SONA pickiness with numbers leaves state of economy hazy

NUMBERS are by nature neutral, but comparing or picking different sets across different periods of time is sure to yield vastly different results. Numbers, in this instance, could confuse.

The lesson is not lost on the Presidential Management Staff (PMS) of President Gloria Macapagal-Arroyo; it chose to highlight economic data as of 2007 that generally recorded progress over 2006 data. But the PMS, in its 112-page Technical Report on the 2008 state of the nation address of the President, also chose to deemphasize the bleaker numbers that portray a national economy on the decline.

It seemed like it wanted to set a happy tone for Arroyo’s SONA; the PMS opted to stress the better numbers registered in 2007 and ignore the poorer, if fresher, ones recorded in 2008. The result: a picture stuck in time seven months ago, or before oil prices soared, typhoon Frank visited, and the economy started to slide.

The PMS report said the Arroyo administration has achieved significant gains, and “it is these gains that allow us now to implement measures to cushion the impact of the global threats on our country.”

To be sure, the PMS acknowledged that “the next years will be highly charged years not only for the country but for the entire world.” But it did so while papering over what could be local roots or solutions to the domestic economy’s regress.

“We remain quiet but nonetheless vigilant,” the PMS report said, “as we are well aware that the skyrocketing prices of oil and of food will greatly impact on our daily lives and on our vision for a better life for everyone.”

And so while the picture on this day of Arroyo’s SONA is one of economic decline, the PMS report rendered a pretty picture of “Improved Macroeconomic Growth Performance.” The report did so by citing that Gross Domestic Product or GDP rated “posted a vigorous growth of 7.2 percent in 2007, the highest since the 8.8 percent in 1976 and an improvement from the 5.4 percent growth in 2006.”

Too, the PMS added that, “with the Net Factor Income from Abroad (NFIA) expanding by 16.5 percent, the Gross National Product (GNP) grew by 8.0 percent, stronger than the 6.1 percent in 2006.” Its conclusion: The 2007 GDP “is within the original target set in the Medium-Term Philippine Development Plan (MTPDP) and in the revised Development Budget
Coordination Committee (DBCC) target.”

Growth, according to PMS, “remained broad-based in 2007 as all sectors accelerated while the major engines of growth in the first quarter of 2008 are the services sector in the production side and capital formation in the expenditure side.”

But it is the seventh month of the year 2008, and typhoon Frank had visited in June and wrought damage to agriculture worth P7.577 billion (including rice and corn crops, P1.436 billion; livestock, P93.776 million, fisheries, P2.654 billion; and irrigation and other agricultural facilities, P2.916 billion.)

Typhoon Frank had also destroyed infrastructure worth P3.968 billion, according to the government’s National Statistical Coordination Board.

Thus, while the PMS cited that “industry posted a 7.1 percent growth in 2007, higher than the 4.5 percent growth in 2006, as mining and quarrying, construction and utilities offset the weakness in the manufacturing sector,” the picture had changed dramatically for the worse.

According to the NSCB, the GDP growth rates by industrial origin in the first quarter of 2008 slowed to 5.2 percent, from 7.0 percent in the first quarter of 2007. The industry sector decelerated, with the construction group hit the worst: it recorded growth of only 4.2 percent in the first three months of 2008, or just a fraction of the 21.7 percent growth in the same period last year.

The manufacturing sector, meanwhile, slipped to 2.3 percent from 4.1 percent, and even before typhoon Frank pummeled most of the nation, the agriculture, fishery and forestry sector declined to 3 percent from 4 percent in the first quarter of 2007.

Yet where it deemed the latest data sets to be useful, the PMS chose these, instead of the 2007 data sets. For instance, it said “government expenditures reached P1.15 trillion in 2007, 2.8 percent below the 2007 target ceiling and 10 percent over the expenditures incurred in 2006.”

In addition, it cited that “expenditures from January to May 2008 amounted to P501.20 billion, 5.7 percent higher than the P474.35 billion recorded during the same period in 2007.”

Note that the PMS report shifted from using data for the first four months of 2008, and not the first three months of 2008. If it had chosen the latter set of data from NSCB, the PMS report would have read differently.

The NSCB data for the first three months show that government had underspent so much: Public construction declined remarkably from 18.9 percent of GDP in the first quarter of 2007 to negative 9.5 percent in the first quarter of 2008, while government consumption went down from 9.5 percent of GDP last year, to negative one percent this year.

The PMS’s choice of data sets for the first four months of 2008 in this instance may have a valid reason. The tax filing deadline falls on April 15, and Arroyo signed the 2008 budget into law only last March 12.

Again, the PMS’s pickiness with numbers showed when it tackled revenues in its reports. This time, the PMS chose to focus on data sets covering the first five months of 2008. It cited: “Revenues in 2007 increased by 16 percent to P1.14 trillion from P979.6 billion in 2006. Tax revenues, amounting to P932.94 billion, made up 82 percent of the total revenues in 2007.”

Finally, the clincher: “Improved collections further continued in the first five months of 2008 with revenue collections growing by 11.5 percent to P482.43 billion from P432.59 billion during the same period last year.”