regarding glorias economic miracle growth kuno


from the malaya
http://www.malaya.com.ph/aug31/edit.htm



''


The 7.5 percent growth of the economic during the second quarter is
simply out-standing. It's the first time the economy grew that much
since the period immediately following the downfall of Ferdinand
Marcos in 1986. The question now is whether such pace of expansion is
sustainable.

Gloria Arroyo expressed confidence the surge in the last two quarters
was no fluke. She said she was sticking, however, to a full-year
growth projection of 6.1 to 6.7 percent, and build on the gains for
bigger growth presumably in the two-and-a-half years remaining in her
term.

That's the prudent course, we suppose, for the momentum is already
faltering in the third quarter. And dark clouds are looming on the
horizon.

We do not mean to rain on Arroyo's parade, but some economists are
already joking about the apparent underestimation of the spending
during the May elections. For there is no question that election
spending was the prime driver of the perk in consumer demand. That's
one spending booster we would not be seeing again until 2010.

Another major driver was government spending. The first quarter growth
in government expenditure was 9.9 percent. This surged to 13.5 percent
during the second quarter.

There should actually be no surprises here. Arroyo said at the start
of the year that after the belt-tightening of years past, her
government would be ratcheting up spending this year. It was time, she
said, the people got their share of dividends from higher taxes. Spent
she did as promised. That the pump-priming took place during the
election period was not coincidental.

Now what's the score on the fiscal front? Collections of the Bureau of
Internal Revenue, the biggest source of government revenues, were
below targets. This was the reason BIR chief Jose Mario Buñag was
sacked. We don't see any likelihood the new BIR leadership would be
able to squeeze more from taxpayers.

Now let's take a look from the supply side. The drought at the start
of the second semester is sure to take its toll on agricultural
production. Agriculture accounts for the GNP and almost half of the
population earns its livelihood from this sector. And the impact of
low agriculture output on industrial production cannot be under-
estimated. The growth driver on the production side was services,
specifically trade and financial.

With an anemic agriculture and manufacturing, growth will continue to
be "ampaw," crunchy on the surface, all air inside.

But on balance, the growth momentum of the first semester can be
expected to be carried forward into the third quarter and, possibly,
the fourth quarter. We should have a good year barring another
shakeout in the world economy.

We're keeping our fingers crossed year 2007 won't prove to be a fluk

.

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