I wonder how President Gloria Macapagal-Arroyo handles huge swings in emotion. If she’s not on the verge of a tantrum (Are you telling me these people from the NSCB are liars??? – additional question marks mine), she’s on cloud nine about the GNP figures.
Expect to read all sorts of analysis about the GNP and GDP figures in the coming days. I wrote about what these figures mean in this post.
Two of the smartest economists in the country, Dr. Felipe Medalla of the UP School of Economics Cielito F. Habito of Ateneo, both former socioeconomic planning secretaries, earlier this year expressed doubts on the integrity of the national income accounts. They should know what they are talking about. The National Statistics Coordination Board was once an agency under them.
I would like someday to write a detailed report of what it takes to churn out the GDP. I would like to pretend for example that I’m a mole inside the bag of the first NSCB survey person that goes out to gather data :-) . For now, I’m content to chew on this question: why are economic figures – GDP, inflation, trade figures, balance of payments –always under fire? That’s the way it was under the Cory, Ramos, Estrada administrations, that’s the way it is until now.
People just can’t seem to believe them. I heard from foreign investment analysts that they have to rely on a bit of “economic sleuthing” to make up for the poor reliability of data coming from the Philippines, especially because these data are often revised. Imagine that.
The discontent comes from an obvious wide disconnect between official data and expert perceptions on what the real score is. This Reuters article written by Rose Francisco, for example, says people don’t feel the growth and don’t enjoy it on their table. Some economists would tell you the country needs to grow consistently by 7% (give or take several basis points) for more than a couple of years more for people especially those in the bottom rungs to actually feel the growth. That sounds reasonable enough, until you realize that you’ve been hearing that argument since the Ramos administration when the economy was also doing well. People are tired of waiting.
One answer could be to accept that GDP could not totally measure a country’s achievements. Anyone interested in gross national happiness?
Dr. Romulo A. Virola, director general of the NSCB, explains:
Expect to read all sorts of analysis about the GNP and GDP figures in the coming days. I wrote about what these figures mean in this post.
Two of the smartest economists in the country, Dr. Felipe Medalla of the UP School of Economics Cielito F. Habito of Ateneo, both former socioeconomic planning secretaries, earlier this year expressed doubts on the integrity of the national income accounts. They should know what they are talking about. The National Statistics Coordination Board was once an agency under them.
I would like someday to write a detailed report of what it takes to churn out the GDP. I would like to pretend for example that I’m a mole inside the bag of the first NSCB survey person that goes out to gather data :-) . For now, I’m content to chew on this question: why are economic figures – GDP, inflation, trade figures, balance of payments –always under fire? That’s the way it was under the Cory, Ramos, Estrada administrations, that’s the way it is until now.
People just can’t seem to believe them. I heard from foreign investment analysts that they have to rely on a bit of “economic sleuthing” to make up for the poor reliability of data coming from the Philippines, especially because these data are often revised. Imagine that.
The discontent comes from an obvious wide disconnect between official data and expert perceptions on what the real score is. This Reuters article written by Rose Francisco, for example, says people don’t feel the growth and don’t enjoy it on their table. Some economists would tell you the country needs to grow consistently by 7% (give or take several basis points) for more than a couple of years more for people especially those in the bottom rungs to actually feel the growth. That sounds reasonable enough, until you realize that you’ve been hearing that argument since the Ramos administration when the economy was also doing well. People are tired of waiting.
One answer could be to accept that GDP could not totally measure a country’s achievements. Anyone interested in gross national happiness?
