The election economy

DIE HARD III

Herman Tiu Laurel

6/3/2013

Daily Tribune

The NSCB (National Statistical Coordination Board) report on the "fantastic" 2013, 1st quarter. Gross domestic product (GDP) growth of 7.8 percent attributes the growth to "manufacturing, construction and consumer spending." But what is the fountainhead contributing to all these three sectors? Was there a great surge in production of some goods, commodities exported or a great surge in employment generation that formerly jobless Filipinos started earning income to splurge in three months? Some enthused about "the good news," columnist BSA (not Aquino) who wrote, "Best of all, we just beat China's 7.7 percent growth and Indonesia's 6 percent and Thailand's 5.3 percent growth. This was quite unexpected because the National Economic Development Authority (Neda) expected only a six or seven percent growth." How shallow, I thought.

Like the "fantastic" 7.9 percent growth rate in 2010 Gloria Arroyo apologists, like former Greece ambassador, wrote about and cited in pooh-poohing BSA III's earlier 2012 boast of 6.6 percent GDP: "… on track to restoring the growth of 7.9 percent she attained…" Both Arroyo and Aquino share one thing — pambobola, both think all Filipinos are fools like that columnist comparing the growth rates of China, Thailand and Indonesia to this latest Philippine growth data. Gloria and PeNoy's "fantastic" growth rates are both based on "election campaign spending" which does not produce anything except inflation and neither does it produce jobs needed by the hordes of Filipino unemployed. Around 45,000 candidates for senator to local councilman spent untold billions that boosted consumption by 33 percent.

This year's public works election period ban started on May 29, hence the first quarter government public works splurge figured heavily in the boost. Much of these naturally went into the income stream of temporary construction workers which also boosted the consumer spending. Thus, the 33 percent rise in consumer spending claimed by the NSCB is not surprising, but hardly any of these are "real" growth that can be considered productive, sustainable and jobs generating. Now, how can one compare these with the rise in genuine production of goods for China (the world's factory), Thailand (which still produces MPV such as vans and pick-ups, while RP doesn't even produce its own paper clip) and Indonesia exports oil. One real statistics that should worry RP is this: Just two days before the GDP hype the business headlines blared — 7.4 percent drop in imports.

For the Philippines' import dependent export industry sector the drop in imports is an indicator of slowing exports such as microchips and other electronic goods. Then, a day after the GDP hype the PSEi (Philippine Stock Exchange index) dropped by 4 percent or the second largest one day drop in PSEi's history. What do the two BSAs say about these? If I am very hard on these two BSAs and their deliberate or simply ignorantly innocent misleading of the reading the GDP figures it is because their shallow and distorting interpretation of the performance causes the Filipino public's mind to be befuddled with wrong notions about what constitutes real economic growth. Even more demeaning is their shallow braggadocio about beating the other countries, a bragging right that has never been earned.

My GNN TV show last Saturday night serendipitously featured the topic "BSP losses, Jobless GDP" and my guests Dr. Rene Ofreneo, business forensics Hiro Vaswani and Solidarity Economic's advocate Ben Quinones, had a field day discussing the GDP claims and the real situation of the economy. What stood out in the discussion was Ofreneo's reference to the "enabling environment" of industrialization that simply isn't present, citing the exorbitant power costs in the country. There was unanimity in this. All recalled the Golden Age of incipient R.P. industrialization during Central Bank Mike Cuaderno's time of "currency and capital controls" and the monetary finance of Tetangco today generating losses.

Final conclusion: no real GDP growth without industrialization, but Neda is still keeping RP OFW, BPO and failing exports dependency. Some "Filipino" businessmen of the Philippine Chamber of Commerce and Industry are pushing for economic legislation "… to relax some restrictions in the entry of foreign capital and in the practice of certain professions ….to attract more investments…. also ….to raise the cap on foreign ownership of industries from 40 percent." RP economic managers have depended on "foreign investments" for decades and all they can show for it is still the "sick man of Asia." If foreign investors, especially Western, were so good then their own countries wouldn't be in such crises. What is absent in our national economic discourse is "re-nationalization" of basic utilities and industries to enable the revival of manufacturing for "import substitution" and jobs generation. Election economics we need like a hole in the head.

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