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7.3% growth an illusion, not sustainable — Diokno (Daily Tribune)

In Newspaper clipping on June 22, 2010 at 4:14 am

“Olivar reminded IBON Foundation to be more professional rather than ideological in drawing conclusions from its researches and analyses on these matters considering the fact that its views contribute to public opinion.”

7.3% growth an illusion, not sustainable — Diokno

By Aytch S. de la Cruz

The Daily Tribune
05/30/2010

The 7.3 percent growth in the first quarter that Malacañang has trumpeted as a “fitting legacy” on the final days of President Arroyo and attributed to her “effective” policies is a mirage and will not be sustainable, being the result of the low base effect from last year, election spending and the rush to complete Arroyo’s so-called state of the nation address (Sona) projects, former Budget Secretary Benjamin Diokno said.

“Adjusting for low base effects and election spending and the last minute rush to complete large scale projects, the economy probably grew by 3.6 percent rather than 7.3 percent,” Diokno said.

Diokno sees the supposed strong growth as a combination of the significant impact of election spending on some economic activities such as broadcasting media, which went up 31.4 percent during the period from 1.3 percent a year ago, and rental of office spaces that grew 10.9 percent from negative 4.6 percent.

He added the growth in manufacturing is largely base effects and also election induced.

Growth in petroleum output is explained by the sharp decline in refining last year, he said. This soared to 65.9 percent from a negative 29 percent a year ago.

Growth in electrical and office equipment can also be explained by higher demand due to the elections, he said.

In contrast, growth that should matter to most Filipinos such as in agricultural output was not realized during the period.

“The 7.3 percent growth in this sense is not sustainable. It is also unevenly distributed,” he said.

The strong growth has a negative impact on the poor, which are mostly in the agricultural and rural sectors. “Palay production shrunk by 11.4 percent, corn output was down 16.8 percent, and sugar production fell by 4.6 percent,” he said.

“What happened to those who rely on agriculture including their families? I expect unemployment, poverty and hunger will increase despite the strong growth. Isn’t that ironic?,” he added.

Think tank Ibon Foundation also came up with a similar analysis on the ephemeral growth in the first quarter.

Malacañang, nevertheless, remained exuberant saying the figure was undisputable and remains the strongest for the past 30 years for the quarter despite the criticisms.

Deputy presidential spokesman Gary Olivar said the figure was drawn by professional economists and statisticians at the National Statistics Office (NSO) and the National Statistics Coordination Board (NSCB) whose credibility has been certified over the years.

Olivar said the manufacturing sector’s 20 percent growth year on year served as major contributing factor to the 7.3 percent growth of the country’s gross domestic product (GDP) during the first quarter.

Apart from this, Olivar related that the country also posted a 9.5 percent escalation in the gross national product (GNP) which included the remittances received from Filipinos working overseas.

“These are statistics based on facts. If you have any complaints or illegitimate thesis about the technique, the technology, the statistical assumptions and techniques used go to NSO, go to NSCB but please do not put the blame on the Palace,” Olivar said.

He added the recovery of the world market from the global recession also served as one of the most important reasons why the country’s GDP surged on a record-high in the last 30 years.

“As the rest of the world recovers (from the global recession), our imports strengthened and that has been happening for the last several quarters so do our exports and the manufacturing industry,” he said.

Olivar said critics should keep in mind various reasons that hinder the country’s employment rate to adapt to this positive development given the difference between capital-intensive industries versus labor-intensive industries.

“It is possible that the improvement we see in our economy even in the manufacturing industry would not entirely reflect or provide equal improvement in the employment numbers because (of certain issues such as) the huge volume of people entering the labor force, or because there are just too many people graduating, or as usual the population growth,” he explained.

Olivar reminded IBON Foundation to be more professional rather than ideological in drawing conclusions from its researches and analyses on these matters considering the fact that its views contribute to public opinion.

He also appealed to Diokno who he said has been persistent in taking apart the so-called economic gains of the Arroyo administration.

“You know, Secretary Diokno, you have to take his hat off for his persistence and diligence for his oppositionist views to the point that once in a while—pardon me Ben, my friend—but you have to avoid getting your objectivity affected,” Olivar said.

Olivar also implored critics to credit President Arroyo’s efforts to achieve this positive development during the twilight of her term.

“You cannot always put the blame on President Arroyo when something bad happens and discredit her whenever there’s a good development—that is not right. You cannot have it one way or the other,” Olivar said.

“It’s about time we change our mindset. We’re about to have a new president this July and President Arroyo will move on with her life at Congress. Let’s just wait how the history will render its judgment,” he added.

For his part, deputy presidential spokesman Ricardo Saludo said he is gratified by indicators and revised forecasts from independent analysts who claimed that the first quarter economic surge will be sustained in the coming months.

“Also welcome is the Bangko Sentral expectation that GDP expansion will not fuel inflation, avoiding hikes in prices and interest rates. Rather than baseless finger-pointing, incoming leaders should join hands with other major groups to sustain policies crucial to economic stability and growth: fiscal reforms, education for jobs, and infrastructure for national competitiveness,” he expressed in an e-mailed statement.

“Critics of taxes should recall how the fall in government deficit and debt as percent of GDP boosted the peso and business confidence. With investors spooked by Greece, let’s not give anyone doubts about the Philippines’ fiscal resolve,” Saludo added.

“If I remember correctly, when President Arroyo took over as president, you know, she had a lot of problems to deal with but instead of wasting her time in finding fault and running after those who should be held accountable—pertaining to the things that have something to do with the cases leveled at former President Estrada—she decided to just leave it to the court system,” Olivar related.

“What she did was she focused all of her attention right away, (from) day one, at work. She rolled up her sleeves and went to work and this is, in fact, one of the big reasons she had many achievements. We would hope that the incoming administration would do the same given the many problems we’re dealing with,” he added.

Olivar, nonetheless, stressed that they are giving the next administration a freehand to establish its priorities during its first 100 days in office and would respect its prerogatives in choosing the people that would comprise its Cabinet.

“All we can do on the part of the Arroyo administration is to wish the incoming administration the best in this difficult task and to offer them whatever support and cooperation and advice they may ask from us before they come into office in July 1,” he said.

“The agenda that they set, the priorities that they identify, the schedule of activities in their first 100 days, that is their responsibility—that is theirs to create and that is theirs to sell to our people and that is theirs to implement,” Olivar added.

Aytch S. de la Cruz

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