Dr. Romulo A. Virola, director general of the NSCB, explains:
Progress, when conventionally measured in terms of economic growth or even in terms of the UNDP concept of human development apparently cannot always be equated with happiness. It seems too, as many of our readers have probably come to acknowledge, that it is not easy to be rich and be happy at the same time. If we cannot have both, what should we then aspire for?He continues:
On a scale of 0 to 10, Pinoys scored in the middle range of happiness with 6.4, tying for 40th to 43rd with Czechia, Greece and Nigeria. Topping the list is Denmark, followed by Switzerland7, Austria, Iceland and Finland. At the bottom are Tanzania, Zimbabwe, Moldova, Ukraine and Armenia. Among the ASEAN countries, Singapore with its high suicide rate is surprisingly tied for 29th to 33rd; Indonesia is 38th and Vietnam is 48th to 50th. Other Asian countries are China, 44th; India and Japan, 45th to 46th and South Korea, 56th to 57th. In terms of happy life years, Pinoys also scored in the middle range at 44.1 years, with a life expectancy of 69.0 years. On top of the list are Switzerland, 69.9 years; Denmark, 62.7 years; Iceland, 62.2 years; Austria 61.0 years and Sweden, 60.8 years…Interestingly, the Japanese, with the highest life expectancy of 80.8 years only have 50.4 happy life years, ranked 30th among the 95 nations. On the other hand, what is in the Scandinavian countries that make their people so happy? It is quite clear that nations which score high in happiness do not necessarily have lower suicide rates. For instance, Denmark, which has the highest happiness score has suicide rates 8 times that for the Philippines among males, and 5 times among females. Of course, we cannot discount the possibility of errors in the measurement of these variables, but the relationship among economic growth, happiness and suicide seems intriguingly complex.I found this part of his article very interesting:
Dr. Allen Tan, former president of the Psychological Association of the Philippines … studied a group of upwardly mobile farmers and a group of more economically stagnant farmers; one of Dr. Tan’s conclusions is that happiness could be viewed as a choice! A choice between what ones referred to as optimistic explanatory style and a pessimistic explanatory style. An optimist would attribute good fortune to something internal within oneself (hard work, innate intelligence) and bad fortune to something external (supersungit na biyenan, chismosang kapitbahay). A pessimist would explain it in reverse: good fortune to something external (help of others, God’s will) and bad fortune to something internal (I am stupid).Can you guess which group the President belongs to? Hehe. I think the GNP and GDP are overrated economic figures. Ralph Andreas Thurm, chief operating officer of Global Reporting Initiative based in Amsterdam gave a fascinating speech during the recent CSR Expo of the League of Corporate Foundations where he said GDP tells the wrong story.
“You cut down trees, you increase GDP. We count ourselves richer without thinking about the damage.”
GDP, GNP, whatever GG..PP...i'm tired of hearing this administration's bs about the economy. P in all these terminologies should be rightly defined. the country's product right now are the millions of OFWs, who are the main reason why the country has reached these economic figures (bloated or not), it is not because of sound economic policies. because if there are any, why is it that the jobless rate is still high?
just a thought...any reactions?
Hey Salve,
I wrote a few blog articles about GDP and I was trying to make it easy to readers. I hope I did. Here's the link: http://reynaelena.com/2007/06/01/what-in-the-world-is-gdp/
I would like to comment on the super happiness of Gloribee with the 7.5% GDP but I'm still trying to understand exactly the driver or what drove it to 7.5%, I've been reading that it's coming mostly from OFW remittances again... so... hmmm... I am gonna withhold my comments for the time being until I finished my very unscientific investigation.
It's long weekend in the US! Yehhhaa! Happy labor labor!
GDP , GNP, 7.5% kuno masarap ba ito ?? mailalatag ba ito sa kainan ni Ordinary Juan de la Cruz?bigyan muna ni Gloria ang mahigit 10 million Pilipinos na jobless ng trabaho para naman malasahan natin lahat kung masarap ba itong binabandila nila na 7.5% GDP o GNP.Kung hindi pa sa padala na remittance ng OFW siguro bagsak lalo ang economiya ng ating bansa.TAMA NA NAG PAMBOBOLA HINDI TANGA ANG KARAMIHAN NG PINOY .. Ang mga sipsip lang sa palasyo at kongresso ang naniniwala dyan.
dabawenyo,
i agree - i looked into the GDP numbers before just to check what's driving it and indeed yon po yong mga padala nameng $12 billion dollars and counting. basic economic princiiple - real wage in the philippines will only rise through productivity, meaning kelangan factories are crunching out products and products and more products that are marketable and generating receipts at taas and sweldo dyan. hindi po and these numbers are purely remittances na naman siguro (kasi me hinahanap pa po akong component sa latest GDP numbers).
eto kasing si gloribee at ang kanyang mga engkanto wanted to parlay sa mga tao na pag tumaas ang GDP, tumaas na rin ang kabuhayan nila. that's what i am reading from all these press releases.
sa Kuala Lumpur lang, she even said na nag-uuwian na daw ang mga OFWs because of the good economy! GRRR! WALANG KATOTOHANAN TO and this one I could debunk based on public figures! yariin kaya ako nang mga engkanto ni gloribee???
