GUT ECONOMY: The phenomenon is determined by the point of view taken, and in this sense, it is relative.

The economy is not necessarily what official statistics say it is. Not in this country, anyway. It is what every Filipino feels in his gut. It is what he eats off the table, not what he reads in government press releases.

If the 6.1-percent growth of the Gross Domestic Product in 2004 (against 4.7 percent in 2003) is cause for jubilation in the Palace, the merriment is not necessarily shared by the man in the street, the family packed in a rented apartment or by the squatter swimming in squalor.

A 6.1-percent growth does not mean anything to those who continue to wallow in want. Begging the pardon of economists on the government payroll, but we cannot help repeating the tired question: How does one eat a 6-1 percent growth?

However, the appreciation last week of the peso to P54.68 in relation to the US dollar — while supposedly good news to importers and government economic managers — is sad news for exporters and households that depend on dollar remittances from abroad.

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STATISTICAL LAURELS: Each man is entitled to his own point of view.

Why is a 6.1-percent GDP growth virtually meaningless to the common tao, while the $1=P54.68 exchange rate big news? It is because, as we said, the phenomenon depends on the point of view taken.

An uptrend in the GDP, by whatever manner it was calculated within the year, is nothing but a cold government claim. But the continuing drop in the peso equivalent of the US dollar within the week hits with impact and immediacy.

The lesson we learn from this is that government officials should not rest on statistical laurels. Statistics can lie, or at least fail to show the total picture. Statistics have to be translated to something palpable.

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REALITY CHECK: Talking of points of view, the Executive Outlook Survey conducted last January among members of the Makati Business Club presents another viewpoint of this special sector. (What you read below was culled from the MBC report.)

The MBC reality check showed that the business community’s outlook for 2005 on the economy is somewhat tempered, notwithstanding the relatively strong growth indicators reported in 2004.

Almost 40 percent of senior business executives polled believe that the country’s GDP growth rate will slow down this year. Over a third of respondents project growth to remain the same as last year. Only 23 percent expect the economy to grow faster than last year.

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SURVEY NOTES: The MBC conducts the survey twice a year among its members. The last was done Jan. 6-28 involving 70 respondents or close to 10 percent of MBC’s membership. Close to 79 percent belong to top management. More than 67 percent are Filipinos.

Over 49 percent of respondents’ companies belong to the services sector, while close to 16 percent are in manufacturing. By company size, 36 percent reported annual revenues of P1 billion and over, 21 percent had between P500 million to P1 billion in annual turnover, and 19 percent had less than P100 million.

In terms of employee size, more than a quarter have less than 99 employees, while more than 24 percent employ between 100 to 299, close to 19 percent over 1,000, almost 13 percent between 500 to 999 employees, and more than 11 percent between 300 to 499 workers.

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INFLATION & INTEREST: The MBC said the respondents’ cautiousness “seems to be partly anchored on the forecast for inflation and interest rates.”

About 73 percent of executives polled expect a higher inflation rate this year. Inflation rose to 5.5 percent in 2004 from 3.0 percent in 2003.

Another 76 percent predict a higher average rate for the interest rate benchmark, the 91-day Treasury bill. The interest rate rose to 7.352 percent in 2004 from 6.034 percent in 2003. In spite of the appreciation of the peso early in the year, 60 percent expect the peso-dollar rate to depreciate 5.6 percent over the next 12 months.

While prospects for investments and trade remain positive in 2005, the mood is not as bullish as in 2004. The number of executives expecting higher investments and growth in exports and imports is considerably lower than at the beginning of 2004.

Nearly 46 percent expect higher investments in 2005. Another 53 percent forecast higher exports this year, while 60 percent likewise project higher imports.

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EARNINGS TEMPERED: The MBC said that corporate earnings reports for the full year will be “somewhat tempered” for many companies.

In the July 2004 survey, the vast majority — from 75 percent to 87 percent — expected revenue and income growth in 2004. In the January 2005 survey, that number has dropped to only 44 percent to 57 percent expecting growth in gross revenue and net income.

The MBC pointed out that among the companies that see a rise in revenues and income, those increases are expected to be dramatic. Notwithstanding that, most companies have downgraded their own net income expectations for net income for 2004.

Looking ahead to this year, 73 percent of respondents project corporate revenues to grow at an average of 15.6 percent while 60 percent expect corporate net income to grow at an average of 27.2 percent on a year-on-year basis.

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INVESTMENT PLANS: The MBC said the outlook for labor should remain reasonably stable.

Sixty percent of respondent companies plan to hold their current workforce size steady (compared to 64 percent in July last year) while over 27 percent said they would expand their workforce. On the other hand, close to 6 percent plan to layoff or downsize their workforce this year.

The outlook for investments is also fairly moderate, according to the MBC. Only 47 percent of respondent firms plan to make additional investments this year, compared to over 71 percent last year.

However, the average investment will be significantly higher than year-ago levels. One factor behind the moderate investment activity, the MBC said, may be the drop in capacity utilization rates for manufacturing companies.

Manufacturers in the survey reported a decline in the average capacity utilization rate to 67.8 percent in end-December 2004 from 76.9 percent in end-May 2004.

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AGENCIES RATED: Business executives continue to rank the Bangko Sentral and the Department of Trade and Industry as the two top performing government agencies in the past six months.

The Department of Social Welfare and Development and the Department of Foreign Affairs ranked third and fourth place. The Department of Agriculture and the Department of Budget and Management were tied for fifth place. Both DFA and DBM improved their ratings, while DA dropped two places to fifth.

The House of Representatives, the Senate, Department of Environment and Natural Resources, Department of Public Works and Highways, and the Commission on Elections were ranked as the worst performing agencies in the last six months.

The agency with the most improved rating in the past semester was the Department of Budget and Management, which rose from No. 17 to No. 5 in the survey and saw its net satisfaction ratings rise from 11.5 percent in July 2004 to 38.6 percent in January 2005.

Those whose net scores deteriorated the most were: the Department of Tourism (down 60.3 percent), the Supreme Court (down 36.6 percent), the Armed Forces (down 36.1 percent), Department of Environment and Natural Resources (down 29.4 percent), and the Metro Manila Development Authority (down 29.3 percent).

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MAJOR ISSUES: Among the major developments cited in the second half of last year were the government’s decision to expropriate and operate Terminal-3 of the Ninoy Aquino International Airport (Naia-3), the passage of the sin tax law (RA 9334), the Supreme Court’s reversal of its ruling on the Mining Act, peace and order, and political stability.

The government has promised to open Naia-3 within six months. It is pushing several tax measures to improve revenue collection, plug the fiscal deficit and shore up the country’s credit standing.

Among the major issues that businessmen were asking the government to immediately address were those pertaining to revenues and the fiscal deficit, graft and corruption, peace and order, infrastructure, and investments.