THE National Statistical Coordination Board, in an unexpected but welcome plug for the education and health sectors, on Monday said the government should spend more for additional classrooms and additional teachers this year if it wanted to exceed the 5-percent to 6-percent growth estimate for 2012 to 7.18 percent.
Based on NSCB estimates, additional spending for education and health, meaning over and above their approved budgets for 2012, would increase the country’s gross domestic product (GDP) by 0.01 to as much as 1.18 percentage points this year.
This means that if the government’s growth forecast for this year is between 5 percent and 6 percent, the economy can grow by around 5.01 percent to as high as 7.18 percent.
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“It is important to note that these estimates were made under the assumption that additional expenditures will be made by the government this year. Expenditures that exceed what has already been incorporated in the 2012 budget,” NSCB Secretary-General Romulo A. Virola told reporters at the sidelines of the National Income Accounts (NIA) briefing on Monday.
“’Yung computation namin is not based on an I-O model [input-output model] so ’yung mga multiplier effects, wala pa dun. This is [our estimated] minimum addition to GDP growth in 2012 [if more spending is done],” Virola added.
GDP scenarios made by the NSCB showed that the economy would benefit if the government spent for an additional 10,000 to 60,000 classrooms this year to meet the ideal classroom-to-student ratio of one is to 45.
The NSCB said this would increase GDP by another 0.02 to 0.11 percentage points in 2012. This would also add another 0.01 to 0.09 percentage points to the first-quarter growth in 2012.
The NSCB also said that if the government spent more to continue employing the 10,000 nurses and 1,000 midwives it hired in 2011 this year, this would increase GDP by another 0.01 percentage point in 2012 and another 0.01 percentage point in the first quarter of this year.
In education, the NSCB said, additional spending to hire 24,000 more teachers to attain a teacher-pupil ratio of one teacher to 37 students would add another 0.03 percentage points in 2012 GDP.
The agency also said that if the fourth tranche in the Salary Standardization Law (SSL) starts in February instead of June this year, this would add the most to GDP with an additional 1.18 percentage point in full-year GDP growth and 1.26 percentage point to first quarter growth.
“If you look at the impact of exports, its different if you talk to the NSCB, its different when you talk to the Neda (National Economic and Development Authority). The difference is that we are economists and they are accountants. And so there is a difference in concept but they more or less point at the same direction,” Neda Director General Cayetano W. Paderanga Jr. said.
This year Paderanga said economic growth would be driven by public construction. He said that as of January 12, 2012, the government already released 72.1 percent or P150.2 billion of the P208.3-billion allocation for capital outlays for various infrastructure projects.
These funds, which are front-loaded under the government’s Disbursement Acceleration Program, are allotted for different agencies like the Department of Public Works and Highways, the Department of Education, and the Department of Agriculture.
Additional boost for construction sector would also come from the government’s Public-Private Partnership (PPP) Program this year as well as robust private construction due to the demand for more office spaces to accommodate business- process outsourcing (BPO) firms.
“The performance of the real-estate sector will be complemented by the continued robust performance of the BPO industries. Meanwhile, the performance of the other services sector will benefit from the surge in tourism as we improve our infrastructure, intensify our tourism marketing campaigns, and maintain a favorable peace and order situation,” Paderanga said.
These factors, Paderanga said, would be able to cushion the impact on the economy of any weakness in the global macroeconomic environment due to the problems in Europe and the US as well as a possibility that the Chinese economy will slowdown this year.
Paderanga added that even with President Obama advocating the passage of a bill that would force American firms to bring back jobs to the US by not outsourcing the services or manufacture of products abroad, this would not be a major threat to the Philippines’s economy.
While the government is watching the global events closely, the pronouncement of Obama is still not a major concern for the government, Paderanga said. The BPOs in the country still offer “economic value” to clients abroad, including those in the US, he said.
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