There was rejoicing when the National Economic and Development Authority (Neda) triumphantly announced that the gross domestic product (GDP) grew 7.8 percent in the first quarter, up from 6.5 percent in the same period last year. The Q1 growth is the highest under the Aquino administration.
The robust growth was boosted by the strong performance of manufacturing and construction, backed up by financial intermediation and trade, according to the National Statistical Coordination Board (NSCB).
The Makati business community joined the government in celebrating the “extraordinary” breakthrough of the GDP expansion, which was mainly credited to the “good governance” of the administration.
The country has not seen a more jubilant celebration of an economic event since the safe arrival of the Manila galleon from Acapulco, laden with goods from and treasures of Spanish colonies in the Americas.
Cannons boomed, the bells of Manila Cathedral tolled and the archbishop of Manila celebrated the Te Deum as the galleon moored in the harbor. The governor-general, the Spanish bureaucracy and the merchants, enjoying the good graces of colonial authorities, were rapturous over the safe voyage of the galleon, described as the “stately castles” of the high seas.
The trade was the lifeline of the colonial economy and the monopoly of the colonial government.
In modern economic activity, the success of a national economy, whether developed or emerging, is measured by its growth rate, no longer in terms of safe ocean voyages, so we are not surprised why the government is going out of its way to brag about its economic management performance over the past three years.
Second-fastest growth
The breakthrough came in the midst of the May elections in which the administration won the majorities in the House of Representatives and the Senate, giving it a mandate to initiate policies to accelerate economic growth at a rate higher than its sometimes paltry performance in the past three years. It is under pressure to show it can produce outstanding results in economic management with this mandate for the remainder of its term.
Jose Ramon Albert, secretary general of the NSCB, reported on Thursday that the Philippines became the fastest-growing economy among Asian countries during the first quarter, boosting the efforts to attract more foreign investments.
Socioeconomic Planning Secretary Arsenio Balisacan said business confidence and consumer optimism fueled this growth. He said this growth was helped by an increase in government spending, outpacing China (7.7 percent), Indonesia (6 percent), Thailand (5.3 percent) and Vietnam (4.9 percent). The first quarter growth was the second-fastest for the Philippines since the 8.9-percent growth in the second quarter of 2010.
The 7.8-percent GDP beat market forecasts that fixed it at 6 percent.
Is growth sustainable?
According to figures of the Inquirer columnist Solita Collas-Monsod of the University of the Philippines’ School of Economics, the economic growth record of the Aquino administration in the first half of his government is uneven.
In 2010, the GDP rates for the first, second and third quarters were 8.4 percent, 8.9 percent and 7.3 percent, respectively. But in the last quarter of 2010, the growth rate slowed down to 6.1 and in 2011, the growth rates were mediocre, averaging less than 4 percent.
Questions were immediately raised: What if the growth rate for the first quarter topped China’s or Indonesia’s and those of other Southeast Asian economies? How did the growth translate to the benefit of the Filipino people?
The questions also included: Who are the beneficiaries of the growth? Was there a trickle down to the poor or the lower classes? Was the growth “inclusive,” meaning no sector was left behind in the distribution of benefits? Is the growth sustainable?
Poor have to wait
Malacañang officials said that trickle down does not happen overnight, which means the lower classes have to wait much longer before they can enjoy the benefits or find jobs that are not being created fast enough to the expanding work force.
The high GDP growth rate could prove meaningless to the jobless poor.
The Neda report said the development on the production side was broad-based, with all sectors contributing positively to growth during the first quarter. Neda said services expanded 7 percent during the period; industry, 10.9 percent; and agriculture, 3.3 percent.
Balisacan said “the impressive performance of these sectors proves that the country is already reaping the benefits of strengthening priority sectors that are potential growth drivers and employment generators.”
Appalling insensitivity
Increased domestic demand pushed manufacturing growth to 9.7 percent in the first quarter, Balisacan said. Increased consumer and government spending contributed to the first quarter growth. The government is sticking to its growth target of 6 to 7 percent this year, despite the persistence of weakening exports, which declined from January to March.
Balisacan said the government hoped to create more jobs to address unemployment, which he conceded was one of the most pressing issues facing the administration.
“The challenge is to create more sustainable jobs to reduce poverty,” Balisacan said.
Asian Development Bank officials have pointed out that employment is crucial in sustaining economic growth. Another media report said that HSBC economist Trinh Nguyen had described the growth as “impressive” but cautioned that government spending had been vital to growth and this might not be sustainable amid continued low government revenues.
The NSCB report was all about the glowing Q1 growth. There was absolutely no word in it relating to its impact on job creation or alleviating poverty.
Its total insensitivity to relating growth to social issues, such as poverty, is appalling.