Salve,
Truly, I must say that when they announced the GDP at 7.5% na pa "look to the sky" na naman ako. As if I can find my answers there and not somewhere nearer the core of the earth where a lot of souls who have once announced similar misleading indicators in the past may be languishing and paying for their sins. Are we calling them liars? Just because we doubt the numbers doesn't mean we're calling them liars.... but for some reason the first knee jerk reaction was that. Talk about being defensive.
But let me just get down to my question. A lot of people who have to make projections based on all these economic indicators have to somehow validate these otherwise we will end up with very "off" projections. what are we to do?
Happy Labor Day Reyna Elena!
Thank you Tinsi!
Indeed, bago ako magpakalasing tonight for the Labor party nang mga timang kong friends, I thought I would stop by:
Tigilan ako nang 7.5% na yan! The bigger question is, sa GDP formula - what's driving it really? I bet you - ni wala nganng jobs equivalent sa GDP na yan eh! Meaning, yong numbers na yan is not generating any productivity at all! Let me guess? OFW remittances?
Buti pa kamo yong remittances namen di mo na kailangang tanungin kung merong tricle down effect dahil DARETSO PO TO SA MGA POOR AND LITTLE PEOPLE like us!
Yong 7.5% nong tiga Pasig? Me trickle down effect ba yon???
MAKALAKLAK NA NGA!!!
Salve,
Nga pala - there's something wrong with the POEA numbers and I can't believe the numbers that I am seeing:
20,000 OFW in America remitting an average of about $328,000 annually
versus
400,000+ OFW in Saudi remitting a mere $4,000 annually.
Binilang ba nang OFW ang mga remittances nang mga immigrants at kung sino sino pang migrants? O baka naman si Malu Fernandez is now working at POEA supervised by COMELEC???
I understand GMA's reaction during the press con of NIA. Saying that the figures are unbelievable doesn't just hit the intended target (GMA) but also causes collateral damage to the lowly paid government statisticians whose only consolation to their work are pride and dignity. They are the number crunchers who took days of "dissertation" and rendered many hours of OTy (govt doesn't pay OTs) trying to defend what they computed in front of the top statisticians in the country to make sure that these numbers are indeed statistically sound. The numbers may look incredible, even absurd to some people. But this is the truth, and the fact that the Q1 data was revised to 7.1 from 6.9 validated that there was vibrant economic activity during the reference period. These numbers cannot be "massaged", because there would be serious repercussions from the international community if these figures are cheated. You can always visit NSCB website for further inquiry about the GDP data.
empleyado, di naman sinasabi na mali ang statistics. ang tanong kasi, ano ang components nito. dahil stats lang to, pwede mong piliin ang mga metrics na isasali mo sa pagcompute. example sa phisix index, pwedeng nilang palitan kung aling stacks ang isasali nila. hindi porke't pinaghirapan ng mga tao ito ay kailangan na tayong maging bulag at humuntong magtanong.
Nuts,
are you nuts? joke lang. yung post ko eh sa konteksto ng reporter na ang sabi eh unbelievable yung figures, hindi yung sa mga post dito. ok para maliwanag, address ko yung post mo. medyo mahirapan ako magpaliwanag dito pero kung bisistahin mo ang blog ni reyna elena may komprehensibong pagtalakay dun tungkol sa National Accounts. sa tanong mo na:
"ano ang components nito. dahil stats lang to, pwede mong piliin ang mga metrics na isasali mo sa pagcompute. example sa phisix index, pwedeng nilang palitan kung aling stacks ang isasali nila."
hindi pwedeng palitan ang components ng National Accounts tulad ng sinasabi mo sa Phisix. kung bibisita ka sa nscb malinaw naman dun kung ano ang mga nagtaas sa GDP. oo nga stats ito, at sa stats may outlier na pwedeng humila pataas ng grado kumbaga sa college, kung ang core subj mo ay mga 2.5 lang tapos yung mga elective mo ay puro 1 pwd kang maging cum laude. tulad din sa college lahat ng subjects kasali, ang tanong lang eh kung anung subjects yung mataas mo. ganun po yun sa National accounts. wala pong hocus pocus na nagyayari, walang dagdag bawas, o dalawa ang numero tulad ng sa wilyonaryo.
"hindi porke’t pinaghirapan ng mga tao ito ay kailangan na tayong maging bulag at humuntong magtanong"
hindi naman sa dapat maging bulag pero sana naman tama ang mga tanong at nasa konteksto.
