hile everybody’s
attention was focused on the fighting in Mindanao, the scourge of inflation was
taking its toll on households, business, and government, leading to a drop in
consumption that, in turn, dragged down economic growth to 4.6 percent during
the second quarter.
The April-June figure resulted in a first semester growth
rate also of 4.6 percent, following a downward revision in the first quarter
growth from 5.2 percent to 4.7 percent. Given these figures, the full-year
growth goal of 5.5-6.4 percent is hardly attainable.
The economy has yet to fully adjust to the inflation pressure
from high oil and food prices. Best estimate of the Bangko Sentral is that price
stability would return only next year.
The seasonal buying frenzy during Christmas might ramp up
consumption a bit. But the country would be lucky if the economy could turn in a
full-year growth of 5 percent.
As in the past, the only thing shoring up the economy is
remittances from overseas workers. We suppose we should just keep crossing our
fingers that a looming global economic slowdown would not fray and snap this
lifeline.
The United States has yet to start shaking off the effects of
the home mortgage crisis. Some European countries are also on the throes of a
property bust. Japan is facing another period of contraction. China, which has
been a key driver of Philippine export growth, is also slowing down.
In the short-term, the cooling off of China’s overheated
economy would probably take the bigger toll on the Philippines’ prospects.
China’s hunger for mineral ores, for example, is abating. The country’s newly
opened mines are already saddled with a huge volume of unshipped inventory. They
might soon go the way of "hot pan de sal" stands.
Economic managers are banking on government spending to take
up the slack in the face of weak personal consumption. We are not sure, however,
whether increased government spending will do the trick. The proposed budget of
P1.4 trillion for 2009 is, after all, only 15 percent higher than this year’s
budget. Given the double-digit inflation rate, that increase is smaller than it
appears.
We are in for a rough ride, folks, and let us not add to the turbulence with
these wild talks of waging all-out war in the South.
