Updated ‘pitik’ test on ‘Aquinomics’
I thought of waiting till next week to write this piece on the general state of the Philippine economy. After all, the National Statistical Coordination Board will only announce the official economic growth data for the second quarter tomorrow. Even so, the National Economic and Development Authority has already come out with a “fearless forecast” growth of around 5 percent for the second quarter (that is, from April to June) of this year. If correct, then the growth in the first quarter would have been sustained or even slightly improved upon.
But even without the official growth figure, one can already make an updated assessment of the state of the economy based on other data that have already been recently reported. Growth in output, after all, is just one yardstick among many. And for many, it is a highly inadequate measure, especially if one is interested in the state of well-being of the people making up the economy. I have already written much on why more aggregate output (and more aggregate income, which is the other side of the same coin) does not necessarily imply more general happiness. My regular readers would know that three vital yardsticks make up my reliable “pitik” test for the economy: presyo (prices), trabaho (jobs), and kita (income)—hence the PTK mnemonic. And surveys tend to show that ordinary people consider these three indicators as most important, in that order.
Let’s start with prices, then. Prices generally go up through time; in fact, one should worry when they generally go down as this reflects a weakening economy. This had been the case in Japan for well over a decade. The relevant question is, how fast are prices moving up? The latest reported annual inflation rate is 4.3 percent, slightly higher than the 3.9 percent last year, but actually slower than in some of our more dynamic neighbors of late. The good news is that food price increases have been slower than overall, suggesting that inflation is not hitting the poor (for whom food is the dominant part of their budget) as hard as the rest. Economists also make a distinction between “headline” inflation and “core” inflation, where the latter excludes prices of price-volatile items like energy and food, thereby being a better measure of fundamental price stability. There is good news here as well: core inflation is actually much lower (3.6 percent), and actually lower than last year (3.9 percent). After all, price rises in the past months have come mainly from oil price increases, which are global in nature and largely beyond our control.
What about jobs? The latest official jobs data show that over 1.4 million net new jobs were generated in the year between April 2010 and April 2011, well exceeding the average of one million new workers who join the labor force yearly. As a result, the unemployment rate fell to 7.2 percent from last year’s 8.0 percent, which is a substantial drop. Even better news is that agriculture saw a net gain of 645,000 jobs, indicating improved welfare (and likely reduced poverty) in the rural areas, where the jobs are needed most given our high levels of rural poverty. Services and industry generated 632,000 and 132,000 new jobs respectively, suggesting that improvements have been felt across the board. Still, the challenge of job quality persists. One of every five employed workers remains underemployed, and the rate has risen to 19.4 percent from 17.8 last year. The economy must generate more full time and better-paying jobs for the news on the jobs front to be completely positive.
As for the output/income yardstick, we will know the official data tomorrow. But the above jobs data are already suggestive of what to expect. One can be reasonably confident that more jobs are indicative of more production. Note that it is less likely so the other way around; we have seen too much of that (that is, jobless or even job-killing growth) in recent years. The first semester agriculture data are already in; the Bureau of Agricultural Statistics reports a hefty 11 percent growth in crops production in the first half, and 5.5 percent overall agriculture sector growth (including poultry, livestock and fisheries). Business is upbeat, and the Bangko Sentral’s quarterly business confidence survey affirms so. Thus, there is good reason to expect that the GDP news tomorrow will be upbeat, and will certainly not disappoint.
On balance, then, we can say it’s so far, so good for ‘Aquinomics’— and that is probably an understatement.
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For over four decades, the Philippine Science High School (PSHS) has produced thousands of graduates who have permeated and excelled in the most strategic areas of Philippine society, and indeed, the global community. When it was established in 1964, the goal of its founders was to develop a critical mass of science-inclined youth to become the foremost professionals and leaders in science and technology in the country. Truly the cream of the crop, only elementary school graduates within the top 10 percent of their class, or those certified by their school principals to have special aptitude in science and mathematics, are allowed to take the PSHS National Competitive Examination. Its outstanding alumni now make up a veritable hall of fame; the rest are movers and shakers in their own right. Alumni will converge at the PSHS Main Campus Gym for their annual homecoming on Saturday, Sept. 3 starting at 5 p.m. I urge all fellow ’Pisay’ alumni to come; admission is free. Sign up in advance at www.pshsnaa.org or call (02)-468-6717.
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