PERRYSCOPE

The grand deception
PERRY DIAZ

SAN FERNANDO CITY, Pampanga -- In my article, "Economic Boom or Boo-boo Economics" (Nov. 30, 2007), I wrote: "With 50% of Filipinos poor -- 40% of whom have experienced hunger -- and with unemployment rate at 7.8%, what we will soon hear is the 'astronomic boom' of discontent and the cry of the helpless poor. Indeed, Arroyo's boo-boo economics has created a short span of high -- albeit false -- expectations. She promised jobs for the people, yet more than one million Filipinos are leaving each year for jobs overseas."

That was four months ago when the OFWs were praising Gloria for calling them the "bagong bayani" (new heroes). Indeed, the OFWs' remittances in 2007 set a record high of more than $14 billion. But little did the OFWs realize that their remittances would make the peso stronger; thus, decreasing the value of their dollar earnings. But in spite of the strengthening of the peso, prices of commodities have mysteriously been skyrocketing.

The decrease in OFWs' earnings has a direct effect on the Gross Domestic Product (GDP) which measures economic growth. Since the OFW families would be inclined to spend less on personal consumption, it would have an adverse effect on the GDP. With "personal consumption expenditure" accounting for 74% of the GDP, a decrease in personal consumption spending would bring down the GDP; thus, cooling off the economic growth.

Last January, the Arroyo government announced that the country's GDP grew 7.3% in 2007, the highest since 1976. For the past two years, President Arroyo has been painting a rosy economic picture of the country. In May 2006, she declared that she envisioned the Philippines becoming a First World country -- an "Enchanted Kingdom," she said -- in 20 years. Since then, she had launched a media blitz heralding her achievements. Indeed, everything seemed to be going so well that Arroyo's "new heroes" have become her zealous defenders against her critics, particularly the media. Not anymore. Today, the "new heroes" feel that Arroyo has betrayed them.

On February 3, 2008 the Daily Tribune editorial said, "There was something smelly and not palatable with the way statistics are being suddenly and drastically revised by the Arroyo government." The source of the stink was in the fine print of a footnote on a government statistics report which said that the GDP was revised from 6.6% to 7.4%. Well, a change of 0.8% in GDP is substantial.

The editorial further stated, "The sudden spurt in the government growth record was the reason Gloria, fresh from the World Economic Forum at the Swiss Alps, was able to proclaim to the world that the economy, in terms of GDP, grew 7.3 percent, while the gross national product (GNP) that takes into account remittances of the army of Filipinos working overseas rose 7.8 percent last year."

Three weeks after the Tribunal editorial, Peter Wallace of Standard Today wrote an article, "Time to face the Facts," which debunked Arroyo's economic data. He said, "if you were told that GDP really only grew about 4.8 percent, and that family spending declined, and that there were more people who went hungry during the past three years than in any period during the past 10 years, you'd think much differently."

Now, there's an ocean of difference between a 4.8% growth and the 7.8% growth that Arroyo has been trumpeting. Wallace explained, "In 2007, the economy, had exports and imports grown as they did during the past 20 years, would only have grown at about 4.8 percent. What created the 7.3 percent wasn't a dramatic improvement in the factors that contribute to growth but, instead, a worrying massive decline in imports." Wallace further stated, "Imports were 6.6 percent less in 2007 than they were in 2006. Now in a healthy, growing economy that's a most unlikely event."

My question is: What caused imports to decline in a "growing economy"? One explanation is that smuggling has increased; thus, negatively impacting legitimate trade activities. And this rationale was unwittingly collaborated by an article in the Warrior Lawyer which said, "one of the many criticisms leveled against this administration is how smuggling is not only rampant, but allegedly condoned at the highest levels of government."

In the past seven years, cheap smuggled goods have been flooding the Philippines. For the first time in the country's history, the rich and the poor are wearing the same expensive brand names. The only difference is that the poor wear fake brand names smuggled from China. Recently, former Speaker Jose de Venecia, Jr. has implicated First Gentleman Mike Arroyo and his son, Congressman Juan Miguel "Mikey" Arroyo, in smuggling operations.

Another interesting article was written by Manuel L. Quezon III -- grandson of the late President Manuel L. Quezon -- which showed a graph titled, "Real GDP Per Capita Quarter-on-Quarter Growth Rate." The graph, covered the period from the 4th quarter of 1981 to the 2nd quarter of 2007. Noticeably, the graph has a gap between the 4th quarter of 1999 and the 2nd quarter of 2001.

Quezon noted, "You will see on the chart above, which comes from a presentation of Dr. Michael Alba, that the line showing the country's GDP is broken at one point. I asked him what that meant. He said, it represents a change made in the manner GDP is computed, which makes all previous data and all subsequent data not precisely comparable to each other." In other words, had the manner in which GDP was computed not change in the 2nd of quarter 2001, the GDP would have been different from what Arroyo had been showing the world.

It is interesting to note that Gloria Arroyo took over the presidency from Joseph Estrada on January 20, 2001, the first quarter of that year. Did Arroyo manipulate the GDP computations?

The biggest victims of Arroyo's grand deception are the poor. A recent survey by the National Statistical Coordination Board (NSCB) showed that the number of poor Filipinos has increased and poverty overall has worsened during Arroyo's term. Poverty incidence rose from 24.4% in 2003 to 26.9% in 2006.

Compounding this is the latest survey by the Hong-Kong based Political and Economic Risk Consultancy (PERC) which revealed that the Philippines -- for the second time in a row -- is perceived as the most corrupt economy in Asia. With the rice shortage and rising cost of commodities, particularly oil and rice, the economic downturn is hurting whom would hurt most -- the powerless poor. (PerryDiaz@gmail. com)