform it into agribusiness, strengthen small enterprises, expand export markets, protect our environment, and realign the national budget to spend more on social services, particularly education and health. The government must implement reforms to improve productivity and boost the investment climate.
This involves upgrading infrastructure, cutting loose from policies that distort market competition, sustaining fiscal reforms, and achieving political stability. “We need to speed up the pace of implementing key reforms to ensure increasing growth over the medium-term.”, he said.
But University of the Philippines Economics Professor Cayetano Paderanga in a television interview said the growth rate was "surprising in the sense that it exceeded most expectations about what the growth would be in the second quarter."
He said the data need closer scrutiny, citing the "rather high" agricultural growth being reported and the expansion in manufacturing that comes at a time when exports are down due to the strong peso.
University of the Philippines (UP) professor Benjamin Diokno, a former budget secretary, has described the growth figures as "incredible and questionable."
Meanwhile, Arroyo's temper showed its volatility again during the question and answer portion, when a journalist asked about the initial reaction of disbelief from certain sectors, how much election spending contributed to the growth and how long before the trickle down effect is felt.
When told that a number of persons doubted the growth rates, Arroyo asked: "Are you saying that our NSCB (National Statistical Coordination Board) people are liars?"
She said the growth can be seen in the ongoing infrastructure projects all over the country. "You can see it and that's driving the growth, the 36 percent increase," she added.
Arroyo said the public construction is not related to election spending because there was an election ban to start new projects. "Those are continuing projects. The only project that can start (in the election season) are foreign assisted projects," she said.
The President said growth has trickled down to the poor, citing the fact that one-fourth of the population already has health insurance, the price of medicine has gone down, more low-cost housing have been built, and unemployment has declined.
She also said the Social Weather Stations (SWS) survey showed that self-rated poverty (SRP) has gone down to 47 percent -- the lowest in history. The SWS survey has explained that SRP went down because Filipinos have lowered their living standards, bringing down the monthly poverty threshold from P12,000 to P9,000 in Metro Manila.
Asked how the growth would be sustained in the next three years, Arroyo said: "Ours is the only administration that has not experienced any negative growth in any quarter. And it has been a six-year administration. So it has been sustained. In fact, the regular boom and bust cycle is three years so we should have gone through two boom and bust cycles by now. But we never did."
Arroyo parried questions on the effect of political jitters, particularly the upcoming verdict on former President Joseph Estrada's graft case on the economic growth, by letting her economic managers answer them.
Trade Secretary Peter Favila said the performance of the second quarter shows that business has ignored politics. Arroyo then said, "Thank you to the business community."
Arroyo said government will intensify domestic growth and investments especially in micro, small and medium enterprises, exports and other business, tourism and infrastructure. She said the concerns of business over power costs and red tape would also be addressed.
She ordered Favila to slash more red tape and drag the power costs on exporters and manufacturers.
She also ordered the super region champions, the infrastructure agencies and state corporations and the infrastructure monitoring task force of the Presidential Management Staff (PMS) "to be merciless in ripping through undue obstacles in the way of long overdue priority infrastructure."
"Let us end the days when our public works were held back by huge deficits and reenacted budgets. To this end, we also urge Congress to speedily enact next year's budget for hopefully even faster growth in 2008," she said. (AP/JMR/Sunnex)
For more Philippine news, visit Sun.Star Cagayan de Oro. (August 31, 2007 issue)
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