But the one great thing about Dr. Canlas is that he is one academic whose feet are down there on the ground. I like the fact that even as he is very happy about the encouraging economic indicators last Friday, he did not exactly try to purvey an easy propaganda line that the economy is turning around. While that could happen, he knows enough not to ignore the very real dangers that lie ahead. He knows the future remains "iffy". And many of these "iffy" things are beyond our control, like the health of the American economy, for instance. If it does not perk up soon enough, we too must bear the consequences.
And he knows all about China and how it has become the darling of investors worldwide. Its membership in the WTO will definitely have quite an impact on us, as it will on the rest of ASEAN. Dr. Canlas emphasized that there is no way we can rest on the matter of keeping ourselves competitive with China. We need to move up the value chain because we have lost the "cheap labor" advantage to China. He didn’t say it exactly, but I could imagine he is worried about losing our remaining advantage in terms of trained manpower and facility with English.
Like the rest of the economic managers of GMA, Dr. Canlas recognizes the need to make the country as friendly to investors, local and foreign. He said that in the process of attracting new investors that we badly need, he and guys like Lito Camacho, Mar Roxas and Vince Perez know they have to keep those who are already investors here happy. Nothing helps the successful wooing of new investors than positive reviews and endorsements from those who made their bets on our country earlier.
The impression I got from my interaction with Dante Canlas is that he is definitely one of the good guys in this administration. Together with Lito, Mar and Vince, Dr. Canlas is part of a team that is giving their all to a mission that can easily be dismissed as impossible under current circumstances. Let us pray that they won’t give up, specially as we go forward into the unknown.
Analyzing the figures released last Friday, economist Emilio Neri, Jr. of Abacus Securities points out that the inherent strength of our personal consumption is still there. Consumer demand grew for food (+2.6 percent) clothing (+4.6 percent) and for the sector that includes cell phones (+8.4 percent), despite slowing down in 2Q01 (+3.2 percent in 2Q01 vs. +3.5 percent in 1Q01) kept the Philippine economy afloat at a time when most other economies in the region have already sunk into recession. Mr. Neri says that "together with strong farm output (+3.0 percent in 1H01) and a resilient services sector (+3.8 percent in 1H01), robust consumption growth for domestic goods improves the chances of achieving the government’s revised GDP growth target of 3.3 percent to 3.8 percent growth this year and avoiding a technical recession."
But as I was going through the breakdown in the section on aggregate demand in the presentation of Secretary Canlas, I noted a significant growth in government consumption from —3.6 percent in the first semester of 2000 to 0.1 percent this year. Investments, mostly government infrastructure, also increased from 0.9 percent to 4.3 percent in the same period. I wondered if these were election related and wondered further if this could be sustained, given the budget deficit limit set by the Arroyo administration itself. Dr. Canlas thinks their revised forecast is achievable. I’ll take his word for it, for now.
A slowdown was inevitable in exports, however, given soft foreign demand. That much, Dr. Canlas concedes. Net exports according to his chart on aggregate demand, suffered a terribly sharp fall from 54.1 percent growth in 2000 to —27 percent now. That’s no doubt due to the fall in the combined output for semiconductors (-31.1 percent) and finished electrical machinery (-18.4 percent), accounted for about 30 percent of the country’s real merchandise exports last year. Economist Neri of Abacus however says there was nothing we could have done. "With a mere 0.2 percent growth in US GDP in 2Q01, a deterioration in the country’s net exports position – the highest since 1Q94, – could not be helped."
There is one other section in Mr. Neri’s analysis that I think is important. He pointed out that "since the Asian crisis began, real growth of domestic capital formation has averaged at —1.3 percent vis-à-vis an average of 9.2 percent between 1995 and mid-1997, showing how little confidence locals have for the economy. What’s worse is that Filipinos have the funds to spend but have decided to "lend" to non-residents instead. Our $3.0 billion capital and financial account deficit in the balance of payments in the year to April also confirms this."
How sustainable is the government’s optimism about the economy as we move forward? Here is how Mr. Neri saw it. "Given the latest revisions, pure number crunching (obviously) yields a higher full year GDP growth estimate. Our computations yield a 3.2 percent GDP growth forecast vis-à-vis our pre-announcement estimate of 2.3 percent growth, assuming investors remain calm. However, since the worsening external environment (e.g. Argentina’s debt bomb) will likely (a) keep exports and the manufacturing sector vulnerable for the rest of the year, and (b) thwart any plans by the BSP to ease monetary policy, we are compelled to maintain our official 2.3 percent growth forecast for now.
Instead of going home one Friday afternoon, a man stayed out the entire weekend hunting with the boys & spending his entire paycheck. When he finally appeared at home, Sunday night, he was confronted by his very angry wife and was barraged for nearly two hours with a tirade of his actions.
Finally his wife stopped the nagging and simply said to him "How would you like it if you didn’t see me for two or three days?"
To which he replied, "That would be fine with me."
Monday went by & he didn’t see his wife. Tuesday & Wednesday came & went with the same results. On Thursday, the swelling went down just enough where he could see her a little out of the corner of his left eye.
(Boo Chanco’s e-mail address is bchanco@bayantel.com.ph)