There are two topics that even the highly educated person —let alone the average individual—knows little about: the human body and money/economics.
That is why we go through these long periods of confusion like “Eating eggs bad,” “Eggs good,” “Eggs bad.” And as of August 16, 2018, “The American Heart Association suggests one egg per day for people who eat them, as part of a healthy diet.”
The confusion is worse when it comes to money and the economy because at least each of us has experience with a human body. We might not know exactly why we have a high fever, but we know enough to understand that there may be a problem. With money and the economy, most people are clueless.
Take the gross domestic product (GDP). How is that data calculated? How does the Philippine government calculate GDP? The reason those questions are important is that there are several ways to reach a final number. Is GDP the total value of goods and services produced? Or should it be calculated by the value of how much government and consumers spend on those goods and services? Further, most governments use a blend of data.
The annual GDP growth rate from the previous year is only one indicator of how the economy is doing and is not necessarily the best. Whatever methodology is used to find the GDP is “perfect” as long as it is used consistently. When I worked in a fast food restaurant—about the time the hamburger was invented—the owner tracked the sales of French fries not by the amount of frozen potatoes he bought but by the number of the paper containers that the fries were served in.
He figured that he could not count the actual potato sales accurately because he knew we employees ate a few fries now and then. But only paying customers received the paper container.
All this talk about economic growth being slower in the past three years versus the previous three years is accurate. However, note this fact: Between 2012 and 2015, the total GDP grew by 14 percent. Between 2015 and 2018, the total GDP increased by 13 percent. Therefore, there is not much difference between the last three years of the Aquino administration and the first three years of the Duterte administration.
If you take the total GDP and divide it by the total population—Philippines GDP per capita—between 2012 and 2015 the total growth was 15 percent and between 2015 and 2018 the total GDP growth was 16 percent. Not much difference in the past six years.
The average “expert” talks much about GDP growth but another way to measure the real world impact and wealth of the economy is found in “GDP per Capita by Purchasing Power Parity (PPP).” This is calculated by valuing total GDP divided by the population and the cost of similar goods and services across borders.
Between 2012 and 2015, Philippine “GDP per capita by PPP” increased by a total of 15 percent. Between 2015 and 2018 the GDP per capita by PPP increased by 16 percent. As you can see, there is very little difference between the two administrations regardless of your political views, which the numbers do not care about.
Certainly, anyone can complain that the highways of the Philippines are not paved by gold. But at least, use real data and not numbers from a political agenda. My dear sainted mother made me eat an egg every day while I was growing up. My perfect cholesterol numbers prove she was right.
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.