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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 80,574 77,076 71,400 43
         
GNI per capita
 US $ 1,080 1,020 1,050 135
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 038 - (27/02/07)

Election season is well and truly upon us. The country goes to the polls in mid May. Up for grabs are 50 percent of the Senate seats (the Philippines has a bicameral Congress with six-year terms but in which half of the upper house retires every three years) as well as local government posts from provincial governor downwards.

While there was talk well into December that the Administration might push ahead with Charter Change and extend the term of the present Congress without the need for re-election, the negative reaction from the public at large was so swift and so shrill, that the Administration quickly backed off that course. Charter change has been returned to the back-burner for the time being but don't count on it staying there for long. 

With the period for the filing of certificates of candidacy for the 12 Senatorial posts already closed and with the filing date for the gubanatorial and local government posts looming, the campaigning is already underway. 

Sadly, this election will be fought on traditional lines. Policy options are taking a back seat to the horse-trading among political personalities and those personalities continue to change horses depending on who will give them a better deal. Both parties appear to have healthy war chests so election spending will no doubt give the economy a shot in the arm over the next few months. Nobody will go hungry during election week.

Alongside the two main teams are a number of "independents". These are candidates who failed to get official endorsement from the major groupings but who feel they have sufficient resources to be able to run a successful campaign anyway. By and large, they are people who are aligned with the Administration, at least in heart if not "all the way".

The opposition of course (campaigning under the banner of "Genuine Opposition" or "GO") appears to be largely under the control of former president Joseph Estrada who is hoping that a groundswell of support from the masa will bring vindication to his stunted presidency and freedom from his present house arrest-not to mention absolvement from the plunder charges he now faces. The entire opposition campaign appears to be set around discrediting the legitimacy of the Arroyo team.

Ranged against the Opposition is the Administration's "Team Unity" ticket which is out to proclaim the message that under President Arroyo, Filipinos have never had it so good and while the masa may still be poor and hungry, good things will come their way eventually if only they hang in with the incumbents. A decisive victory for the administration will resolve once and for all the legitimacy issue and allow government to concentrate its energies over the next three years on delivering on its promises-that at least is the official line and so far as it goes, it is probably correct.

President Arroyo's team will win the election. That is a fearless prediction. And they will win it decisively. No doubt, they will hope to obtain that decisive victory through a fair and impartial vote count, but precautions will be taken to ensure the victory regardless.

Indeed, they may well win fair and square. Mr. Estrada has been out of the limelight for six years now and in actuality his star has already faded. If elections are to be won or lost on the basis of the "message" then the Administration candidates seem to be ahead of the pack already. 

It does little good to claim that while the economy may be improving, it would have done even better had Ms. Arroyo not been at the helm. This is not a presidential election and there is no alternative leader (other than Mr. Estrada) for the opposition to rally around. Those who may be eyeing a bid for the presidency in 2010 know the score and are maintaining a very low profile. It would be imprudent on the local political scene to do otherwise.

Beside which, if President Arroyo gets her way and has the force of numbers to bring about Charter Change she may be around for a lot longer than 2010. Even if she does leave office at that time she will be mindful of what happened to previous presidents who became controversial and will not want to suffer the same fate. But there again, President Estrada did not come from the elite who are used to governing this country. If the powerful clans continue to call the shots she will have nothing to fear-which is one reason President Arroyo is unwilling to cross them in any fundamental way.

In this regard we are reminded of the famous quote of Lord Palmerston, a British politician of the mid-nineteenth century: "Britain has no permanent allies-only permanent interests."

That famous quotation holds sway in the Philippines today. The ruling elite of the country has no permanent allies, only permanent interests to protect. How else can you explain the permutations and combinations evident on the local political scene? It is the hallowed principle of the "divine right to rule." 

But before we get too carried away, it is worth remembering that true participatory democracy that many in the West urge upon the Philippines (and to which many Filipinos themselves aspire) is really only a product of the last fifty years or so and that for most of the last millennium from Magna Carta through to the present, politics was about dividing the spoils among those who controlled the wealth. Even the good Lord Palmerston, quoted above, purchased his seat in Parliament and regarded it as his right to do so. Can we complain when Filipino politicians do the same?

So what is in store for the next three years?

There has rarely been a government going into an election that has not presided over an expanding economy, lowering inflation and an improving business climate. As has been pointed out on numerous occasions, statistics can be manipulated to serve any purpose-just about!

Gains have been made in recent years but, as many of the international rating agencies point out, the Philippines is not out of the woods just yet. While a number of these same agencies would claim that the "outlook" has improved, the actual rating given to the Philippines has not yet been reassessed. None of this of course stops the government from trumpeting its achievements and glossing over any criticism.

