So What if #Philippines GDP Grew by 7.1% in Q3 2012? Jobs Market and Seasonally Adjusted Figures Tell a Different Story

I was amused to read about the Philippine economy “soaring away” with 7.1% GDP growth in Q3, 2012. For all the talk of a “soaring economy” just like the “surge in investments” – I watched OFWs in Israel and Syria refusing to return to the Philippines. After all with a “soaring” growth – there has got to be lots of jobs for the picking, right? Obviously, ordinary Filipinos sense a disconnect and feel no improvement in their lives.

Aquino’s economic managers will of course hire the best PR agencies they can buy to spread the good news of “Aquinomics”. The question remains though – has the growth translated to improved economic conditions for majority of Filipinos?

Recall that a few weeks back – the Philippines was supposedly facing an investment surge – while Singapore faced a 2.96% decrease in investments. Based on these percentages – Noynoy, Purisima, and Balicasan were ecstatic about the “surge”. Well if we actually bothered to check the Philippine “surge” of $1B in investments against the 2.9% decrease in investments of Singapore – the difference was something like $58B in investments because despite facing a reduction – the investments that went to Singapore was in the vicinity of $59B!

Thus, before buying the spiel of Aquino’s “growth”, let’s kick the tires, unwind the yarn for a drive, give the 7.1% the benefit of the doubt and dig deeper.

A Grain of Salt

According to the NSCB:

“The beyond expectation third quarter growth was driven by the Services sector with the robust performances of The beyond expectation third quarter growth was driven by the Services sector with the robust performances of Transport, Storage & Communication, Financial Intermediation, and Real Estate, Renting & Business Activities supported by the five consecutive quarters of sustained accelerated growth of the Industry and the seemingly weather tolerant Agriculture sectorby the five consecutive quarters of sustained accelerated growth of the Industry and the seemingly weather tolerant Agriculture sector”

Let’s break each of these industries that supposedly drove growth, and identify the dominant players and see where the rest of Filipinos come in.

• * Transport – Tan, Aboitiz, Gokongwei
• * Storage – Ayala
• * Communication – Ayala, Pangilinan
• * Financial Intermediation – Ayala
• * Real Estate, Renting & Business Activities – Ayala
• * Agriculture – Ayala

So where are the rest of the Filipinos? Still lining up for jobs overseas – that’s where!

Just the Numbers: Did the GDP Growth Translate to More Jobs?

So what if PHL GDP grew by 7.1% in Q3 2012. Let’s look at the numbers:

The indicators show that:

1. Employment has not increased and remains at 93%.
2. Of the people who are employed – there is an increase in underemployment – from 19.3% in Q2 to 22.7% in Q3.
   Labor that falls under the underemployment classification includes those workers that are highly skilled but working in low paying jobs, workers that are highly skilled but work in low skill jobs and part-time workers that would prefer to be full-time. 
   For example, an individual with an engineering degree working as a pizza delivery man as his main source of income is considered to be underemployed and underutilized by the economy as he in theory can provide a greater benefit to the overall economy if he were working as an engineer. Also, an individual that is working part-time at an office job instead of full-time is considered underemployed because they are willing to provide more employment, which can increase the overall output.
3.  Unemployment has not decreased and remains at 7%.
4. The price of goods has increased. CPI of 131.4 is higher than previous year’s 126.8 (2006=100)

To make a long story short, joblessness is still high, and more people are being compensated less, but have to pay more for goods.

Adjusting for Seasonality: *Pop* goes the Bubble

When one factors in seasonality – the 7.1% GDP growth becomes a mirage. As pointed out by the NSCB itself

“On a seasonally adjusted basis, GDP grew by 1.3 percent from 1.2 percent while GNI grew at a slower pace of 1.2 percent in the third quarter from 1.4 percent in the second quarter of 2012.

Agriculture, Hunting, Forestry and Fishery sector grew by 0.2 percent, a slowdown from the 1.7 percent in the previous quarter while Industry accelerated at 2.1 percent from 0.2 percent with all subsectors except for Mining and Quarrying contributing robustly to the growth.

On the other hand, the Services sector recorded a 1.0 percent growth for the third quarter of 2012 from 1.7 percent in the previous quarter with the positive growth of all its subsectors.”

Why is the seasonally adjusted rate important? As pointed out in the Investopedia site:

A rate adjustment used for economic or business data that attempts to remove the seasonal variations in the data. Most data will be affected by the time of the year. Adjusting for the seasonality in data means more accurate relative comparisons can be drawn from month to month all year.

****

These adjustments are more often used when economic data is released to the public. The ice cream industry tends to have a large level of seasonality as it will sell more ice cream in the summer than in the winter. By using seasonally adjusted sale rates, the sales in the summer can be accurately compared to the sales in the winter.

Read more: http://www.investopedia.com/terms/s/saar.asp#ixzz2DaOmDY8f

Which one would you rather believe? The 7.1% yarn? Or, the seasonally adjusted 1.3%? 

Business as Usual

Let me spell all these out in layman’s terms. Let’s have a thought experiment.

Consider a pie.

- 90% is owned by 10 people

- 10% is owned by 90 people

If the 90% owned by the 10 people grew – then total pie grew, even if the 10% owned by 90 people did not grow.

Under these circumstances – only the 10 people who own the 90% benefited.

Meanwhile, the 90 people who owned only 10% of the pie are still as poor as f*ck – and in 2013 will pay a bigger tab for Noynoy’s P2.006 trillion budget that awards tax-funded projects to Aquino’s cronies.

Aman Futures’ executives can eat their heart out – they are in the wrong profession, they should run for Congress, run the same scam and be called “Honorable”.

About the Author

BongV has written 458 stories on this site.