Opportunity from US crisis

EDITORIAL

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10/03/2008

The government the other day drastically reduced the growth target for the year to only below five percent and Gloria’s economic team attributed the downscale to the financial turmoil swirling from the United States.

The assumption was that the slowdown in the US and consequently, the world economy, would pull down exports and will substantially reduce money transfers from the estimated 10 million Filipinos working overseas.

Socioeconomic Planning Secretary Ralph Recto said the likely state of the economy or the simulations that the economic managers are considering, depend largely on the outcome of the $700 billion bailout package in the US.

According to the bright boys of Gloria, the economy remains resilient but at the same time, it would have to take a three percentage point drop in the growth rate from the more than seven percent gross domestic product expansion last year.

Recto said the scenarios drawn up for the economy ranges from the best to the worst with the worst seeing the country’s economy still growing at a miniscule three percent.

What Recto and the rest of Gloria’s economic team were not telling the nation was that the revision of targets was already the second done for the year and before the Wall St. crash.

The first downgrade was to a range of 5.5 percent to 6.4 percent growth from the original growth estimate of between 5.7 percent and 6.6 percent.

The downgrade then was blamed on rising prices of commodities in the world market, primarily crude oil.

The economy has been on a downspin since the start of the year which mostly was the result of a drastic drop in consumer spending as a result of high prices.

Consumer spending was unusually high last year as a result of the national elections.

The economic situation darkened when prices shot up, including rice, the reason only being that the country, which is the biggest importer of the grain, has jacked up its demand.

The answer of the government to the skyrocketing prices was to give out subsidies and one-time cash dole-outs to the poor which did little to improve their livelihood.

It then became a strong argument not to remove the value added tax (VAT) that Filipinos are bewailing as a source of their collective hardships.

Now, the government is again floating more fiscal reforms which boils down usually to yet another tax measure.

What is being bandied about lately is the imposition of a 20 percent tax on short message services or text messages.

Of course, a panic condition needed to be created to again push the unpopular tax measure similar to Gloria’s cry of a fiscal crisis when the expanded VAT law was pushed when the debate on it was raging.

The financial crisis that is engulfing the world as a result of corporate greed in the US is indeed daunting but the ripples from it would not likely be as harsh as the financial crisis that hit Asia in the late 1990’s, which former President Fidel Ramos then claimed the country had escaped with but little scratches. A pretty bad scratch though, since the economic growth was zero then, when he left Malacañang.

This time, instead of the brave face, which frequently is being resorted to in the absence of any concrete solutions being put forward by Gloria and her cabal, what the country is getting are statements that are close to saying the country is becoming a major casualty in the US turmoil.

It seems that building up a scenario of a full-scale crisis is in the agenda of Gloria for reasons that is expected to unravel prior to the 2010 elections.

Give it to Gloria in her ways and means of transforming a crisis into an opportunity — and for her benefit, naturally.

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