All these hard sell about a strong economy – despite undeniable data that the Philippines is on the verge of a recession — would be further exposed and discredited as the global crunch and the country’s own perennial crisis deteriorate. For Arroyo, the political costs can be huge.
By ARNOLD PADILLA
MANILA — Last week, the National Statistical Coordination Board (NSCB) released the 2009 first quarter National Accounts. The report said gross domestic product (GDP) grew by 0.4 percent, a significant decline from the 3.9 percent growth during the same period last year.
An NSCB press release stated that the economy was “weighed down by the impact of the US financial meltdown and the global crisis, and historic declines in manufacturing and trade.”
The same statement also said that the economy is “teetering into recession” as seasonally adjusted GDP sank by 2.3 percent and the gross national product (GNP) by 1.2 percent. Such contractions mark the first time since 2001 when both GDP and GNP declined quarter on quarter. The contraction in seasonally adjusted GDP is also the first in two decades.
But the spin doctors of Malacañang quickly twisted the hard data presented by the NSCB. President Gloria Macapagal-Arroyo herself claimed in a recent speech in South Korea before overseas Filipino workers that the Philippines is holding its own amid the crisis and that we should be thankful because the GDP remains positive.
Meanwhile, Anthony Golez, a deputy Palace spokesman, said that contrary to the NSCB’s assessment, the economy is not on the verge of a recession. Golez projected that the GDP would not contract in the second quarter, arguing that the so-called Economic Resiliency Plan (ERP) of the administration will prevent the decline.
Besides, a growth is still a growth no matter how small, Golez argued. National Economic and Development Authority (Neda) undersecretary Rolando Tungpalan belabored this point further. He noted that the minimal growth the Philippines had was still better compared to its Asian neighbors. Singapore and Taiwan posted double-digit contractions while Malaysia, Taiwan and Hong Kong declined by six to eight percent.
And finally, Gary Olivar, another deputy presidential spokesperson (this time on economic affairs), reminded everyone that the annual GDP growth under his boss is still higher than those of Ferdinand Marcos, Corazon Aquino, Fidel Ramos and Joseph Estrada.
That these presidential mouthpieces have to extract the “good news” the way they did from the unmistakably weak GDP figures illustrates how defensive Malacañang is in terms of the country’s economic performance.
Recession in the Philippines
The most common indicator used to ascertain a recession is two consecutive quarters of contraction in the GDP. By this definition, the Philippines would be in a state of recession if seasonally adjusted GDP would again shrink in the second quarter.
Unfortunately for the spin doctors in Malacañang, macroeconomic indicators strongly point to this possibility. Less highlighted by economic managers is the status of the country’s composite leading economic indicator (LEI). Also monitored by the NSCB, the LEI breached negative territory in the second quarter, which implies the general direction that the economy tracked during the period. For the past four quarters now, the LEI index has been on a steadily deteriorating downward course.
The LEI system was developed by the NSCB and Neda to serve as basis for short-term forecasting of macroeconomic activity in the country. Its index is computed using the performance of 11 leading indicators, namely consumer price index, electric energy consumption, exchange rate, hotel occupancy rate, money supply, number of new business incorporations, stock price index, terms of trade index, total merchandise imports, tourist arrivals and wholesale price index.
But whether the country will technically enter into recession is immaterial as far as ordinary people are concerned. For them, the economic crisis is no longer a threat but a daily reality that they have been facing for as long as they can remember. In times when the Philippines was posting relatively vibrant GDP growth rates, a great majority of Filipinos faced ever-worsening job scarcity and poverty.
To illustrate, while the annual GDP growth rate under the Arroyo administration — despite the anemic first-quarter figures — remains higher than Marcos’s, et al, job scarcity is also at its worst. Unemployment rate has remained at double-digit (more than 11 percent) every year since 2001 with the average number of jobless workers at almost four million annually.