IF the government is serious about promoting “transparency,” it should start by adopting a more realistic narrative about economic indicators.
On Thursday, there were two important statistics released by the government. The first was the unemployment rate as of the latest Labor Force Survey (LFS), and the second was the government’s full-year budget deficit.
Neither of these indicators was particularly encouraging. The country’s unemployment rate in January rose 0.6 percentage points to 6.6 percent from 6 percent in October; lower, certainly, than the 7.5 percent unemployment rate recorded in January 2014, but still representing the addition of about 260,000 people to the ranks of the jobless in the past quarter.
The government’s budget deficit for 2014 totaled a mere P73.1 billion, a significantly smaller budget gap than the P164 billion deficit at the end of 2013, and at 0.6 percent of GDP, less than a third of the government’s programmed target of 2.1 percent.
If one took at face value what the two government officials detailed to present these figures to the press—NEDA chief Arsenio Balisacan for the unemployment data, and Finance Secretary Cesar Purisima for the budget numbers—had to say about the results, the Philippine economy is in excellent shape, with steady, tangible growth continuing unabated.
On the unemployment figures, Balisacan said: “The January outcome shows signs that the country’s labor market is continuously improving,” choosing to focus on the year-on-year decline in the jobless rate. While that is objectively correct, it is not the whole story. Unlike many other indicators, unemployment data is more meaningful over a shorter time period, because it is a short-term economic concern for households. Therefore, the result showing that unemployment increased by 10 percent in just one quarter becomes more important.
Granted, that increase was not at all unusual; for the past 13 years, January’s unemployment rate has always been higher than October’s, so this year’s results are just part of the typical pattern. Balisacan could have explained that, however; by side-stepping the very obvious 6.6 percent figure, he instead came across as though he was describing an alternate reality.
To be fair to Balisacan (because, truth be told, I like the guy), that somewhat misleading approach may not have been entirely his fault; his statement was a close approximation of that put out by the Philippine Statistical Authority (PSA), so he may have simply been making an effort to be a consistentteam player.
At least Balisacan was capable of wrapping up his comments with a thoughtful recommendation (keep rice prices under control, somehow) that normal people could understand, which is more than can be said for Finance chief Cesar Purisima, who brought a full tank of meaningless platitudes to his press briefing on the budget deficit figures.
“I am pleased to say that the Philippines continues to stand on firm fiscal footing as we grow at a sustainable pace, owing to the reforms that we have put in place,” Purisima said.
This, while the numbers he was presenting to buttress his claim were painting a picture of an economy slowly settling toward stagnation thanks to the Administration’s atrocious management. For this year, the government set a target deficit of 2 percent of GDP (roughly P200 billion), and a target primary budget surplus – the primary budget excludes government debt payments – of P86.4 billion.
The government sets those targets because the latter represents a prudent bit of ‘slack’ for unexpected expenditures, and the deficit target represents a budget for debt issuances for the year. A variance of ludicrous proportions—the 2014 primary surplus was about 187 percent higher than planned, while the full budget deficit was off the mark by a whopping 350 percent—is not a sign of competent planning or implementation. As a BPI economist pointed out in an interview with The Manila Times on Thursday, “Better fiscal numbers aren’t necessarily a good thing if it comes at scrimping on spending, at a time when the government needs to invest to build capacity.”
Certainly, no one expects Purisima or any other Administration figure to face the public with a mea culpa message, but to completely ignore blatant discrepancies between actual figures and what the government imagines is happening is counterproductive and makes them look foolish. Purisima should have admitted that the government’s assumptions were unrealistic—because the figures already make that quite obvious —and that some changes will have to be made.
At this point, everyone who has a reason to have an opinion about it is already aware that the Philippine economy is, at least for the time being, in reasonably good shape despite some stubborn lingering issues. The Aquino Administration need not limit itself to selling that proposition any longer, but one has to wonder if that’s all they’ve got—that we’re having this conversation five years into a six-year term suggests that’s probably the case.