It's in every major daily's (Aug. 31st) frontpage. Philippine Daily Inquirer: "Surprise! 7.5% growth". Manila Bulletin: "GDP grows 7.5% in 2nd quarter, highest in 20 years". Business Mirror: "GDP surges to 7.5% in 2nd qtr". Business World has a more modest yet prospective headline: "RP on track to meeting growth goal".
The National Statistical Coordination Board (NSCB) attributed the unprecedented growth to "continued favorable economic conditions such as stable interest rates and strong peso, resilient agriculture sector, vibrant industry and services sectors, plus election-related spending and intensified infrastructure investments". The just-released figure is a full 2% over the 2006 2nd quarter GDP (5.5%).
What the skeptics say. Private think tank IBON Foundation particularly singled out the "sustainable election-related expenses by both candidates and the government as the major contributor to the surge of the 2nd quarter GDP. IBON estimates that some P30 B to P50 B were spent by candidates during the May elections while P 51.4 B was spent by the government during the first semester allegedly in support of administration candidates.
I agree with IBON that the P30 B-P50 B the candidates spent during the election period have contributed to the increase in GDP, but the sweeping generalization that the P51.4 B first semester government spending was election-related to favor administration-backed candidates is not at all true.
For one, the government was operating on a 2005 re-enacted budget for the whole year of 2006. While spending for the 1st quarter of 2007 was based on the same re-enacted budget, this was augmented by the P46.9 B supplemented budget (RA 9358), which was mostly unloaded during the said quarter. The 2007 GAA took effect April 2007 and fund releases were correspondingly adjusted during the second quarter based on the new expenditure program, hence a higher government spending.
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