Election to boost growth, says UN report

Election spending should prop up domestic consumption that is crucial in stirring economic growth, according to the 2010 United Nations Economic and Social Survey (UN-ESCAP) Report of Asia and the Pacific stated.

“Politicians would need to spend for their media bureaus, advertising, tarpaulins, their nationwide sorties and meals for the campaign team. These food, t-shirts, these all contribute to spending because there is a demand,” Dennis Arroyo, director of the National Planning and Policy Division of National Economic and Development Authority, explained during the Manila launch of the UN-ESCAP report at the Astoria Plaza in Pasig City on Thursday.

George Manzano, Economic Affairs officer of the Macroeconomic Policy Analysis Section of UN-ESCAP Bangkok, averred, saying that more domestic demand and consumption are normal phenomena during election

The UN-ESCAP official, however, warned that sustaining election-driven domestic consumption remains a serious challenge in the Philippines, considering that the country barely escaped economic contraction in 2009 with a 0.8-percent economic growth.

Quoting the UN-ESCAP report on the Philippines, Manzano said that merchandise exports from the Philippines declined by 30 percent during the first three quarters of 2009 because electronics is a crisis-sensitive sector. He added that 35 percent of Manila’s exports were destined to the US and European markets, which were hardest hit by the global economic meltdown.

Asian economies must invest
The UN report urged the Asia Pacific governments, including the Philippines, to increase its social spending to consolidate the region’s stronger than anticipated economic rebound, rather than hiding under the mask of the vibrant economies of China and India.

“Domestic consumption should be sustained by investing in social services such as infrastructures to counter insecure employment. Let us not forget that fiscal stimulus is only temporary,” Manzano pointed out.

Increasing social spending, according to the UN-ESCAP report, should be done by directly supporting income security for households by providing food security, education and access to health care to reduce the need by poorer families to maintain precautionary savings.

Arroyo concurred with Manzano’s view, saying that such efforts should be put in place to so as to shield affected sectors from the impacts of the continued strong peso performance against the dollar, the rising oil prices and the El Niño phenomenon.

On the other hand, the report highlighted how the Philippines withstood the global economic storm as a result of the services exports industry, particularly business process outsourcing and remittances from overseas Filipino workers (OFWs).

“This is because of the wide geographical dispersion of OFW and the mix of skills and positions held in overseas job market many of which are in healthcare which is a crisis-neutral sector,” the report added. –Llanesca T. Panti, Manila Times