Growth much higher in 2010
GOVERNMENT number crunchers have revised the country’s national income accounts anew, a move that has yielded faster economic growth of 7.6% for 2010.The National Statistical Coordination Board’s (NSCB) yesterday released preliminary results of the "revised and rebased" national accounts, which now use 2000 instead of 1985 prices and include new components. As a result, the Philippine economy officially grew by 7.6% in 2010, faster than the record 7.3% rise in gross domestic product (GDP) based on 1985 constant prices. The revisions, done in partnership with the World Bank, were presented yesterday in a forum where government statisticians also said they were dropping the term "gross national product" in favor of "gross national income" or GNI. "This marks a milestone in improvement and development of the Philippines’ national accounts," NSCB Secretary-General Romulo B. Virola said. "The rebasing and revision in the national accounts were done in order to make it (the data) timely, relevant, reliable, accessible and comparable," Mr. Virola added. The country’s national accounts have undergone four overall revisions -- 1968 (from base year 1955 to 1967), 1973 (from base year 1967 to 1972), 1995 (from base year 1972 to 1985) and 2011 (from base year 1985 to 2000) -- rooted in the system of national accounts (SNA) used by most economies. Among Southeast Asian countries, the Philippines was the first to adopt the 2008 version of the SNA, the international statistical standard for the national accounts of the United Nations. Indonesia, Mongolia and Cambodia are planning to adopt the international standard in 2012, 2014 and 2015, respectively, while Thailand, Laos and Vietnam have no plans of adopting the standard, said Charles Aspden, the NSCB’s foreign consultant for the project. Asked to comment, University of the Philippines economist Benjamin E. Diokno said "rebasing is a good move... 1985 is such a distant past and 2000 is a good year, a normal year." The preliminary data cover the years 1998 to 2010. New components affected economic growth. For instance, the output of non-life insurance services now includes "income accruing from investing the technical/actuarial services of insurance companies." Imports are now valued based on "free on board," which does not include freight and insurance, instead of cost, insurance and freight. Gold has been excluded from merchandise exports and treated as financial assets of the central bank. The item import of services now includes expenditures of overseas Filipino workers abroad. Moreover, the inclusion of intellectual property products like research and development, mineral exploration, computer software and databases and entertainment, literary or artistic originals expanded the country’s fixed capital formation, which is part of GDP. The new standards also require the "explicit identification and treatment of non-market production of government as output of non-profit institutions serving government." "In the growth rates from 1999 to 2010, six out of twelve years were revised downward with 2000 having the biggest revision of -1.6 percentage points while 2001 has the biggest upward revision of 1.1 percentage points," said Raymundo J. Talento, director of the economic statistics office of the NSCB. Other features of the rebasing and revision are the adoption of the 1994 Philippine Standard Industrial Classification which captures more industries and commodities. "Looking at the 1985-based income accounts, electricity gas and water only captures water and electricity, while the 2000-based income accounts includes steam," Mr. Talento said. Under the Agriculture, Fishing and Forestry sector, mango, pineapple, coffee, cassava and rubber were highlighted. Other commodities have also been included in figures for exports, imports and manufacturing sector of the national accounts. There were three changes in terminology for the 2000-based income accounts: gross national product and imputed output of bank service charge are now termed as Gross National Income and Financial Intermediation Services Indirectly Measured (FISIM), respectively. "Indirect taxes" and "direct taxes" have been replaced by three categories -- taxes in production and imports, taxes on products, and other taxes on production. Mr. Talento said the first quarter national income accounts to be presented on May 30 will be based on 2000 prices. -- Daniel Anne Nepomuceno-Rodriguez
‘Hot money’ flows surge as investors hunt for yields
NET FOREIGN portfolio investments nearly tripled in April from a month earlier as investors were lured by the prospect of higher yields, the central bank yesterday said.
Also known as "hot money" due to the ease with which the funds can be taken in an out of an economy, foreign portfolio investments posted a net inflow of $673.8 million for the month, 174.6% higher than March’s $245 million and 220.7% more than the $210 million hit a year earlier. The result pushed the tally for the first four months of the year to $1.65 billion, up 176.8% from $594.86 million in the comparable 2010 period. "Favorable yields and less risky fixed income securities continued to attract foreign investments to the country," the Bangko Sentral ng Pilipinas (BSP) said. The April result, the central bank said, was due to "strong macroeconomic fundamentals [that] buoyed the keen interest in portfolio investments ... in contrast to a year ago when uncertainties loomed in April, a month before the May 2010 Philippine elections." Registered investments totalled $1.7 billion, slightly higher than March’s $1.6 billion and 51.7% up from a year earlier. Stock market placements accounted for 54.8% of the total or $934 million, up an annual 28.3% and going mostly to holding firms ($336 million), banks ($155 million), telcos ($153 million), property firms ($104 million) and utility companies ($100 million). Investments in peso government securities accounted for 40.3% or $687 million, a 280.4% increase, while the remaining $84 million was placed in peso time deposits, unit investment trust funds and money market instruments, the BSP said. Singapore, the United States, the United Kingdom, Luxembourg and Hong Kong were the top five investor countries, accounting for 91.3% of total registered investments for the month. Outflows, meanwhile, decreased to $1.0 billion or 21.1% from $1.3 billion in March, although year on year a 12.8% gain was recorded. For the January-April period, the central bank noted a surge in investor interest in peso government securities, which saw placements surge by 628.2% year-on-year to $3.1 billion. Combined, investments in the stock market and government securities accounted for 97.8% or $6.1 billion "each taking a 50-50 share or approximately $3.1 billion each compared to last year when a stronger preference for PSE (Philippines Stock Exchange)-listed shares was seen ($2.0 billion)," the BSP said. Outflows for January to April rose by 111.3% to $4.6 billion, with $4.2 billion representing withdrawals from interim peso deposits. Sought for comment, University of Asia and the Pacific economist Cid L. Terosa said: "This [influx of hot money)] is a vote of confidence in the short-term economic prospect of the Philippines," he added. Mr. Terosa said he expected the country to keep posting net inflows "albeit at a slower pace," echoing comments by BSP Governor Amando M. Tetangco, Jr. last week. -- ASOA | 
