he Philippine economy, it
seems, is like a man who everytime he tries to shift from a fast walk to a
sprint falls flat on his face. The track usually gets blamed. There's that rough
patch caused by a slowdown in the US economy. There's that slick surface caused
by the rising global crude prices. There's the muddy spot caused by unseasonal
rains and typhoons. Everything gets blamed except for the man's chronic ill
health.
Five months ago, Gloria Arroyo was dancing because of reports
that the gross national product grew by 7.3 percent in 2007 (this was later
adjusted to 7.2 percent). With the acceleration, the Philippines was claimed to
be on the verge of a takeoff. First World status was not only on the horizon, it
was temptingly close at hand. Within 10 years the Philippines would vault into
the ranks of developed countries.
Early this month, it was reported that first quarter growth
was down to 5.2 percent. Just a hiccup in the steady march to sustained growth,
the Palace said. The economy would pick up in the second quarter, especially
after Arroyo ordered stepped up government spending. The second quarter is
entering its last three weeks and if anybody says it will be better than the
first quarter he ought to have his head examined.
The gloom is palpable because of the food and oil crises. We
probably do not need yesterday's official report that inflation in May surged to
9.6 percent year on year, from 8.3 percent in April, to tell us the situation is
rapidly deteriorating. But that price surge to 9 percent also tells us that the
government is running out of options on how to reinvigorate a flagging economy.
Earlier, we were inclined to favor the government's announced
intention of higher spending to pump prime the economy. While balancing the
budget is desirable, the target need not be met this year as programmed. There
is room for running a deficit as the debt burden has markedly eased. The
International Monetary Fund, in fact, has already given its go-ahead signal for
the government to increase spending.
With that May inflation of 9 percent, spending its way out of
the currently slowdown would be downright irresponsible for the administration.
Most of the extra spending purportedly would go to programs directly benefitting
the poor. An example of this is the recent P500 one-time cash grant to poor
power users ("katas ng VAT" as Gloria would boast).
These band-aid solutions will soon be eaten up by rising
prices. Inflation is the scourge that hurts the poor most. Between artificially
driven growth and stable prices, choosing the latter is a no brainer.
But that's only us talking. Gloria could keep flogging a tired horse in the
next two years. After all, it's her successor who would inherit the mess of her
making.
