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10:20  Wednesday  1 September 2010

There have been some comments questioning the integrity of GDP numbers released by the government.  I know that these figures are generated from statistics gathered by the National Census and Statistics Board.  A few years back, I am not sure whether it was the World Bank, the IMF or the ADB or all of them cited the National Census and statistics Bureau for their good work in providing the government with the National Accounts at a timely pace and with good quality.

My own assessment of the situation is this:  Will it benefit the government to manipulate the data?  The answer is no.  Whether the numbers are good or not, people will react negatively or positively if there is trust in the sitting administration.  During the past administration, the economy was doing very well – a fact that was verified by the strong earnings of companies that profit from a robust economy.  These are telcos, power generators and distributors, real estate firms, banks, consumer goods, retailers, exporters, hotels, you name it.  These figures are meant to help business decisions and not merely to give adulation to government.  At the end of the day, it is what is in people’s wallets that confirms to them that the GDP figures are true or not; and this can be judged from the amount of money people are spending from the wet markets, the 168 Mall in Divisoria, the SM and Robinson’s Malls and all these commercial hubs that have mushroomed around the country.

Anyway, from where I am sitting, I can see an economy that is growing fueled by strong consumer spending in metropolitan areas where much of the jobs are.  In the NCR, much of spending is fueled by BPO workers as well as the retail establishments that surround them.  The same goes on in Cebu and activity is even supported by strong tourism traffic.  In Davao, you can literally say that their local economy is going bananas as China is now importing 85% of their banana consumption from the Philippines.

Of course we will be vulnerable to any global economic slowdown and most businesses are prepared for that possibility already since everybody has been talking about it for a few months now.  What surprises me is the strong price surges in hard commodities such as gold, silver, copper, nickel and iron ore.  Yesterday, I saw on Bloomberg Television that Australia’s coal and iron ore exports are surging again.  If that is happening, then some country or a group of countries are buying; and if they are buying, that means they are using these commodities.  That to me signals economic activity.

The recent hard commodity spike is what has caused mining stocks like PX and AT to surge lately.  I think in the next few days, we will see more movements in mining shares including the speculative ones like ORE, CPM and GEO.  Even if enthusiasm cools down a bit on some of the market’s favorites, the rotation into mining stocks could keep trading interest going.

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