Strong spending by government boosts Philiippine economy

This is from the Financial Times. No doubt there will be somewhat of a slowdown this year especially with a higher peso. Exports will be more expensive and demand may be lower from countries such as the U.S. The higher dollar will also mean that when expatriates send remittances back home in U.S. dollars they will buy fewer pesos. Even so, growth looks not to be all that bad, certainly no depression. Perhaps Arroyo's continuing rule is depressing enough ;).

Strong spending by Manila boosts economy
By Roel Landingin in Manila
Published: February 1 2008 02:00 Last updated: February 1 2008 02:00
The Philippine economy grew at an annual rate of 7.3 per cent last year, recording its biggest expansion in 31 years thanks to stronger consumer and government spending.
But yesterday's gross domestic product data came as the country's central bank cut its main lending rate by 25 basis points to pre-empt the expected drag on the economy of a slowdown in the US.
Almost a fifth of Philippine exports go to the US, its biggest trading partner.
Last year's better than expected growth came as higher revenues from taxes allowed the Manila government to increase outlays for public works by almost a third.
Private-sector investments in construction and durable equipment also grew while personal consumption rose, buoyed by remittances from overseas Filipinos and falling unemployment.
Government planners, however, expect growth to ease this year to 6.3-7 per cent.
Margarito Teves, the finance secretary, said yesterday that the Philippines depended less on the US economy than it used to.
"The latest indications are that there is increasing decoupling between the Philippine and US," Mr Teves told the Financial Times.
But he said the government was nonetheless preparing a stimulus package to lessen the impact of a US downturn. This will include a ramping up in infrastructure spending and cash grants to extremely poor households.
The government is also planning to spend 60 per cent of its infrastructure budget for this year in the first four months.
Jose Salceda, an adviser to President Gloria Macapagal-Arroyo, earlier this week proposed a stimulus plan that would also see the government slash income taxes. But Mr Teves said that plan had been turned down because "we didn't want to weaken our revenue effort as that will hurt our ability to spend later"
He also said the government was still sticking to its plan to achieve a balanced budget this year, ending a decade of fiscal shortfalls.
Government economists have said that a 1 per cent decline in US economic growth will translate into a 1.9 percentage point cut in Philippine growth.
However, more recent estimates from the World Bank and the International Monetary Fund showed that the adverse impact was much less, at only 0.2-0.9 per cent, Mr Teves said.
Copyright The Financial Times Limited 2008

Philippines: Gloria's claim of economic growth a pack of lies: NDF

The National Democratic Front is a front for the Communist Party of the Philippines. Jose_Maria_Sison is the leader of the party and resides in exile in the Netherlands. He has been in and out of jail on murder charges! However, this does not mean some of his criticisms are not sound. As one can see Gloria's representatives are long on rhetoric and short on substance although the Daily Tribune from which this is taken is not exactly a cheerleader for Arroyo!

Gloria’s claim of economic growth a pack of lies — NDF



12/31/2007

The National Democratic Front (NDF) yesterday accused President Arroyo of lying to the Filipino people about her alleged role in stirring the country into joining the ranks of developed economies.

According to Prof. Jose Maria Sison, NDF chief political consultant, Mrs. Arroyo has been working against national industrialization and genuine land reform.

“Gloria Arroyo, the fake president, keeps on babbling that her regime is propelling the Philippines to become a ‘First World country.’ She is obviously lying,” Sison said in message sent to the Tribune.

He added the Arroyo govern-ment has misrepresented as “development” the “consump-tion-led and debt-ridden” growth of the Philippine economy.

“It has used domestic and foreign borrowing to finance and abet the growing trade and budgetary deficits and to conjure the false illusion of economic growth. It wastes public funds through overpriced

and graft-ridden infrastructure projects and the purely parasitic expenditures of the military and bureaucracy,” Sison pointed out.

He said the Philippine economy has remained dependent on the production of agricultural and mineral raw materials, which are being exported at greater volume but at lower prices, adding agriculture has become lopsided as production of staple food is neglected and food products are dumped on the Philippines from abroad under the policy of trade liberalization.

Sison pointed out the lack of employment opportunities in the country has forced more than 10 percent of the population to work abroad at great social cost to the country.

He stressed the claim of the Arroyo government that the peso has been gaining strength against the US dollar was a result of the “undervaluing of the foreign exchange earnings of overseas Filipino workers by increasing foreign debt through program and project loans and the sale of bonds in the commercial market, and by attracting portfolio investments, structured dollar loans and the Japanese yen in the carry trade.”

Sison in painting a bleak picture of the Philippine economy in 2008, said the underdevelopment and chronic crisis of the Philippine economy will make it extremely vulnerable to the current financial crisis and recessionary trend being generated globally by the United States.

“The Filipino people will undergo unprecedented economic and social suffering in terms of rising unemployment, decreasing real income, soaring prices of basic goods and deteriorating social services,” He said.

Sison added the US and the global demand for both Philippine raw-material exports and semi-manufactured reexports will contract because of the continuing industrial decline, reduced employment and recessionary trend in all developed countries.

“US economic growth is expected to go down to less than two percent from the usual level of around three percent. The 30 OECD countries are expected to have an average growth rate of less than 3 percent from the usual level of more than 5 percent,” he said.

Sison also predicted that in 2008, the underdeveloped Philippine economy will be facing serious problems in relation to the export of raw materials and the reexport of low value-added semi-manufactures in the shrinking global market as well as in relation to the securing of new loans and selling of bonds to service the accumulated debt and finance of the importation of oil and other critically=needed goods.

Meanwhile, after getting into a series of controversies this year, Malacanang yesterday expressed hope that positive things will pour on 2008.

Executive Secretary Eduardo Ermita said this New Year’s wish is not only for the welfare of the Arroyo administration but for the whole Filipino nation as well.

He also expressed belief that the year 2008 will be luckier, saying the number 8 represents never-ending or perpetual progress.

“Remember, eight connotes perpetual motion. Never ending, perpetual progress. Let’s think positive, may we all be good and better come the year 2008,” Ermita said.

For his part, Chief Presidential Legal Adviser Sergio Apostol predicted that Mrs. Arroyo will continue to be immune to any impeachment complaint in the coming year, saying all the negative issues hurled against her have already been resolved or have died natural deaths.

Over the weekend, Apostol said the “worst is over” for Mrs. Arroyo as the government has neutralized the threat posed by the camp of opposition Sen. Antonio Trillanes IV who staged the Nov. 29 Manila Peninsula siege.

“We are very very confident that the President will never be impeached on 2008. We have the numbers in Congress and she is not doing anything wrong,” Apostol said.

Press Secretary Ignacio Bunye, for his part, said his New Year’s wish is for everyone to contribute to nation-building and understand that progress will not be easily achieved.

“I wish that every Filipino does his or her share in nation-building. Change will not come in one fell swoop. It will be built on a daily basis with the sacrifices and unselfish acts of each one of us. Even simple act of self-discipline go a long way,” Bunye said. Gerry Baldo and Sherwin C. Olaes