NUMBERS BELIE CLAIM OF GROWTH

Six months ago, Arroyo also said that she had achieved the best Philippine economy in the last three decades. But the latest official figures show the opposite. 

This year’s first-quarter statistics show that the industry sector suffered the most significant slowdown, dropping from 6.6 percent in 2007 to 3.9 percent in 2008, mainly due to less activity in construction and manufacturing. Construction, which hit a high of 21.7 percent in the first three months of 2007 — a pre-election period — sank to a low of 4.5 percent in the same period this year.

	Table 1: GDP Growth Rates By Industrial Origin Source: NSCB, Social Watch Philippines SECTOR 2007 (First Quarter) 2008 (First Quarter) Agri, Fishery, Forestry 4.0 3.0 Industry Sector 6.6 3.9   Of which:     Manufacturing 4.1 2.3     Construction 21.7 4.5 Service Sector 8.4 6.9 GDP 7.0 5.2

These two areas are labor-intensive and employ millions. Social Watch co-convenor Leonor Magtolis Briones estimates that this translates to a loss of 168,000 jobs since April last year.

"These claims are totally erased by the fact that unemployment now stands at eight percent and underemployment at double-digit levels," says Briones, adding that the jobs created were “for street cleaners, canal diggers, flower trimmers and the like," not long-term work.

In fact, the number of unemployed Filipinos could have been higher than eight percent had it not been for a revision of the formula, which now excludes those who do any work even for one hour during the reference period.

Meantime, Alvic Padilla of Social Watch Philippines for the Alternative Budget Initiative points out that inflation continued to accelerate after the first quarter, hitting a record 11.4 percent last month.

"Diminishing purchasing power of people's money will inevitably lead to lower consumption, and may affect business profitability, defer expansion of business, and reduce overall production," he says in a paper he authored.

Table 2: Monthly Inflation Rates, 2007-2008 Source: BSP, Social Watch Philippines
YEAR	JAN	FEB	MAR	APR	MAY	JUN	JUL	AUG	SEP	OCT	NOV	DEC
2007	3.9	2.6	2.2	2.3	2.4	2.3	2.6	2.4	2.7	2.7	3.2	3.9
2008	4.9	5.4	6.4	8.3	9.5	11.4

Typhoon Frank, which pummeled a wide swath of the country a few weeks ago, also weakened the capacity of those in the lower quintile of the population to weather the economic storm.

Frank damaged crops, livestock, fisheries, irrigation, and other agricultural facilities worth P7.57 billion. An estimated P3.9 billion worth of roads and bridges were also damaged. This will obviously have an impact on the country’s food production and food price, says Padilla.

As it is, food prices had already been on a steep climb in the past few months, with President Arroyo blaming the global food crisis for the rice price hike in the local market and the ripple effects on all food commodities and grocery items.

But IBON’s Guzman argues that while it is true that global food costs have increased, global food production in 2007 would show that most of the food commodities registered growth in production (except for wheat) while ending stocks for important grains (in the case of wheat and corn) either declined or were maintained (in the case of rice).

“In other words,” she says, “global supply is simply tight but manageable and is therefore not the main cause for the phenomenal price movements.”

Rice Watch and Action Network (R1) lead convenor Jessica Reyes-Cantos also says that while global trends will always be a factor, the primary dilemma is with the Philippine government’s policy implementations.

PROBLEMATIC AGRICULTURAL SECTOR

The way IBON sees it, the Philippines has long had an agricultural crisis that is characterized by backwardness, low productivity, landlord monopoly, tenancy, usury, foreign control and incursions, trading cartel and monopoly. These days, it says, the situation has been aggravated by globalization policies such as the liberalization of rice and food imports, as well as the privatization of public stockholding and marketing organs, such as the National Food Authority (NFA), and the deregulation of agriculture, such as substantially reducing the budget for it.

	[photo by Jaileen Jimeno]

Reyes-Cantos rues what she calls the government’s “quick-fix” solutions. “If there is rice shortage, then import,” she huffs. “This is not sustainable. What’s necessary is to create long-term solutions, invest in production, and support farmers.”

But financial and economic experts point to other “band-aid” measures that they say only worsen problems. Monsod, for instance, describes the president’s recent scheme of giving P500 doleouts to selected members of the poor as “nakakasuka (sickening).”

"What is P500?” asks Monsod. “What is a one-shot deal that has no long-term effect?"

She adds that it is obvious that Arroyo was just "courting the Manila vote."

The government has defended the scheme by saying it is merely giving back part of the people’s taxes, since the funds supposedly come from the value-added tax (VAT) imposed on oil.

Monsod acknowledges that the VAT "saved the country." But she urges Arroyo to be more circumspect in the use of its proceeds. "The best you can say for it is that it (the subsidy) is aimed at the poor,” she says. “But even then you could have been more selective."

Monsod is a member of the advisory council of the Pantawid Pamilyang Pilipino, a subsidy program under the Department of Social Welfare and Development (DSWD). The program aims to implement a conditional cash transfer program to the poorest families in poorest towns identified in the 2006 Family Income and Expenditure Survey (FIES). Under the scheme, families who send their children to school will receive as much as P1,400 a month in health and education support.

Briones, for her part, suggests, "(Arroyo) should start reversing the government public expenditure patterns. Declining economic growth, soaring cost of living, and increasing unemployment do not bode well for the worsening poverty."