by ALEX P. VIDAL
“Economy does not lie in sparing money, but in spending it wisely.”
Those who eke out a living on a hand to mouth basis everyday and those who continue to wallow in abject poverty, the unemployed and underemployed, did not absorb the much-ballyhooed “economic growth” bragged about by the country’s economic wisecracks recently.
For ordinary laborers, wage earners in breakneck jobs and the hoi polloi, day to day struggle to make both ends meet is still a race for survival-- survival of the fittest and the best!
The big break on our economy’s Cinderella Story was ignited by the raising of the country’s credit rating by the Standard & Poor’s (S&P) from BB+ to BBB-, which means that the financial services company now considers the Philippines and its debt to be “investment” grade. Economic analysts described the “stable” outlook concurrently assigned to the rating as to suggest that our economic managers are “continuing to do a good job in handling the country’s economy.”
The S&P upgrade also reportedly follows a similar move by fellow “big 3” ratings agency Fitch at the end of March. Fitch also upgraded the country from a non-investment (sometimes called “speculative”) grade to the all-important “investment” grade of BBB-.
In the second quarter this year, the National Statistical Coordination Board (NSCB) Secretary General Jose Ramon Albert reported that the Philippine economy posted a 7.8 percent GDP growth in the first quarter of 2013 from 6.5 percent the previous year with the upbeat business and consumer sentiment, as well as sustained government capital expenditure. Albert said the Q1 growth is the highest so far under the Aquino administration and also the third consecutive quarter of more than 7.0 percent GDP growth.
The robust growth was reportedly boosted by the strong performance of Manufacturing and Construction, backed up by Financial Intermediation and Trade.
On the demand side, Albert said increased consumer and government spending shored up by increased investments in Construction and Durable Equipment contributed to the highest quarterly GDP growth since the second quarter of 2010.
The reported “continued inflow of remittances” from our overseas workers accelerated the Net Primary Income from the Rest of the World to grow by 3.2 percent boosting the Gross National Income (GNI) growth to 7.1 percent from 5.7 percent in 2012.
“On a seasonally adjusted basis, GDP is gaining momentum growing by 2.2 percent in the first quarter of 2013; GNI grew by 1.9 percent. All major sectors posted positive growth in seasonally adjusted terms for the first quarter of 2013. In particular, the entire Agriculture sector posted a growth of 0.8 percent in the first quarter of 2013 from 0.4 percent the previous quarter,” Albert expalined. “However, Industry slowed down to 2.5 percent growth in the first quarter of 2013 from 4.0 percent in the previous quarter. But the Services sector accelerated to 2.2 percent in the first quarter of 2013 from 1.1 percent in the previous quarter as all its subsectors recorded positive growth. Positive growth in seasonally adjusted terms across major sectors has been resulting since the fourth quarter of 2010.”
With the country’s projected population reaching 96.8 million in the first quarter of 2013, per capita GDP reportedly grew by 6.1 percent while per capita GNI grew by 5.3 percent and per capita Household Final Consumption Expenditure (HFCE) grew by 3.4 percent.
Meanwhile, The Diplomat analyst James Parker believed that “the second upgrade from S&P is therefore of particular importance.” With two out of the three major credit ratings agencies (the other being Moody’s) having assigned an “investment” grade rating to the Philippines, he explained, Manila’s bonds can now be included in key global investment funds which limit their exposure to investment grade government securities.
Moody’s currently rates the Philippines’ debt at one notch below “investment” grade, so it is clear that this is close to becoming a consensus decision. The International Monetary Fund (IMF) has raised its economic outlook for the country too, even as it cut its 2013 and 2014 growth forecasts for China, Taiwan, India, South Korea and Singapore.
“Indeed, economic growth in the Philippines improved quite significantly since Benigno Aquino III was elected president in 2010. The economy expanded 6.6 percent last year, partly due to robust domestic demand and a rising stock market. The government deficit is being brought under control and, unlike many other emerging markets such as China, the Philippines’ boasts favorable demographic trends with a large working age population through 2050,” wrote Parker.
Whatever gains the country is enjoying today, it is best that stakeholders also feel and understand the significance of these changes in the financial chart. It should have multiplying effects and the poor as well as the middle class must largely benefit from these gains. /MP