Dapat ngang tingnan yung stats. kagaya sa press release na nilabas nila, isa sa factor na na-identify ay ang election-related spending/government consumption. Sumikat na sila sa election, napaganda pa ang resulta ng GDP. Ang tanong sustainable ba ito? baka pwede kasi may election na naman.
Pero pag tiningnan mo yung stats, mukhang di kaya. Tingnan mo ang per industry, bumagal ang manufacturing. Tumaas ang Mining and quarrying dahil sa appetite ng china as fuels (pero di lang tayo ang country na nakinabang dito. atsaka baka humina to pagkatapos ng olympics). Ang AFF although tumaas bumagal din ang growth.
pero tama ka. i am nuts.
from what i understand about national accounting, there are different methods to get the final results. and they all give different answers although quite near from each other. considering the voluminous transactions, i'm sure statistics are applied. and in doing so certain assumptions are developed which is qualitative in nature. anyway for the figures to be credible, there should be some validation. perhaps a survey whether the economic indicators are being felt by the businesses, consumers, foreign investors,etc. this is similar to quality service benchmarking.
Nuts,
nakakatawa ka naman para aminin mo na nuts ka. medyo tama na ang tanong mo. sustainable ba ito? ayan ang magandang pag usapan. kasi kung itatanong eh totoo ba ito, kung ayaw mo maniwala wala akong magagawa. faith mo na yun eh.
nabangit mo ang election/government spending. sa totoo lang last year pa sinasabi na isa sa mga driver ng growth this year ang election this year at sa infra spending dahil sa supplementary budget at ang pagkaka pasa ng budget for 2007. pero wala akong nabasa na nag confirm nito. ang nababasa ko lang eh bakit gnun? expected na nga ito eh. dun sa sinasabi mo sa isang post mo na may isinasali merong hindi, kung iniisip mo na ngayon lang isinali yung election related spending, matagal ng may government spending item sa national accounts. yung sa manufacturing naman matagal ng mabagal yan dahil mula pa nung protectionist era hindi na nag mature ang mga manufacturing firms/plants dito satin at nilamon na sila ng globalization. hindi sila competitive kaya magsasara talaga sila.yung sa mining hindi lang naman dahil sa china. una dahil sa reform sa mining law. pwd na pumasok foreign investors hindi katulad dati. pangalawa hindi lang dahil sa fuel pero dahil sa steel na kelangan ng china para sa olympics. kung matapos man ang olympics lumalaki pa rin ang china at maraming steel pa rin ang kelangan nila para sa infra projects nila. kabi-kabila ang roads and bridges na tinatayo nila kaya hindi pa rin masasabi na tapos na after olympics. ang AFF mabagal dahil sa drought at bagyo nung mga nakaraang buwan. hindi lang masyado nababalita pero sa ibang parte ng pilipinas ramdam na ramdam talaga ang drought.
eto ang matinding tanong para sayo nuts. kung hindi sustainable ang growth na ito, ano sa tingin mo ang dapat gawin para maging sustainable?
don2x,
medyo mahirap ang survey na sinasabi mo, kasi subjective yun. pero may FIES naman na nag-determine ng level ng income ng HH. alam ko sa BSP may consumer confidence at business confidence survey.
@don2x,
there's supply side and demand side for computing the NIA. in theory they should be equal. but in reality they are not. the difference is what you call Statistical Discrepancy (SD). These are both covered in the national accounting of NSCB.
perhaps the supply/demand methods may be similar to the expenditures and the income approaches in computing the NIA. from wikipedia, discrepancies are the result how inventories are treated, the cut-off dates,etc. surveys which are qualitative can be considered to validate quantitative results i.e. quality service benchmarking.even statistians have to rely on subjective judgement on sample size, choice of averaging, degree of confidence, etc. anyway gnp/gdp may interest businesses and economic planners but not the consuming public. what is important to the public is inflation and perhaps interest rates as these affect household budget.
ano po ba ang gnp
Hi Ailene, GNP = Gross National Product. ( in a DCF seminar I attended last month they also refer to this as Gawa Nating Pilipino versus (GDP=Gross Domestic Product or) they also like to refer to as Gawa Dito sa Pilipinas)
I cannot comment on the very lively discussion on the posts above. I found Rey Angeles' latest book : The Philippine Economy -Do Our Leaders Have a Clue, very helpful in connecting the dots (ie. stats and the disconnect with public perception)