WHEN Global Source reported last month that the 7.3-percent growth in the Philippines’ gross domestic product (GDP) in 2007 might have been overstated, the immediate reaction was to label the New York-based think tank as an unfair skeptic or one with the usual western bias against developing economies.

Actually, the report was prepared not by westerners but by Filipino economists-former finance undersecretary Romeo Bernardo and Margarita Gonzales. Their names on the report were an assurance that the report was objective and the questions were valid and fair.

Indeed, even the World Bank, International Monetary Fund and the Asian Development Bank have accepted our government’s report that the economy grew by 7.3 percent last year, the highest annual GDP growth rate in the past 31 years.

Consensus aside, Global Source sees the need for the government to enhance the gathering and processing of national-income data and “make it more reflective of what goes on in the real economy.”

In its March report, it cited instances where some analysts claimed that growth might have been “overstated” in the past several years. One indicator was the way growth in family spending, as measured by a national survey of households, had fallen behind growth in personal consumption under the national-income accounts in recent years.

Global Source noted a similar break in the pattern with regard to incomes, for instance, when relating family-income growth versus GDP growth.

Another argument was that the poverty level had not only declined, but it even worsened to 26.9 percent in 2006 from 24.4 percent in 2003, while measures of inequality hardly changed.

According to the report, “The question in this case becomes, which data set is correct? Household surveys and national-income accounts are known to have their own estimation weaknesses, with each having its own set of supporters. Some tend to doubt the latter more these days, however, because of inconsistencies.”

The report also said the “questionably” high growth rates in recent years might be explained by the fact that the agency in charge of national accounts, the National Statistical Coordination Board (NSCB), had been slowly changing its methodology.

Two former socioeconomic planning secretaries, Cielito Habito and Felipe Medalla, according to Global Source, agree on the useful rule of thumb in correcting the overstatement and making the figures more or less comparable with past growth—the two men simply trim away one or two percentage points.

“This means that last year’s growth was likely in the 5.3-percent to 6.3- percent range—more in line with the historical average, yet still quite high,” Global Source conceded.

As a businessman, lawmaker and Filipino, I was among those who cheered our economy’s impressive performance in 2007 because a high growth rate is what we really need to make sure that the benefits of economic growth filter down to every Filipino household.

But, you know, I really prefer to have the real figures. Did we really grow by 7.3 percent last year? If we did, let’s congratulate ourselves and move on. But if we did not, then let us face the situation and work harder.

My point is that the government, particularly the NSCB and other agencies involved in measuring economic performance, should review their data and compare these with Global Source’s findings. Then the government must issue an official statement, either affirming its earlier report on the economy or revising it. The people deserve nothing less.

Statistics are important for policymakers and  lawmakers, investors and creditors, among others, because these serve as a guide for them  in preparing road maps for development or in crafting legislation; for investors in making decisions on whether to put up factories or not; and for creditors to determine the country’s capacity to pay.

Inaccurate statistics can make or unmake our reputation in the international community. Investors could pull out or defer projects, creditors could impose high interest rates on loans and our own development plans could be derailed if decisions are made based on unreliable data, like inaccurate economic-growth reports.

As I said in an earlier column, we are facing mixed trends as far as the economy and businesses are concerned. Like the rest of the world, we are concerned about the impact of the subprime crisis and the slowdown in the United States, the surging oil prices and, more recent, the emerging global food crisis.

But for the Philippines, I believe our economic fundamentals remain strong and positive developments are still coming our way. For instance, a preliminary report from the coconut sector showed that our coconut exports increased by 52.3 percent in March. The estimate for the whole year is a 13-percent growth for 2008, compared with a decline in 2007. Another example: The Bangko Sentral ng Pilipinas has reported a 15.5-percent increase in remittances from overseas Filipino workers for January-February 2008. So we are still on track toward breaching the $16-billion mark in remittances for this year.

These and other developments, like the continuing capital expenditures of many companies, are strong indicators that we will survive the global challenges confronting us. We don’t need to pad our figures—the truth is enough! 

You may send your comments/feedback to mbvillar_comments@yahoo.com.

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