loria Arroyo
yesterday left for Switzerland on a week-long trip that will also take her to
the United Arab Emirates. Before leaving, Gloria said she was making the trip to
showcase the country’s economic turnaround and to attract more business
partners, especially now that the United States is in danger of going through a
recession.
We wish her all the luck. On her departure, the stock market
was down 5 percent, following sharp declines last week. The drop was triggered
by fears of a US economic slowdown. Most analysts do not see any return to the
bullishness in the past two years that Gloria habitually cited as proof the
country is firmly on the road to First World status 20 years from now.
We don’t subscribe to the idea that a booming stock market is
proof of the strength of the underlying economy although we do recognize that it
is an indicator of prevailing business confidence. But since Gloria wants her
administration measured by how well the stock market is doing, then, by all
means, let’s take a look at what the current shakeout in the market possibly
portends.
The bull run, it appears, is over. This is not surprising,
given the cyclical nature of the stock market. Only a fool of an investor would
believe everyday is Christmas. Down the line, weakening investors’ confidence
would translate into slower business activity.
Gloria boasted that the year 2007 marked the turnaround
toward sustained growth. While the figures are not yet in, it is likely that GNP
growth last year could have hit the 7 percent mark. Building up on the 5-6
percent growth rates in preceding years, 7 percent is a significant figure. When
sustained, a growth rate of 7 percent gives the economy the momentum to break
out of underdevelopment.
As things now stand, the high growth of 2007 could turn out
to be the top. The economy could conceivably sink back as the cycle swings to
the downside.
Gloria has had a good run of more than 20 quarters of
successive growth. Although that’s nothing to be sneezed at, that does not mean
the economy is on the take off as Gloria claims.
The bright side is that unless we have been totally brainwashed by Gloria’s
spin masters, there is no danger of a crash. It will be soft landing, for the
economy has not gained a reasonable altitude.
