Growth Rate For Economy Isn't All That Accurate To Measure Economic Performance

Here's a table that may show two kinds of students in the Philippines or just around the world. Now let's look at the growth rate of the two students. The first is the good student and the second is the bad student. If you ignore the results of the first exam and the second exam, you will think the second Pinoy is the outstanding student. But what if you decide to think about going beyond growth rate, there is something you need to understand. The fact that a lot of Filipinos really lack knowledge in basic economics leads to them being misled by the "growth rate phenomenon".

Let's take a look at the percentages vs. actual performance. The smart Pinoy's growth rate may just be 1% but take a look at the two exam results. He nearly scores perfect in both his exams and there's only a point difference so that's why there's only a one percent growth rate. On the other hand, the lousy Pinoy's growth rate is 10% because it's 1/10. You might say that the lousy Pinoy is the good student and the smart Pinoy is the lousy student. But in reality, you should expect the lousy Pinoy to be held back while the smart Pinoy moves forward. Just because one's growth rate is huger doesn't mean that one's doing good as evidenced by this simple example.

When many people say that the President Nobita administration has a high growth rate in spite of problems like economic overprotectionism with unjustifiable tax rates. With a hypothetical statistics, let's think of comparing growth rate of the Philippines vs. Taiwan. Let's say that the growth rate of the Philippines is 10% higher than Taiwan. But in terms of net domestic profit, Taiwan has better performance this year and slightly lower last year. What if the Philippines was just increasing 10% yet even after the 10% increase the performance was not all that good compared to Taiwan?

It's really time to get actual numbers and figures and not just the growth rates. Statistics is never complete with all the numerical data present. If we just have the growth rate without actual solid numbers, how are we going to determine which economy really performed better? Maybe the one with the higher growth rate turned out to be the worst place for investment. It's time to demand transparency and actual data not just the growth rate.


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