Q2 economic data: What does it mean?

There are different ways to calculate the value of a nation’s domestic economy and its growth. The total income of the government, companies and individuals can be measured. Alternatively, the total amount of public and private spending can be used, or the value of all production of goods and services can be counted.

Most governments use some sort of combination of these to arrive at a number. However, that data can never be completely accurate and, of course, misses a large portion of the underground economy, which is off the official books. Some nations, including the UK and Italy, even estimate the amount spent on illegal prostitution and illegal drugs as part of their economic output.

The key, though, is for the government to be consistent in what figures they use to estimate the GDP so as to have a reasonable comparison between time periods.

The Philippine Statistics Authority reported on Wednesday that the Philippine economy grew by 6.5 percent year-on-year from the second quarter ending on June 30, 2016. This growth was in line with estimates by most economists although below the 7-percent growth that the Department of Finance was shooting for. For the past three quarters, growth has averaged 6.5 percent, so there were no surprises here.

When you consider the weakness of the Philippine peso, which raised import costs, higher crude-oil prices than one year ago, and a new administration, the numbers are good even if not great or as high as everyone wishes they could be. The other factor to consider is that in the second quarter of 2016 election-campaign spending boosted the economy. Growth last year at this time was 7.1 percent over 2015. But media company ABS-CBN just reported a decline of 43 percent in net income in the first half of 2017 due to the absence of election-related advertising, which lifted profits in the comparable period in 2016.

Any economic data is subject to great “interpretation” by the government and media. Further, economic growth in early 2015 was dismal, so, naturally, 2016 looked strong. But bias in all reporting of even simple numbers is expected in this time of “political hell”.

While the agricultural sector was comparatively strong in the second quarter (up 6.3 percent) and the industrial sector continued its 7-plus- percent growth in the past two years, government and household spending saw a substantial drop from 2016’s growth.

In 2016 government spending grew by 13.5 percent versus 7.1 percent this year, and household final spending was up only 5.9 percent, from 2016’s 7.5 percent. Again, the election was a factor in both. Interestingly, export expenditure grew by 19.7 percent this year, against 10.6 percent last year. And the Philippines experienced very strong postelection year economic growth as compared to 2005 and 2011.

What do all those boring numbers really mean?

Looking at the first half of 2017, we can say with cautious optimism that the Philippine economy is becoming much better at surviving and thriving with our contentious and often nasty political climate, and global economic situations that are often chaotic and unpredictable. We sincerely hope that this trend will continue through the rest of the year. The Filipino people deserve it considering all the nonsense that they have to put up with.



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