I’M not an economist, but I keep abreast of economic reports, such as the quarterly performance in terms of the gross domestic product (GDP). Thus, my views on the economy are based largely on personal observation and experience, a kind of hands-on take on the economy.
Economists, both from the government and the private sector, were dismayed by the GDP growth of 5.2 percent in the first quarter of 2015, which was lower than expected. The government has been targeting an average growth rate of 7 percent to 8 percent for this year, to rebound from the 6.2-percent GDP growth in 2014 after posting 7.2 percent in 2013.
The performance in the first quarter also drew pessimistic reaction from some groups. But other quarters, not just the government, remained confident that the economy could still recover.
The World Bank, in its flagship report “Global Economic Prospects,” expects the Philippines to post strong growth in 2015 and in the next
couple of years despite the multilateral institution’s lower forecast for the global economy. The Bangko Sentral ng Pilipinas also does not see any need for additional stimulus to prep up the economy after the slowdown in the first quarter, given the good prospects for the remainder of the year.
The slowdown was attributed mainly to the lower spending by the government, particularly on capital projects like infrastructure. Public construction during the first quarter of 2015 dropped by 24.6 percent to P56.37 billion compared with P73.93 billion in the same period in 2014.
As I noted in previous discussions, the private sector took up the slack, as private construction increased by 16 percent to reach P279.3 billion compared with P240.6 billion in the first quarter of 2014. This indicates something positive. While economists worry about the lower GDP numbers and the issue of underspending by the government, those in business—the investors, the CEOs, the tycoons—who really are the major players in the economy, maintain their aggressive stance, unfazed by the not-so-pleasing economic report.
I call it excitement, a word that is not part of the economist’s lingo, but it is something obvious to a businessman like me. It explains why private construction grew by double digits, while public construction shrank, also by double digits, in the first quarter.
Excitement is also reflected in the skyline of Metro Manila, and even in the provinces, which is fast changing. Interesting things are happening in the private sector and we see a lot of aggressive moves by the big players, the tycoons. The continuing improvement in the business climate, brought about by higher credit ratings for the government, the liberalization of the banking industry and the lifting of the European ban on Philippine carriers and, of course, the bright prospects for the economy, among other factors, further stimulate the aggressiveness in the private sector.
Excitement reflects how the tycoons feel about the future of the Philippine economy. It is indicative of the strong investor confidence, as well as their optimism about their business prospects. The excitement is not limited to local investors, as we see the influx of foreign brands, which enhances the attractiveness of the Philippines as an investment hub.
The excitement affects many industries, particularly tourism, the hotel industry, the retail business and related sectors. The excitement also reflects the changes in the domestic market, including the rising purchasing power of Filipinos. The tycoons are continuously expanding their operations and reach through acquisitions or organic expansion, and are taking their capital to many provinces outside the metropolis.
All of these changes can only be good for the Philippines, which still needs to take leaps and bounds to reach the stage of economic development where every family will be able to live comfortably, without worrying whether there will be food on the table for the next meal.
I will discuss the exciting things that are happening in some industries and economic sectors in more detail in the succeeding columns.
(To be continued)
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