MALAYA EDITORIAL: FIRST QUARTER GROWTH NOT SO GOOD
MANILA, MAY 25, 2011 (MALAYA BUSINESS INSIGHTS) (‘We cannot afford–heaven forbid – five more years – of governance that cannot deliver.’)
THE growth picture for the first quarter of 2011 appears to be not too good. Growth likely ranged from 4.8 percent to 5.8 percent, according to Planning Secretary Cayetano Paderanga.
This is a full two percentage points from the government growth target of 7 to 8 percent, but economic managers are sticking to the target until at least end July when the first semester figures are in.
Paderanga said the agriculture and services sectors drove growth in the first quarter. Farm output grew 4.1 percent, a reversal of the 0.5 percent contraction in the first quarter of 2010 blamed on the effects of El Niño. Growth in services was unlikely to match first quarter 2010’s 7.1 percent, but still respectable at the pre-crisis level of between 5 and 7 percent. Industry, which grew 12.1 percent during the same period last year, would be back to single-digit levels.
To meet the full year 7-8 percent target, the government expects an increase in private investments in the next three quarters, Paderanga said.
He added that the figures he cited (the official statistics are due on May 30) are based on the old methodology using 1985 prices, not the rebased/readjusted method using 2000 prices.
Two things immediately come to mind following Paderanga’s statement. The first arises from his reference to the old methodology. Under that, growth in 2010 was 7.3 percent. Under the new methodology, growth was adjusted to 7.6 percent. This bears our suspicion that the readjustment announced last week by President Aquino to a growth rate of 7.6 percent was a result of adopting the new methodology. It is, in effect, a sleight of hand that does not change reality.
The second intriguing thing was Paderanga’s reference to private investments without any mention of public investment.
The fiscal figures for April point to another month of under-spending by the government. Spending amounted to P112.08 billion or 86 percent of the P130.3 billion programmed expenditure for April. This was even 8.03 percent lower than the 121.87 billion spending in April 2010.
The 86 percent April spending performance was an improvement over the first quarter’s 80 percent (P349.2 billion expenditures against the programmed P431 billion), but line agencies have a lot of catching up to do to exhaust the P1.09 trillion released so far by the budget department which is equivalent to 66.3 percent of the P1.645 billion 2011 budget.
Total below-budget spending for the first four months stood at P100 billion (P461 actual expenditures against programmed P561 billion).
What would have been the impact on the first quarter GDP growth had the government fully spent its budget? Or, put another way, how many additional jobs would have been created and how many more mouths fed?
President Arroyo has directed the departments and line agencies to speed up implementation of programs and projects. We hope his underlings are listening. We have lost four months of opportunities. We cannot afford six more months – and, heaven forbid, five more years – of governance that cannot deliver.
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