Philippine Economy grew by 5.2 percent in the 1st quarter of 2015

The domestic economy grew by 5.2 percent in the first quarter of 2015 from 5.6 percent the previous year. The main driver of GDP growth for the quarter was the Services Sector which grew by 5.6 percent from 6.8 percent. Industry, on the other hand, accelerated to 5.5 percent from 5.4 percent posted last year.  Similarly, the Agriculture sector accelerated to 1.6 percent from 0.6 percent.

Among the three major economic sectors, Services gave the highest contribution to the GDP growth in the first quarter of 2015 contributing 3.1 percentage points followed by Industry 1.9 percentage points, and the whole Agriculture sector 0.2 percentage point.

Net Primary Income from the Rest of the World grew by 2.7 percent from 11.1 percent in the first quarter of 2014.  This, together with the GDP performance, resulted to GNI’s growth of 4.7 percent from 6.6 percent in the first quarter of 2014.

With the country’s projected population reaching 100.9 million in the first quarter of 2015, per capita GDP grew by 3.4 percent from 3.8 percent while per capita GNI and per capita Household Final Consumption Expenditure (HFCE) grew by 3.0 percent and 3.6 percent from 4.8 percent and 4.3 percent, respectively.

Source: http://nap.psa.gov.ph/sna/2015/1st2015/2015qpr1.asp

Click here for the itemized presentation of GDP by industrial origin and expenditure.

Rice Supply Response in the Philippines

The Philippines is basically an agricultural economy and its principal source of income comes from agriculture. An improvement in agriculture greatly affects the welfare of the people and the national economy (Fajardo et al., 1992).  Therefore, the use of economic principles in agriculture is very vital. Proper agricultural development leads to industrialization, and this is the dream of every poor nation.

Rice (Oryza Sativa Linn.) is in the heart of Philippine agriculture. It is considered the single most important commodity because rice is the major staple food of approximately two-thirds of Filipinos. As the country’s staple food, rice accounts for 35 percent of the population (now about 77 million) to as high as 60 – 65 percent for households in the lowest income percentile (GMA, 2002).

Rice is a very important commodity in our country and the government should maintain its stable production with respect to the increasing population. Twenty-three percent (23%) of the total Philippine population directly and indirectly derives their income from the industry (Philippine Peasant Institute, 1992).

Not only is rice an important staple, it also significantly contributes to the economy of the country. Rice is cultivated in 2.7 million hectares or 30 percent of the country’s total arable land. It contributes an average of 15.5% percent of the country’s gross value added (GVA), 13 percent to the consumer price index (CPI), 3.5 percent to the gross domestic product (GDP) and 3.3 % percent to the gross national product (GNP) (Ginintuang Masaganang Ani, 2002). In the light of this contribution, the country still has difficulty to attain self-sufficiency and price stability in rice production. The government has initiated different rice programs (e.g. Ginituang Manasaganang ani), and researches in order to formulate relevant policies in the rice industry.

For the past several years, different models and approaches in studying supply response were used. Some supply response models use only few of past values in forming expectations. Some other models use the entire past history, with the past values receiving declining weights as we go further into the distant past. These models were called distributed lag models of expectations (Maddala, et al., 1992).

Distributed lag models are potential models to be used in estimating supply response. There were few attempts to use these models in estimation. The specific distributed lag model that is well-known is the Polynomial Distributed Almon Lag Model, which was developed by Shirley Almon in 1965.

Distributed lag analysis is a specialized technique for examining relationship between variables that involve some delays or lags. In particular, the Almon Polynomial Distributed Lag Model, are used in order to reduce the effects of collinearity in distributed lag setting (Greene, 1993). 

Reference: Erazo, J. and E. Cruz. 2007.  Rice Supply Response in the Philippines: An Almon Lag Approach. Unpublished Undergraduate Thesis. School of Applied Economics, University of Southeastern Philippines. Obrero, Davao City.

Microfinance and Poverty in the Philippines

           Microfinance is commonly associated with small, working capital loans that are invested in microenterprises or income-generating activities (Churchill and Frankiewicz, 2006). Such microenterprises are often family owned and have less than five employees, sometimes based out of the home, as for instance small retail kiosk, sewing workshops, carpentry shops and market stalls (Whole Planet Foundation, 2009). Today, however microfinance is referred to more generally as the provision of financial services to those excluded from the formal financial system (UNCDF, 2002). In the beginning the credits that were given to poor were called microcredits or micro-lending, but soon it became clear that also other financial services were used and needed by the poor which enlarged the microcredits to microfinance (Felder-Kuzu, 2005). Microfinance and microcredit are often used interchangeably, but it is important to highlight the difference between them because both terms are often confused. According to Sinha (1998), microcredit refers to small loans, whereas microfinance is appropriate to non- government organization (NGOs) and microfinance institutions (MFIs) who supplement loans with other financial services. Microcredit is a component of microfinance in that it involves providing credit to the poor, but microfinance also involves additional non-credit financial services such as savings, insurance, pension and payment services (Okiocredit, 2005).

My Blog Milestone

I want to apologize to my readers for not writing any posts these past few weeks. In the Philippines, March is the graduation season and as a teacher, we are very busy in final exams, student requirements and theses. That's why I was not able to write any article, because my mind was blacked-out. But today, the waves are kind of settled now and I noticed that I reached my milestone of visitors in my blog. Today, I already had my first 50,000 visitors (hits). What a remarkable zenith of blog accomplishment! Thank you to all my blog followers, without all of you, I could not reached this.

Lending money to the poor

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In the old testament of the bible, Exodus 22:25 states that "If you lend money to one of my people among you who is needy, do not treat it like a business deal, charge no interest (NIV, Biblica)." The bible clearly says that you should not abuse the weakness of the poor financially. The poor is deprived from the basic needs they should have in order to sustain their living. They are the unlucky ones, who struggle everyday to survive the lack of food, clothing and shelter. The only resort they  have in order to improve their lives, is to find jobs with higher salary (in which they are not capable of). If not, they will avail of the high interest loans from informal lenders, in order to start a business of their own.

Micro-financing was the answer in providing access to credit for the poor. Mohammad Yunus of Bangladesh develop a method of lending for women in their village. He created a model on how they could improve their lives through lending and teach them to be liable to their obligations with friendly terms of payment that they could manage. Indeed, when we have our business, we should not overpower the weakness of the poor. We should complement with their available skills and give them the proper education to succeed in their endeavors. Truly, its hard to separate business from charity, but we need to balance these things for the betterment of humanity.