2003 GNP: Senseless Growth, Pointless Boast

Government uses statistics to claim that the economy is fine, but the same statistics could be analyzed to prove that the situation is not as rosy as government claims it to be.

By DANILO ARAÑA ARAO
Bulatlat.com

The peso-dollar exchange rate sunk to historic closing low of P55.98 last Jan. 30 and the 2003 budget deficit was projected at P195 billion ($3.48 billion).

Despite these developments, the government still claims that the economic situation is “looking good,” owing to the growth in the gross national product (GNP) of 5.5 percent in 2003. The gross domestic product (GDP), on the other hand, grew by 4.5 percent.

According to the National Statistical Coordination Board (NSCB), the GDP refers to “the value of all goods and services produced domestically.” The GNP is defined as the GDP “adjusted with the net factor income from the rest of the world.”

Based on NSCB data, the local output or GDP grew significantly during President Gloria Macapagal Arroyo’s incumbency. In 2001 and 2002, GDP posted growth rates of 3.0 percent and 4.4 percent, respectively.

Claiming that the GNP growth over the past three years of her administration was much higher than in the previous three years, Arroyo stressed the need “to continue this…uptrend in growth in order to have a sustained basis for uplifting the condition of the average Filipino.”

However, does an increase in the growth rate necessarily result in better living and working conditions for the poor?

Agriculture

While the country is largely agricultural, the agriculture subsector posted a minuscule growth of 2.7 percent last year. Palay grew by only 1.7 percent in 2003, much lower than the 2.4 percent growth rate in 2002. Only sugarcane had a double-digit growth rate of 13.0 percent.

The fishery subsector, on the other hand, increased by 7.4 percent. That forestry grew by 193.3 percent is no cause for celebration since this is a reflection of environmental degradation. No less than the NSCB attributed this surge to “renewed harvest from the plantation forests of Paper Industry Corporation of the Philippines (PICOP) in Caraga Region.”

Ironically, agriculture, fishery and forestry accounted for 19.6 percent of the entire GDP in 2003 even if studies showed that through the years, more than 70 percent of the population depend on agriculture.

Industry

While industry grew by 3.0 percent in 2003, this was largely due to increased mining and quarrying activities resulting in a growth rate of 17.5 percent for this subsector. The industry sector comprised 34.0 percent of the entire GDP.

Manufacturing, which should theoretically provide for regular job opportunities for the poor, posted a growth rate of only 4.2 percent and electricity, gas and water grew by only 2.9 percent. The construction subsector was on its third year of contraction, posting a negative growth rate of 5.9 percent in 2003.

The NSCB claimed that this was “due to the much bigger drop in public construction as the government drastically reduced expenditures on capital outlays to contain the budget deficit. While investments in private construction managed to grow during the year, it was not enough to offset the slack in public construction.”

Services

Services accounted for 46.4 percent of the total GDP, and the NSCB admitted that it contributed the most to GDP growth.

Communication services had the highest growth rate of 13.4 percent. The NSCB explained, “Wireless communication services, particularly the Short Messages Services (SMS) market, continued to drive the telecommunications industry as strong consumer demand for these products and services persisted.”

Analyzing growth

Arroyo stressed that remittances of overseas Filipino workers (OFWs) contributed to the GNP growth as their total income increased again in 2003. She also cited the “robust recovery in private investments and the upbeat consumption of Filipino families” as factors for the increased economic growth.

NSCB data showed that net factor income from abroad posted a growth rate of 18.9 percent.

This situation is no different from the past where the administration has depended on the so-called modern-day heroes for much-needed dollars.

In addition, the performance of agriculture, industry and services proves that as in the past, the growth was both short-term and speculative. Manufacturing did not post any remarkable growth and the current demand for telecommunications services, particularly those related to mobile phone technology, was the main propeller for growth.

It is in this context that the government’s claim of upbeat consumption of Filipino families must be analyzed. Based on the given data, this neither reflects increased purchasing power of people nor the affordability of basic goods and services.

Growth, in the final analysis, must be appreciated in the context of how it directly translates to better living and working conditions to people and not just the impressive display of numbers. Bulatlat.com

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