Finance Secretary Cesar Purisima said confidence in the way the government was being run had encouraged more people to do business in the country.“The growth rate shows that the economics of good governance, or ‘Aquinomics’ works,” Purisima said in a statement.
Robust domestic consumption and higher government spending have helped cushion the economy from the worst of the global slowdown, while manageable inflation has allowed authorities to keep interest rates conducive to growth.
The privation resulting from taxation, whether voluntary or compulsory, affects the tax-payer in his quality of producer, whenever it operates to curtail his profits; that is to say, his income or revenue; and affects him in his character of consumer, whenever it increases his expenditure, by raising the prices of products.And, since an increase of expenditure is precisely the same thing as a diminution of revenue, whatever is taken by taxation may be said to be so much deducted from the revenues of the community.
As I previously wrote,
Thus the environment of low leverage and prolonged stagnation in property values is likely to get a structural facelift from policy inducements, such as suppressed interest rates which are likely to trigger an inflation fuelled boom by generating massive misdirection of resources-or malinvestments.Of course many would argue on a myriad of tangential or superficial reasons: economic growth, rising middle class, urbanization and etc... But these would mainly signify as mainstream drivels, as media and the experts will seek to rationalize market action on anything that would seem fashionable.
Among industries, construction posted its highest growth in at least six quarters, jumping 24.3 percent from a year earlier as Metro Manila enjoys the best property boom in two decades
According to a report released at the end of September by Bangko Sentral ng Pilipinas (BSP), the central bank, lending to the real estate sector hit an all-time high in June. Banks’ exposure to the sector reached P561.6bn ($13.55bn) at the end of the second quarter, up 18.9% on 2011 and 4.4% higher than the end of the first quarter in 2012.The BSP said the country’s 38 universal and commercial banks accounted for P434bn ($10.47bn), or 77.3%, of overall exposure, while 71 thrift banks accounted for the remaining 22.7%, worth P127.6bn ($3.08bn). Thrift banks are institutions offering basic banking services, focusing on deposits and mortgage financing, which play an important role in the Philippines’ banking system.The lion’s share of exposure, some 97.3%, or P546.5bn ($13.18bn), consists of real estate loans, with the remaining 2.7% (P1.2bn, $28.94m) accounted for by securities issued by property companies. These segments grew 4.3% and 8.4%, respectively, during the second quarter of 2012.The P22.3bn ($537.89m) of new loans issued in the second quarter was split between P11.9bn ($287.04m) of residential lending and P10.4bn ($250.85m) in the commercial segment. Investment in real estate securities included P12.1bn ($291.86m) in debt and P3bn ($72.36m) in equity.
The upcoming rebound would not only close the underperformance gap but would also power this sector as one of the best performers.The Philippine property sector as I earlier predicted will see a boom phase] (again barring any exogenous shocks). Real estate or property booms have traditionally functioned as the centrifugal force from a monetary induced bubble cycle. This has been very evident in China. And likewise became the ground zero for the US mortgage-banking crisis.
All these talks about curtailing bubbles again represents authorities superficially dealing with symptoms. In reality, they are pretentious actions. They are intended to paint the imagery of the politics of “do something” in the assumption that they “know” or fully comprehend the situation.Really?Bubbles serve to bloat statistical economic growth. This gives media mileage and approval ratings for the incumbent authority. They also enrich the political as well as the politically favored economic class whom are usually the first recipients of easy money policies.So why they should political authorities curb a bubble? Should they kill the goose that lays their golden eggs?
Like the repeated doping of a horse, the boom is kept on its way and ahead of its inevitable comeuppance, by repeated doses of the stimulant of bank credit. It is only when bank credit expansion must finally stop, either because the banks are getting into a shaky condition or because the public begins to balk at the continuing inflation, that retribution finally catches up with the boom. As soon as credit expansion stops, then the piper must be paid, and the inevitable readjustments liquidate the unsound over-investments of the boom, with the reassertion of a greater proportionate emphasis on consumers' goods production.