Something for the Philippines’ government to crow about, as the country’s economy – to be more precise, its gross domestic product (GDP) – grew by 7.3 percent in 2007, which was apparently higher than the 6.1 to 6.7 percent rate that government economists and planners were predicting for the year.
The increase was felt across a broad range of economic activity, with services taking the lion’s share of growth:
“The services sector rose 8.7 percent. This sector, which includes the booming business process outsourcing sub-sector, had its fastest growth since 1987.
“Almost all services sub-sectors registered faster growth: transportation and communications, 8.2 percent (compared with 6.3 percent in 2006); trade, 9.8 percent (6.1 percent in 2006), finance, 12.3 percent (11.4 percent in 2006); real estate, 6.0 percent (5.7 percent in 2006); private services, 8.8 percent (6.9 percent in 2006). Only government services registered a slowdown to 3.3 percent from 4.7 percent in 2006.”
What were the factors that contributed to this impressive performance?
“”In an environment of benign inflation, low interest rates and a strong peso, the Philippine economy turned in its best performance in 31 years,” Romulo Virola, secretary-general of the National Statistics Coordination Board, told reporters in a news briefing yesterday.
“”On the demand side, increased consumer spending, investments in public and private construction, government spending and exports of non-factor services largely contributed to the remarkable performance of the economy,” he added.
The full press release from the National Statistical Coordination Board can be obtained by clicking on the link.
Philippine central bank officials also reacted to the news:
“The Bangko Sentral ng Pilipinas (BSP) cut its overnight rates by 25 basis points Thursday, less than expected, after robust 2007 economic growth data suggested the country could maintain its momentum well into this year.”
Administration officials, of course, were quick to attribute the credit for this success to you-know-who:
““[Last year’s growth] is a clear manifestation that President [Gloria Macapagal] Arroyo is leading the country using correct economic strategies,” deputy presidential spokesman Anthony Golez said in a statement.”
There are some, on the other hand, who doubt the sustainability of this achievement:
“Economists, on the other hand, continue to question the sustainability of the GDP growth. Former budget secretary and now University of the Philippines Prof. Benjamin Diokno was quick in saying that the GDP growth is “not sustainable”.
“Diokno said the only reason that could make the 7.3-percent full-year (GDP) a sound figure is the fact that the third-quarter growth was revised to 7.4 percent from the previous announcement of 6.6 percent, a difference that is seen to be subject of debate in days to come, considering that in past instances, revision of data involved an upward or downward change of only a fraction of a percent.”
The administration’s boosters may pooh-pooh Mr. Diokno’s remarks out of hand as made by an academic living high up in his ivory tower, but a set of observations contained in the same Business Mirror article I linked to makes several valid points, and disturbing ones at that:
“Australian economic analyst Peter Wallace said one major factor for the GDP�s swelling was the decreasing import bill of the country, which is actually a negative sign, he said, since lesser imported capital equipment means less economic activity for the future.
“He said a GDP at the 5.5 percent to 6 percent range would have been healthier as long as the importation of capital equipment is higher because “this is what we need.”
“Wallace also found puzzling that oil imports are down in 2007, which is not logical for a fast-growing economy. When economic activity is high yet the importation is down, the inevitable conclusion, he said, is that there is rampant smuggling.”
Even a recession in the United States is not expected to have much of an impact in the Philippines, in so far as one industry is concerned: US recession seen to drive demand for BPO facilities here.
The Internet economy is often described as hanging on a thread, or threads that is, of fiber optic strands that make up the many undersea telecommunications cables that gird the globe and carry the bulk of the world’s voice and data traffic. A break in a critical link often proves disruptive, as was demonstrated in southeast Asia in 2006 and now in the Middle East and Europe:
“Internet outages disrupted business and personal usage across a wide swathe of the Middle East on Wednesday after two undersea cables in the Mediterranean were damaged, government officials and Internet service providers said.”
India is seen to be especially affected by the outage:
“India’s lucrative outsourcing industry had to contend with internet slowdowns and outages after two cables were cut under the Mediterranean Sea, disrupting Web access across a wide swath of Asia and the Middle East.
“The disruptions on Thursday cost India half its bandwidth.”
If I’m not mistaken, a good chunk of Philippine Internet traffic to Europe is usually routed via the United States, so Philippine Internet users should not be overly affected.
The Guardian says that many people around the world continue to take for granted the immense infrastructure required to operate the Internet, as embodied in all those cables worth billions of dollars literally sunk at the bottom of the sea:
“”People just don’t realise that all these things go through undersea cables – that this is the main way these economies are all linked,” said Alan Mauldin, the research director of TeleGeography. “Even when you’re using wireless internet, it’s only really wireless back to your base station: the rest is done over real, physical connections.”"
In 2006, an earthquake in Taiwan broke the undersea cables connecting Asia to the United States. In this instance, a badly-moored ship off Alexandria, Egypt may be the culprit.
For those of you who may be interested, here is a link to a site filled with historical submarine cable route maps, including one of the Philippines.