IT was not prudent of government to hold the press conference announcing the latest gross domestic product (GDP) figures in Malacañang.
The announcement politicized the whole process—more so because the announcement was made by the President who, for all her work ethic and passion for reforms (“I’d rather be right than popular”), is, sadly, the wrong messenger as the surveys consistently show her as an unpopular Chief Executive. The medium is the message, so to speak.
She now faces another round of post-midterm-election political troubles with the reopening of the “Hello Garci” controversy and the possible congressional investigation into the national broadband network deal with the Chinese government. Thus, whether she likes it or not, the GDP show in Malacañang was, from the start, bound to be cast as plain political opportunism.
Of course, there’s no incentive for the ruling party to work for progress if it couldn’t have the luxury of claiming credit for the economy’s gains. But it should do it with finesse, as past administrations did. Given the need to free the national accounts from partisan political dynamics, previous Philippine presidents in recent memory (Marcos, Aquino, Ramos and Estrada)—and most leaders of democracies worldwide—had the keen sense of refraining from making a spectacle out of the regular releases of such normally neutral and boring sets of numbers.
“Are you saying the National Statistical Coordination Board [NSCB] people are liars?” said the visibly irked President when a journalist signaled incredulity over the surprising number.
That scene on national TV may have raised questions on the veracity of the GDP figure, an unfortunate incident in a supposedly academic briefing.
The President was right to feel upset that people might doubt the hardworking number crunchers of the State, given the high degree of professionalism that has marked the work of people in the NSCB and the agencies it closely works with. But she was wrong in thinking the doubt is driven by malice; it’s just that, having politicized a routine job of reporting the income accounts, she had invited suspicion for the work of these people.
Expectedly, the opposition immediately linked the President’s negative popularity rating with the GDP figures, saying: “If the economy is doing well, then that means that our national officials are performing well. But why is it that Mrs. Arroyo has a poor trust rating?”
That was sad because as a democracy—at least we pretend to be—people here are supposed to believe more in their official statistics than their political leaders. The credibility of statistics, together with other important institutions, is very critical in the functioning of a system. Citizens, business people, investors, entrepreneurs and planners make decisions based more on official numbers, which should remain untainted, than the pronouncements of politicians.
President Arroyo simply could have continued with the tradition of having the GDP announced by the NSCB in a neutral venue. And then issue her reaction from the Palace; then she’d have every right to glory in it from her perch.
Having said that, we are inclined to believe that the recent GDP and gross national product (GNP) figures are real.
One thing we should be proud of as Filipinos is the fact that our statistical system, specifically the one preparing the national accounts, has remained neutral—even in the time of the dictator Ferdinand Marcos, who was once accused of dressing up the balance of payments numbers, but never the national accounts.
Yes, the economy has been growing the last several years. The industry sector bounced on the back of a surging construction and mining sector.
The services sector also grew—on the strength of transport, storage and communications (more people buying cellular phones and sending SMS); trade (despite the strong peso); real estate (more people buying condos); and private services (courtesy of the outsourcing industry). There are signs of these trends in the last several years, including the ever-frequent mall “sales.”
The usual question is where do the people get the money? And the usual answers: remittances, outsourcing and call centers, electronics and semiconductors, and other new growth drivers like mining and construction.
Note the huge difference between the GDP growth rate (7.5 percent in the second quarter, 7.3 in the first half)—that accounts for goods and services produced, exchanged and paid for within the country’s borders—and the GNP (that’s the GDP plus or minus the contribution of Filipinos working abroad), which grew 8.3 percent in the second quarter and 8 percent in the first half.
It shows the bigger contribution of OFW remittances as a growth driver. From the expenditure side, the national accounts says personal consumption expenditure contributed 4.75 percentage points, followed by merchandise exports (2.56 percentage points), and construction (1.57 percentage points).
That means that as usual, the country’s improving growth rates have really more to do with the globalized sectors of the economy (primarily labor migration and foreign trade)—a trend that New York Times analyst Thomas Friedman calls “the revolution from beyond”—and less with what’s Malacañang doing or not doing.
This trend means two things. First, there should be no basis for that spectacle in Malacañang. The proper credit goes to overseas Filipinos and exporters, despite the “strong peso” and Malacañang’s inability to address their plight. Second, it would also be unfair to dismiss the GDP figures as inconsequential to the country’s economic life, for they are real gains delivered by real people—exporters and OFWs.
The only real questions now are two things: first, whether or not it’s sustainable; and second, whether or not it’s the kind of growth we want to pursue.
It’s possible to maintain the growth momentum—assuming the external environment remains favorable (robust global economy). It’s actually possible to grow primarily on the strength of the services sector as shown by India.
But it may not be the most desirable kind of growth. Services-driven growth essentially benefits urban dwellers. The benefits flow to the well-off first before they trickle down to the wretched classes. The example again is India: its 8-percent growth rate since 2002 essentially accrues to a million information-technology workers out of a billion Indians, while many, many are suffering from what N. Ram—editor of Chennai-based The Hindu newspaper—calls “mass deprivation.”
We desire more inclusive growth, something that harnesses the potentials of the farms and the factories, besides the call centers, banks, mines and telecom firms. That’s not yet in our GDP figures—especially not with lackluster results on capital formation (business people are not yet buying new machines and office equipment!)—an indication that business confidence in the Philippines’ long-term prospects has yet to be fully restored.
(Note: I originally wrote this as editorial for BusinessMirror, 4 September 2007)