Something disturbs us in the RP GDP growth figures from 2007 to 2010. It only grows tremendously during election years- for not-so-healthy reasons.

Consider the GDP growth rates in election years (2007) 7.1% and (2010) 7.3% compared to the non-election years of (2008)  3.7% and (2009) 1.1%.This must not be the case- as the growth in election years is artificial and “unreasonable” election spending is always inflationary.

Then in 2011, the Aquino anti-corruption crusade stymied government spending and resulted in a mediocre  GDP growth rate of 3.8%.

Criticized from all sides for the economic anemia in 2011, the Government appears bullish about 2012 GDP growth rates forecasts: the DTI (Trade and Industry gung-ho) at 7,6% and another  Government agency at 5.8%. Private economic think tanks ,however, point to a more modest 4.5% to 5.5% GDP growth rate in 2012.

The Aquino regime is often positively referred to as “transformational” compared to GMA’s “transactional” kind of moral leadership. In the economic front, GMA was obsessed by   “numbers- growth” while Aquino is for “inclusive-growth.”

The “inclusive growth” means the GDP growth must be felt by all socio-economic strata in order to stop the annual deterioration in the gap between the rich and the poor. It is meant to be pervasive and sustainable.

How would the various economic sectors fare then?

After a two year deterioration in “export growth” of (-) 2.0% in (2008) and a worse (-) 13.4% in (2009), exports bounced back to a high 25.6% in 2011. Even though electronic exports slid, other non-traditional exports surged.But this development will be sensitive to the negative outlook for Europe balanced by better-than—expected recent economic data from the American shores.

Government and domestic investment spending will certainly prop up GDP since it is almost sure that at least 8 (about P80-B worth) of the 16 PPP projects (including the Panglao international airport)   –aided by about P 470-M in the so-called  Project Development and Monitoring Facility ( PDMF)  which will help the pre-PPP activities , including feasibility studies and the like- will come to fruition.

Aside from the PPP projects , government must jumpstart the local economies by pump-priming activities , instead of being paralyzed into inaction by fear of corrupted deals. Economic professor Benjamin Diokno is even suggesting that to cut short the time processes in the PPP, government should do a “reverse BOT”- essentially mandating government to first “construct” the PPP project- then offer it for “private management” and eventually “privatization”.

In the case of a Panglao airport, government will, for instance, build the runway, terminal and ancillary buildings-  and then ask a private group to manage it efficiently and thereafter “sell” the entire project to a private corporation like an Ayala or a Pangilinan group, to cite two examples.

These activities will create jobs in the countryside which is better than the pure CCT (conditional cash transfer) which is really aimed at health and education target concerns rather than being a purely anti-poverty vehicle. But the expansion of the CCT coverage from 2.1 million benefactors to 4.0 million in 2012 will have its positive benefits, no doubt, as well.

Government must seize the momentum since the Department of Labor statistics pointed out that some 2 million new jobs were  reportedly created in one and half year of the Aquino government ( June 2010- December 2011). If the recent  increase in investments (per BOI) of 22%  and the 41% in the Export and Economic zones in 2011 are validated, that should create more jobs this year.

Job creation is important because this increases consumer purchasing power which, in turn, encourages business to invest and create even more jobs. The banking system, on cue, is also playing its role.

The BSP (Central Bank) has signified its intention to reduce overnight lending rate from 4.5% to 4.25%  and will thus effectively lessen the cost of money to spur business to invest rather than park their funds in “lifeless” Treasury Bills.

On the other hand, agriculture is one sector that Government must focus attention, too, given the nature of our topography. The last few years’ agricultural growth has been dismal: (2008) 3.0%, (2009) 0% and (2010) even a worse (-) 5% negative growth. The BSP must get stricter on the compliance of banks to re-channel 30% of their lending portfolio to agriculture –and impose stiff penalties against violators.

That will dramatically boost countryside economic activities.

Other positive “drivers” of the economy should be the  BPO (call centers)  which should eclipse the US$9-B top performance, the OFW remittances (over) US$20-B and Tourism (okay lets have more fun here) poised to hit 4.2 million tourists in 2012, according to the Department of Tourism.

Confidence in government (not just in its clean governance crusade) but the ability to make its economic vision into reality is a must to spur further growth.

Consumer confidence (indicated by more spending than saving) will make business take away money parked woefully in low-interest deposit accounts in banks and expand capacities. International creditor confidence will make fresh  money  not only available but at cheaper cost as well in exchange for a better RP country credit risk- saving the nation billions in interest savings.

It doesn’t mean though that we are not facing threatening downsides.

Climate change and criminal neglect of government and private contractors, illegal logging, unmitigated construction and undirected mining will make  natural calamities set back  the gains we will make. The Muslim problem will always be a pain in the neck as negative travel advisories and the recent “real” threat of a large-scale bombing of the Black Nazarene procession in Quiapo (3 million devotees) will surelygive investors and tourists pause and then succumb to fear.

The external global economy, likewise, which is not in the pink of health with Europe, the USA and Japan still struggling back and the fear of China’s economic bubble going bust soon –due to years of overheating- will knit the eyebrows still.

But barring any major catastrophe or earth-shaking world event and the with the RP justice system finally working towards more accountability for good governance, we feel there is reasonable hope to believe that the RP GDP growth in 2012 will surpass the 3.8% in 2011.

A 5.0% to 6.0% GDP growth rate in 2012 should not be a impossible.

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