IGNACIO BUNYE'S VIEW FROM THE PALACE
MANILA, MAY 13, 2007 (Office of the Press Secretary) View from the Palace (For the week ending May 13, 2007)
As you read this, you may have already voted or are about to vote. No matter which set of candidates you have selected, my only hope is that those ultimately elected will be truly worthy of our trust and who will have the steadfastness and commitment required to carry on the reforms already started by President Arroyo.
Many agree that notwithstanding the many reforms, development is still hampered by excessive politicking. At the local level, for instance, worthy initiatives are often abandoned simply because they were started by a rival politician. This is magnified at the national level with the election of some whose sole objective is to bring down the current administration even if they have nothing better and concrete to offer.
This administration has made monumental strides in moving our economy forward. And this is very basic. Without good economics, we will not have the wherewithal to fund basic social services without mortgaging our children’s future. Improving the economy is, indeed, the first real step towards breaking the cycle of poverty.
Not even President Arroyo’s harshest critics can dispute the fact that the Philippines has seen 24 consecutive quarters of economic growth, a first since 1986. In her second term, the Philippines has averaged 5.53 percent GDP (gross domestic product) growth rate, and no administration has come close. The next highest average GDP was 4.37 per cent, which was achieved during the first Arroyo term. For comparison, here is how the other Presidents fared: Ferdinand Marcos, 3.83; Corazon Aquino; 3.8; Fidel Ramos, 3.76; and Joseph Estrada, 2.93.
For 2007, Lehman Brothers forecasts 5.8 percent GDP. We may be a far second to China’s projected 9.6 percent but still we are above most Asian countries, such as Indonesia, 5.7, Hong Kong, 5.5; Malaysia, 5; Singapore, 5; Thailand, 5; South Korea, 4.3, and Taiwan, 3.9.
The national government deficit in 2006 was only P65 billion, an eight-year low. As a consequence, national government borrowing is also at an all- time low (2.88 percent for 91-day T-bills during the February 2007 auction).
The inflation rate of 2.2 percent recorded in March 2007, is the lowest in 20 years.
On the other hand, the peso is on a six-year high and keeps getting stronger. In 2005, the peso was Asia’s best performing currency, appreciating 6.01 percent relative to 2004. And in 2006, the peso appreciated 8.28 percent.
The real estate industry never had it so good. The 26 percent growth, recorded in the 3rd quarter of 2006, is the highest in 25 years.
Director Dennis Arroyo (no relation to the President), head of National Economic and Development Authority’s (NEDA) National Planning and Policy Staff, attributed the real estate boom to the following: "The boom is fueled by overseas Filipino workers (OFWs) buying condo units, call centers demanding office space, and the malls that keep on multiplying. The proliferation of malls is evidence of an expanding middle class, in turn due to the OFW phenomenon.
There are now 28 malls in the SM chain alone. SM commits to have a total of 40 shopping centers by 2011.
Although the ratio of investments to GDP still remains low at 15 percent, Dennis Arroyo expects investments to rise due to the following factors:
a. Massive infrastructure spending in the ‘super regions’.
b. The return of investor confidence. At least 81 percent of the members of the Makati Business Club, which has been critical of the President, expect 2007 to be better than 2006.
c. Rise in foreign investments. This is due to the Philippines’ strategic location, a well educated, productive and English-speaking work force and the continuous effort to cut red tape to simplify requirements for investing in the Philippines. Just 10 days ago, Texas Instruments announced plans to invest US$1 billion to build new facilities in the Philippines, which they chose over other locations including China.
Microenomic reforms are working. Our macroeconomic fundamentals are stable. We have achieved momentum. We just need to sustain it so that we can bring the economic gains to the poor.
We do hope that our electorate has become more mature and more discerning and sees the need for continuity on a path of economic reform.
Chief News Editor: Sol Jose Vanzi
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