Sunday 6 June 2010


HITTING THE GROUND RUNNING

Bernardo M. Villegas

Manila Bulletin, June 6, 2010

It is very important that President-elect Noynoy Aquino is able to hit the ground running on June 30, 2010. He is fortunate that he is facing a more favorable economic environment than his two immediate predecessors in 1998 and 2001, respectively. As I correctly forecasted early this year, a GDP growth of 7.3% in the first quarter was achieved. The prospects for April to June 2010 are even brighter since these months coincided with the peak of election-related spending and the summer months.

The world is recovering from the Great Recession of the last two years. The recovery is especially robust among the emerging markets to which the Philippines belongs. In both the advanced economies and the emerging markets, economic indicators are generally improving. Countries like China, India and Indonesia with which the Philippines is increasing trade and investment relations are experiencing a V-shaped recovery, i.e. they are already growing at GDP rates that are close to or even higher than their pre-crisis levels. As reported by the Economist Intelligence Unit, China's economy expanded by almost 12% year on year in the first quarter of 2010, and Singapore's by a whopping 12%. World trade, which is recovering rapidly as GDP and manufacturing growth pick up, rose by an unprecedented 5.3% in the three months to January 2010 compared with the previous three-month period. It is no wonder that Philippine exports have expanded at 43% in the first quarter of this year.

Thanks to the ongoing global economic recovery, the new Administration can follow the double-track strategy to attaining the 7% to 9% growth in GDP that the country needs to effectively combat mass poverty, which is one of the worst in East Asia. The first track--which is a strong domestic market--is what enabled the Philippines to avoid a recession in 2009, together with its two giant neighbors, Indonesia and Vietnam. Despite exports declining by more than 30% in 2009, GDP managed to grow because of domestic consumption, fueled especially by the remittances of overseas Filipino workers and government pump priming. Growth in the first semester of 2010 can be as high as 7% because in addition to these two sources of mass purchasing power, there was the added stimulus from the billions of pesos spent by the candidates for the May 10 elections.

(...) [artículo aquí]

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