Tuesday, July 27, 2004

The President's State of the Nation Address yesterday

• The nation's most worrying economic problem is the rising budget deficit. Last year, the actual deficit was P199.9 billion against a target of P202 billion. The target this year is P197.8 billion. In the first semester, the actual deficit was P80.1 billion against a target of P79.6 billion. The nation has been posting budget deficits in nine of the last 13 years.

The ballooning deficit poses a danger to the nation because it stunts the economy, bloats the nation's debt burden, raises interest rates, spurs inflation and, because it is a sign of mismanagement of the nation's finances, turns off potential foreign investors.

• The public debt is increasing; debt service eats up about one-third of the national budget that would otherwise go to essential social services and infrastructure. The government's public debt stock as of September 2003 stood at P3.8 trillion or 90 percent of GDP.

• The country's population, one of the fastest growing in Asia, is expected to break the 84-million mark this year if left unchecked. About three babies are born every minute. The high population growth rate of 2.36 percent negates economic growth, puts pressure on social services and infrastructure and causes overcrowding in the cities.

• The incidence of poverty is growing, from 31.8 percent in 1997 to 33.7 percent in 2000, or 32 million poor Filipinos in absolute terms. The projection is that 40 percent now live below the poverty line.

• The number of unemployed rose to 4.99 million last April. The unemployment rate increased to 13.7 percent in April from 12.2 percent in the same month last year. Every year about 1.9 million Filipinos enter the labor force.

• On the brighter side, the country's gross domestic product grew 6.4 percent in the first quarter, compared to 4.8 percent in the same period last year. It was the country's strongest economic performance since 2001.

• The economy grew 6.4 percent in the first quarter on the back of robust farm output and election spending. Last year the gross national product expanded by a hefty 5.5 percent, spurred by the rapid expansion in remittances from overseas workers.

• The economy is being kept afloat by the remittances from an estimated seven million overseas Filipino workers, which is projected to increase to about $8-9 billion this year from $7.6 billion last year.

• The agriculture sector grew by 7.7 percent in the first quarter, compared to 2.9 percent in the same period last year. The services sector, the fastest expanding sector in 2003, grew by 5.9 percent.

• Merchandise exports in May rose by 15.3 percent to $3.26 billion, the highest in 18 months.

• Total investments in the first five months of the year rose 692 percent to P137.4 billion from only P17 billion in the same period last year.

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