So it comes as no surprise that in recent days, the president's chief economic adviser unveiled a new three-year plan to boost economic growth to 7 percent in 2007, 8 percent in 2008 and 9 percent in 2009. Dubbed as "Plan 789", the strategy seeks to accelerate economic growth to the extent that it will match-if not surpass-the growth of neighbouring Southeast Asian countries.

The country's gross domestic product (GDP) grew by only 5.4 percent in 2006, although this was faster than the 5.0 percent growth registered in 2005. If the GDP manages to grow by 7 percent in 2007, this will be the fastest rate since the 6.7 percent expansion registered in 1988.

GDP growth achieved during the Arroyo administration from 2001 averaged 4.37 percent. This was already better than the 3.86 percent average during the term of President Aquino, 3.83 percent during the regime of the late strongman Ferdinand Marcos, 3.76 percent during the time of President Fidel Ramos, and 2.93 percent during the term of jailed President Joseph Estrada. 

Since assuming office in 2001 the Arroyo administration had sustained GDP growth for 24 successive quarters since 2001. This is the longest uninterrupted growth spurt the Philippines has recorded for the past 25 years. 

The government's long-term strategy will continue to focus on the 10-point agenda, which includes balancing the government budget by 2008, providing education for all, automating the elections, improving transportation and digital infrastructure, terminating hostilities, healing the wounds of EDSA, providing electricity and water for all barangays, creating six to 10 million jobs, decongesting Metro Manila, and developing Clark and Subic.

So far, of the 10 points in the agenda, the government will admit to failing only in two-"automating the elections" and "healing the wounds of EDSA' or uniting the hostile political factions in the country.

Growth does not come without a cost

While the first three years of the Arroyo administration may be regarded as the formative years during which time it was hoped that President Arroyo would walk the talk and bring about cohesive, inclusive and principled governance to the Philippines, it is the past three years-since the election of 2004-that that have established the hallmark of her governance. 

The downside of achieving progress on the economic front has been a retreat from even the limited progress made in achieving rule of law and embracing the principle of sanctity of contracts to a culture whereby those within the ruling elite often appear to act with impunity and brazen disregard for the consequences-legal or moral. 

The watershed of course, was the revelation in mid-2005 that President Arroyo cheated in the 2004 election-or to be closer to the truth-that she won by out-cheating her opponents. Almost immediately that fact came to light the ruling elite closed ranks and adopted the line that "those who are not for us are in fact against us". 

So we are now faced with a Philippines where the economy is showing signs of improvement and, certainly, those who have the ability to invest in stocks or hedge on currencies are doing rather well. But it is also true that foreign investors continue by and large to sit on the sidelines and that as a result, unemployment and underemployment remain chronic problems. New investments and new jobs that would redistribute wealth to the lower elements of society are not yet happening and, indeed, much of the basic infrastructure remains to be put in place. This will take a lot longer than three years.

For its part government spokespersons would claim that President Arroyo has produced the best income distribution of all four post-Marcos administrations but others would counter that progress has been so infinitesimal that the verdict has to remain out at the present time. 

It is the poor that are switching from buying food to buying cell phone loads that are feeding the profits of the telcos that are feeding the rich.

The most likely outcome for the next three years at least is for more of the same. Barring unforeseen global developments, the economy will continue to make modest progress-probably better than previous-but not at the rate the government forecasts. Political dissent will continue to be stifled, especially where entrenched interests are threatened. Much of government as well as the armed forces will likely remain in denial believing that economic progress can only be achieved if society becomes more disciplined. 

Sadly, measures to bring about the discipline this country sorely needs are the wrong measures in the wrong places. If you are a provincial labour organiser or a journalist seeking to expose malfeasance then you will continue to be considered a threat to entrenched interests and suffer the consequences. Whether or not the perceived threat comes from local politicians or national ones, the result will be the same. The Palmerston Axiom will continue to hold sway.

But expect little to be done by way of improvements to the quality of life for Juan dela Cruz. Traffic will continue to be chaotic, the only family respite will be found by spending remittances in one of the major shopping malls and during typhoons, giant billboards (which curiously now are all being reconstructed) will continue to pose a threat to human life. Buses on EDSA, Manila's main artery, will continue to pose danger to life and limb. After all, isn't it the generals who own the bus companies?

Life in the Philippines will continue much as it has done before. The rich will stay rich; the poor will stay poor and business will continue to make modest gains. After, all business can operate anywhere provided there is a modicum of stability and, if we are to end this commentary on a positive note, it would be that all other things considered, the Arroyo administration has succeeded, against earlier predictions of providing better stability and predictability. Progress has been modest but there has been progress. For this small benefit, most are thankful.

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