Malacanang was too quick to claim credit for that 7.3-percent economic growth. The credit truly belongs to our OFWs. In fact, every time the economy gets really bad here, thanks to bad governance, more Filipinos leave for abroad. That means bigger remittances that turns the domestic economy to produce “miracles” like that 7.3-per cent growth rate.
Indeed, remittances grew robustly by seven percent in 1Q10. BSP’s forecast for remittance growth this year is eight percent. So there it is, our OFWs working hard to produce the economic growth our officials have failed to accomplish but are now claiming credit for. Let us also not forget our underground economy, estimated to be 40 percent of our economy. Some of the effects of the underground economy are probably being captured too in national income accounting.
But good as the economic contributions of the OFWs are to economic growth, things could be a whole lot better. Ateneo’s Ciel Habito commented it would be nice if investments accounted for a greater part of our economic growth. Investments create domestic jobs and as such may prove to be more sustainable in the long run.
Right now, consumption driven largely by OFW remittances, make up almost four-fifths (78 percent) of gross domestic product (GDP). In contrast, Dr. Habito points our, investment propels a much larger part of our neighbors’ economies, where consumption comprises an average of only 60 percent of GDP. What the new administration must successfully figure out is how to channel more of those OFW remittances to productive investment that would help sustain growth in the years ahead.
The good news for now is, in the view of Global Source, a New York-based think tank, “there does seem to be the makings of a broad-based revival if not a boom. Exports have recovered in tandem with the rest of Asia. Domestic demand grew rapidly in 1Q10, with private consumption rising by 5.9 percent owing to strong remittances, investment by 24.3 percent on the back of an export recovery, and government consumption by a hefty 18.5 percent.”
The part about government spending may be a bit misleading because the current administration decided to spend most of the year’s budget in the first part of the year so that Ate Glue can leave in a blaze of glory. But that was done at the expense of also leaving behind a serious fiscal deficit problem. In fact, President-to-be Noynoy may find out he doesn’t have money to do any of the things he promised during the campaign.
What Noynoy has going for him is very positive investor sentiment. The BSP was able to track this improved sentiment starting to build up in anticipation of a new government next month. BSP’s most recent investor confidence surveys are showing the kind of optimism on our economy and our country we had not seen for a while.
The eagerness of the world to welcome our new leader could be seen in the beeline of foreign ambassadors paying a courtesy call on the yet to be proclaimed President. Even financial rating agencies are talking of a possible upgrade as the political risk factor recedes in the background as a major concern.
The names being mentioned as potential members of the Aquino economic team are mostly belonging to experienced hands with good reputations and who are well known to the markets, Global Source noted, contributing further to the growing confidence for the country. Also helpful is the general assumption that even if he eventually loses the vice presidential race, former investment banker Mar Roxas will be an important adviser to the incoming President.
Were it not for this mad rush for the perceived safety of the dollar in the wake of the European troubles, the peso would probably be growing stronger rather than going south in the last few weeks. But analysts say the final proclamation of the new President and his assumption of office at the end of the month should see all that positive sentiment being expressed prior to the election finally translating to gains for early investors.
Global Source reassures: “for as long as the global revival continues, which would support both private consumption through remittances as well as exports, we expect growth to remain quite strong even with elections over and despite the likely cutback in fiscal spending after earlier election-related frontloading.”
Just in case the apologists of the outgoing Malacanang tenant try again to claim credit for the good times starting to roll around, remember that the two biggest contributors to that positive sentiment are the OFWs and the assumption that Noynoy Aquino will be President on June 30. What happens after that depends on him and on us.
Smuggling
Here’s a reaction from reader Alex A. on smuggling.
What needs to be stopped is not just rampant oil smuggling, but smuggling of all types of products (steel, cement, plastic, food, apparel, automotive parts etc.) either by way of undervaluation, misdeclaration or outright smuggling.
The customs bureau should also seriously look into the operations of all customs bonded warehouses, many of which are being used as some sort of clearing houses for smuggled goods. Either shut them down or put a very tight watch on them.
Stopping smuggling in its tracks or even by just diminishing it will immediately resurrect many of our long-suffering material goods industries, even with our woefully insufficient infrastructure and high power costs. Stopping smuggling will lead to higher employment, and eventually higher custom duties and tax collections. The question is, as with many other things in this country, would the incoming government have the balls to do it?
The new administration should also revisit all the bilateral and multi-lateral free trade agreements that previous adminstrations have entered into which have created distortions in our tariff structure. There are instances where duties for finished products are sometimes lower that those for semi-finished products or raw materials, thereby producing a negative impact on many of our material goods industries in a big way.
Magic wand
Dr Ernie E comes alive after a long hibernation with this one.
A nun and a priest were crossing the Sahara desert on a camel. On the third day out, the camel suddenly dropped dead without warning.
After dusting themselves off, the nun and the priest surveyed their situation. After a long period of silence, the priest spoke. “Well, Sister, this looks pretty grim.”
“I know, Father. In fact, I don’t think it likely that we can survive more than a day or two.”
“I agree,” says the Father. “Sister, since we are unlikely to make it out of here alive, would you do something for me?”
“Anything, Father…”
“I have never seen a woman’s breasts and I was wondering if I might see yours.”
“Well, under the circumstances I don’t see that it would do any harm.”
The nun opened her habit and the priest enjoyed the sight of her shapely breasts, commenting frequently on their beauty.
“Sister, would you mind if I touched them?”
She consented and he fondled them for several minutes.
“Father, could I ask something of you?”
“Yes, Sister?” I have never seen a man’s pen—. Could I see yours?”
“I suppose that would be OK,” the priest replied lifting his robe.
“Oh Father, may I touch it?”
The priest consented and after a few minutes of fondling he was sporting a huge erection.
“Sister, you know that if I insert my pen – in the right place, it can give life.”
“Is that true Father?”
“Yes, it is, Sister.”
“Oh Father, that’s wonderful ... Stick it in the camel and let’s get the hell out of here!”
Boo Chanco’s e-mail address is bchanco@gmail.com. This and some past columns can also be viewed at www.boochanco.com