MikeLigalig.com

By Carlos H. Conde
International Herald Tribune

A year ago, Bernadette Sembrano took a gamble.

Using her savings and some money borrowed from the bank, she bought a piece of land in a middle-class suburb here and built two rows of townhouses.

She intended to sell the units to overseas Filipino workers, the main drivers of a property boom in this island nation of 85 million. But so far she has only found one buyer for the eight units.

"I am such an optimist," said Sembrano, who works as a television journalist.

Her optimism is widespread in the Philippines these days, where the government reported Aug. 30 that the economy grew at an annual rate of 7.5 percent in the second quarter, the fastest rate in 20 years. It is a remarkable event for a country plagued by political scandals and military mutinies - two perennial problems.

Stronger economic growth is already changing the lives of many ordinary citizens, who have new jobs and see bridges and roads springing up.

Still, there are doubts about the true vigor of the economy - related to increased government spending before an election and the sustainability of fiscal overhauls.

And, like elsewhere in Southeast Asia, the Philippines is vulnerable to a possible slowdown in the U.S. economy if problems in the housing market begin to spill over into other sectors.

But for a country that has seen so much turmoil and poverty since the 1970s, the Philippines' recent economic resurgence, however fragile, has nevertheless been a welcome surprise to economists.

President Gloria Macapagal Arroyo, a U.S.-educated economist, has taken credit for much of this, having implemented measures - higher taxes and improved revenue collections, to name two - that her political opponents and critics relentlessly opposed.

"While our economy has reached a new level of maturity and stability with one of the strongest macroeconomic fundamentals in two decades, we should not rest," Arroyo said after the release of the latest growth figures. "We're the only administration that has not experienced negative growth in any quarter."

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