are we really on a roll?

[Asus700]

is this good news or what? what do you think? can we sustain this?

Economy expands 6.9%

1st-quarter GDP growth strongest in 17 years

MANILA, Philippines -- The Philippine economy surged 6.9 percent in the first quarter of the year from the same period in 2006, way above expectations, prompting officials to declare that the country was no longer a laggard in Asia.

Low inflation, a strong peso, government’s pump-priming activities and preparations for the elections pushed gross domestic product (GDP) growth to its highest level since 1990, the National Statistical Coordination Board reported Thursday.

The gross national product -- GDP plus remittances from overseas Filipino workers and the earnings of Filipino companies abroad -- grew 6.6 percent in the first quarter.

“The Philippines is on a roll,” President Gloria Macapagal-Arroyo said in a statement issued from Australia, where she is on a state visit. “This is the fastest pace in almost two decades -- 9.1 percent growth in services, 5.3 percent in industry, 4.2 percent in agriculture.”

Growth in the services sector, which includes transportation, finance, trade and communication, was largely due to the booming business process outsourcing (BPO) industry, mostly made up of call centers.

Bill Belchere, an economist at Macquarie Bank, described the GDP growth in the first quarter as a “stunner.”

Investors cheer

Stock market investors cheered the GDP growth, which beat market projections of 5.7-5.8 percent.

The Philippine Stock Exchange index jumped 76.12 points or 2.23 percent to 3,474.67, its second-highest level in history, after the all-time high of 3,505 recorded on May 22.

“The news of a better-than-expected growth triggered the run-up,” said Astro del Castillo, general manager of First Grade Holdings Inc. “This is the vitamins that the bulls are waiting for. The sustained growth is a good sign for the capital-raising of listed companies.”

Government officials said the 2007 target of 6.1-6.7 percent growth was well within reach and could be revised upward, with the country now closer to hitting a hitherto elusive 7.0-percent growth.

Economists say the Philippines needs to grow 7-8 percent annually to cut poverty substantially.

Joey Salceda, a former stockbroker and until recently President Arroyo’s chief of staff, said the GDP growth vindicated the planned “7-8-9 percent” growth target he propounded three months ago. The target is envisioned to place the country at a higher growth plane and avoid the boom-and-bust cycles that have wiped out gains achieved by economic reforms.

“Underlying trends show there is sufficient momentum for growth acceleration, swinging around the 7-percent GDP average for the rest of the year,” said Salceda, governor-elect of Albay province.

Salceda said strong revenue collections and proceeds from the government’s privatization program should ensure sufficient funding for the administration’s massive infrastructure program, which is expected to be the main growth driver in the next three years.

Low interest rates

Economic Planning Secretary Romulo Neri said the drop in interest rates encouraged borrowings that were used to finance investments, while the slowdown in inflation supported consumption by households.

Finance officials said the drop in interest rates was largely due to the rise in the collection of revenues that resulted in a lower budget deficit.

The decline in the budget deficit, in turn, improved the country’s credit image, causing lenders to seek lower interest rates on the government’s borrowings. The interest rates, done through the issuance of bonds, are used as benchmarks for setting the interest rate on bank loans.

The Arroyo administration also took pride in the strengthening of the peso, which, it said, helped temper inflation.

A strong peso makes imported goods cheaper, encouraging spending. Higher spending means higher demand for goods and services, which leads to growth in production.

Dennis Arroyo, director for policy and planning at the National Economic and Development Authority, said the GDP growth in the first quarter placed the country on competitive footing with neighboring countries.

He noted that while the 6.9-percent GDP growth was still lower than China’s 11.1 percent and Vietnam’s 7.7 percent, it was higher than growth rates in many other countries.

Arroyo noted that Singapore grew by 6.0 percent, Indonesia also by 6.0 percent, Hong Kong by 5.6 percent, Malaysia by 5.3 percent, Taiwan by 4.1 percent and South Korea by 4.0 percent.

Neri said investments must grow some more so they can generate jobs that can help reduce poverty levels.

He said the macroeconomic reforms -- improving tax collection and increasing government spending on social services -- “currently implemented must now be complemented with microeconomic reforms to improve industry competitiveness.”

He said microeconomic reforms like making credit more accessible to small entrepreneurs and reducing the cost of doing business should be done. With reports from Gil C. Cabacungan Jr. and Elizabeth Sanchez-Lacson; with INQUIRER.net

Copyright 2007 Inquirer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

[uls]

1 in 10 pinoys work overseas. That's 8 million people sending dollars to their dependents. The dependents are very good at one thing: spending.

And that's what is driving strong consumption.

Isama mo pa jan ang mga well-paid service sector employees (call center) who are also good at spending.

Tapos isama mo pa jan ang strong corporate earnings ng mga malalaking companies.

Pati real estate sector.

mabagal ang trickle down effect so hindi pa masyado maramdaman ng mga poor.

[Asus700]

its funny how may people you will find at megamall on ordinary days like tuesday and its only 2pm!

i bet they have relatives abroad who sends them money so they can buy and eat their way to good times.

[mazdamazda]

yes we are... tuloy tuloy lang... banish the pessimistic thoughts!

[uls]

Yes actually ang nagbubuhay sa mga mall and fastfood is OFW dollars... not local minimum wage earners... unless local wage earners with a lot of disposable income... which are not really that many.

Tumataas ang standard of living mga mga OFW dependents. Like they build new houses and syempre they have to buy appliances and furniture. Tapos cellphones and load and computers and internet and shoes and clothes...

[CVT]

This is good news, especially for us, who chose to stay in the Philippines.

However, my personal perception is that this is not yet sustainable for a couple of reasons:

1. A good portion of the money in our country are coming from our OFWs,-results are divided families. Nobody can be certain that this model will work overtime.

2. It has to be backed by (physical) industries in our country, whether local or multinational. A lot of manufacturing companies are moving out because of cost reasons and not-so-attractive business climate. So, what's left are the services and distribution companies. Even with that, the former is always challenged by the same threats as the manufacturing sector.

2801:clap:

[Asus700]

hope no more impeachment moves or chacha in congress

[torque2006]

main problem of pinas is population control. no matter how industrialized the philippines becomes, we are too many to all be employed, hence the OFWs will never go away.

i hope someone in the government addresses this concern.

[uls]

Ya service sector driven ang growth natin. Hindi manufacturing.

Problem dito is the poor hardly benefit from this kasi uneducated/unskilled sila e.

Skilled labor like software engineering, or ung mga marunong mag english makakakuha na agad ng trabaho

unskilled labor kasi mas na-a-absorb ng manufacturing sector. Kaya lang nasa China lahat ng factory hehe

[chua_riwap]

1 in 10 pinoys work overseas. That's 8 million people sending dollars to their dependents. The dependents are very good at one thing: spending.

And that's what is driving strong consumption.
Isama mo pa jan ang mga well-paid service sector employees (call center) who are also good at spending.

Tapos isama mo pa jan ang strong corporate earnings ng mga malalaking companies.

Pati real estate sector.

mabagal ang trickle down effect so hindi pa masyado maramdaman ng mga poor.

Applause, applause........ sa amin, na OFWs. So with the other sectors.

That's a good sign, at sana nga ma-sustain natin ito. At ......bumaba na rin sana ang halaga ng mga bilihin.