Study: GDP rise not necessarily sign of economic growth

The 5.5 percent growth in the gross domestic product (GDP) recorded in the second quarter does not necessarily indicate an improving economy, think-tank IBON Foundation said on Saturday. The GDP growth, partly attributed to improved agricultural production, was announced in a recent press briefing by Economic Planning Secretary Romulo Neri, director general of National Economic Development Authority (NEDA). "With this kind of growth, I think we are no longer among the laggards in Asia," Neri was quoted in an INQ7 article as saying. "We may not be growing as fast as India and China, but I don't think we're still the sick man of Asia." IBON agreed that some sectors did register growth — agriculture, manufacturing, exports, and higher household spending — but pointed out that these are "low-employment" sectors. "Although agriculture did expand, increased production occurred amid high and increasing numbers of unpaid family work and the high-value but low-employment activities of commercial fishing and aquaculture for export," IBON research head Sonny Africa said. Africa said that as of April 2006, 52 percent of those employed in agriculture were own-account workers and 24 percent were unpaid family workers. Similarly, although NEDA cited a distinct pick-up in manufacturing, industrial growth is actually slowing and manufacturing employment, in particular, is falling. Africa cited the falling volume of production index (VoPI), which posted a 4.3 percent decrease in June. He also pointed out that the number of workers in manufacturing fell to 3.17 million in April 2006 from 3.2 million a year ago. "The only things masking this slowdown are the high and rising prices in the oil, water, and power sectors dictated by big corporate monopolies," Africa said. He added that despite the growth in exports, the sustainability and competitiveness of the sector still remained in doubt. Philippine exports have quite low value-added, Africa said, because they are mainly assembled from imported components. June exports and imports of electronic products, for example, amounted to $2.32 billion and $2.03 billion respectively, registering a value-added of only 12% of export earnings. The 5.2 percent increase in personal consumption in the second quarter was driven by higher remittances from overseas Filipino workers (OFWs), he said. OFWs remittances, which had already reached $6 billion in the first half of the year, fueled the spending of a new middle class for cellular phones, malls, real estate, and luxury personal services, according to Africa. "However, none of the sources of growth in the GDP are signs of an improving domestic productive economic base. In fact, the pattern of growth actually betrays the elite bias of the economy," Africa said. He added underemployment continued to soar in step with corporate profits. He cited figures showing that as of April 2006, some 8.4 million workers are underemployed, accounting for over one-fourth of employed workers. Meanwhile, as of 2004 the net income of the country’s top 1,000 firms reached P370.7 billion, a 111% increase from the P175.5 billion recorded in 2003. - GMANews.TV