The Anatomy of 6.9% GDP.
The recent government decisions seem to prioritize government consumption (from 6.8% for Q1 2006 to 7.1% for the same period this year) through various infrastructure projects that are expected to
boost the economy in the future. This is understandable because, of all the parameters, this is the only one controlled by the government. The other parameters are interdependent This is also one factor that will contribute in making a “business-friendly” environment.
Personal Consumption, however, should be equated with trade balance because, in a healthy economy, consumption is equated with the local capacity to earn income (Per-Capita Income against Per-Capita Consumption). Income is derived from employment and business earnings
which are directly equated to trade.
In this case however, personal consumption has been derived from OFW remittances and not from internally generated income. Hence, the potential imbalance or unsustainable growth.
The President of the Republic is an economist so we should trust her judgement. The euphoria over the increase 6.9 GDP is boosting the capital formation along with the government’s decision to improve the country’s business climate through improved infrastructure support.
Aside from the infrastructure, she has also put the development of Small & Medium Enterprises to her priorities, making SMEs as dependable base for exports and source of employment.
