Tuesday, February 20, 2007

Economic Growth in Question? Here are 10 Reasons Why...

Recently, several news were flashed informing the general public on the perceived economic growth experience by the country. Although figures were presented, it is hard to agree with the pronouncement made by the government on the status of our economy. Forget about the numbers, but the idea of promoting hyped growth appears to be misleading. Economists will provide in-depth analysis that will contradict such claim. Simple observation, however, can guide you to justifications refuting the government's press release.

10. It is hard to believe on figures when these are extracted from estimates. The government provides economic targets and computes for growth using various mechanisms. Accordingly, these computation tools are highly flexible to satisfy the targets even without factual bases.

9. The dependence of the country on OFWs was never highlighted in the report. Usually, human resources are used for domestic development. Although the remittances of the OFWs are vital, their contribution to the country where they are based in considered as more valuable.

8. Some countries with more complex circumstances have performed better. Indeed, most of our neighbors have experienced higher growth.

7. Economic growth is usually seen in the plight of the citizens. Just imagine this situation. Government officials usually have luxury cars issued for them, staffs and air-conditioned offices. Meanwhile, some areas have only one school with three classrooms and 80 students being taught by 1 teacher.

6. Prices of commodities remain high and there have been misconceptions on the current strength of the peso. It has to be remembered that aspect beyond government's control can affect the value of our currency.

5. Because the government emphasizes more on GDP growth, it is imperative to discuss its components with respect to economic advancement. First, government spending never increased because the budget was reenacted. Supplemental budget was insufficient to translate growth.

4. Moreover, investments have been focused on the increasing value of the PSEI. These are stocks and most of us are even unaware of these securities. By and large, investment has to propagate employment and sustain the business sector.

3. Most of the exports that the country provides are still primary and secondary products. Imports, however, have been concentrated to tertiary goods. Definitely, there is a mismatch in the manner in which balance of trade is presented.

2. Consumption is considered as the backbone of the GDP. This needs to increase consistently without considering all other economic indicators. Recent statistics, on the other hand, point out the lack of buying power citizens have. In Manila, it will take more than 700 pesos for a family of 6 to survive. The minimum wage in Manila is way below such requirement. The situation is provinces is worse and can only get worst.

1. The rich continues to get richer and the poor remains in the bottomless pit. When asked about this, the President walked out from a televised press conference. Indeed, that is growth for you.

The government maintains that the practice of sound fundamental of economics have motivated the growth. But the current situation argues such contention. Growth as translated by the government is subjective although its true essence is determined through objective calculation.