Good news and bad news on the economy.
First the good news. The Philippine economy grew in real terms (that is minus the effect of inflation), by 6.5 percent in the second quarter (April-June 2017).
That’s the fastest in Asia, after China, whose economy grew by 6.9 percent in the second quarter this year. “We remain as one of the best-performing economies in Asia,” gushed Economic Planning Secretary Ernesto Pernia at a press briefing yesterday.
“We have overtaken Vietnam’s 6.2 percent growth and Indonesia’s 5.0 percent. This puts the country as either the second or third fastest growing major Asian economy, next only to China,” Pernia pointed out. “Malaysia and Thailand have yet to release their data, but we can expect that they will be lower than the performance of the Philippines for this quarter,” he said.
Now, the bad news.
The economy is actually slowing down. That the 6.5 percent second growth is higher than first quarter 2017’s 6.4 percent to me is not all that significant. It could be a function of error (GDP accounting, by the way, has an Errors and Omissions Account, where government economists place figures and trends they do not readily understand or refuse to explain). Later, when nobody is looking, government economists adjust their figures to more realistic levels.
The economy is worth P16 trillion. Get one-fourth of that (to represent three months), you have P4 trillion. Get 0.01 percent of that, you get P40 billion—less than half the amount, nearly P100 billion, corrupt Customs people haul in annually as bribe money.
The second quarter 2017 economic growth of 6.5 percent looks bad to me, relatively. In the same period last year (2016), the economy grew at its fastest in three years at 7 percent. Part of the robust growth is explained by election spending. But just how much could corrupt politicians spend to boost the economy?
So growth in the second quarter last year was real growth, but that was no thanks to BS Aquino III, the do-nothing president. Growth last year was fueled by spending – by consumers (by 7.3 percent) and by the government (by 13.5 percent). In fact, in April to June last year, 4.9 percentage points (or 70 percent) accounted for the 7 percent GDP growth. Government spending contributed 1.6 percentage points of the 7 percent. So last year, 6.5 of the 7 percent growth rate came from only two sources—consumers and the government.
In the second quarter this year, both consumer spending and government grew but at a much smaller rate. Consumer spending was up 5.9 percent during second quarter this year, down from 7.3 percent in the second quarter 2016. Government spending was up 7.1 percent, down by almost half, from the 13.5 percent growth in second quarter last year.
Despite the dramatic slowdown in government spending growth, Secretary Pernia had the temerity to blame private sector spending for the lower- than-expected GDP growth in the second quarter 2017.
Pernia quipped: “Taking the last quarter’s GDP growth, where the government’s spending performance was lackluster but where the private sector stepped up, and then this quarter’s GDP growth, where government really stepped up but where private sector slackened, just think what could happen if both government and private sectors together exerted that extra effort!”
He added: “We really need everyone and every sector to move in sync towards our goal of inclusive, a high trust and resilient society and a globally competitive knowledge economy.”
Why the timidity by private business in the second quarter this year? Two reasons: one, government red tape and corruption; and two, the downside risks to business this year are becoming apparent. There is so much uncertainty in the US, in Europe (with Brexit and failing banks), and in Asia, with nukes manned by fingers owned by crazy leaders.
According to JJ Atencio, who is retiring as CEO of mass housing developer 8990 Holdings, it now takes 100 signatures and 200 documents to launch a housing project. To comply with those requirements, it would take anywhere from one year to two years, from only six months two decades ago. It takes only eight days for 8990 to build a house, but it takes them eight months to sell it, because of regulatory requirements.
In the booming business process outsourcing business (BPO), Silicon Valley icon Diosdado Banatao, a Filipino self-made dollar billionaire from Cagayan (my home province), has warned of the threat posed by robots to clerks and humans manning call centers. They call it artificial intelligence. Instead of a beautiful voice coming from a beautiful face, you get the disemboweled voice of a robot who is more intelligent than you. Robots do not take coffee breaks, do not go on medical or pregnancy leaves, do not form unions, do not demand pay increases but they think better and have common sense. So they make a lot of sense to employ. In fact, in one experiment, two robots or AI things were made to speak to each other using language devised by humans. Who know what happened? The robots decided to invent their own language so humans could not eavesdrop.
The same with President Duterte. He uses a different language in dealing with drug lords and drug addicts. As for the economy, he says he doesn’t understand it, leaving Sonny Dominguez, Ben Diokno, and Pernia to devise their own language to explain what’s going on in the economy.
Meanwhile, eight million people still have no jobs or are underpaid in their present jobs. Prices are rising every day. And the LTFRB has not yet lifted the suspension of Uber whose service is used by up to one million commuters everyday.