I have been telling you for the past nine months that the Philippines was doing great. Oops, there I go again trying to take credit, like some others I know, for something I had nothing to do with.

Actually, it is the Philippine Stock Exchange (PSE) that has been telling you and I and the world that the Philippines has entered a booming economic period.

Have all the experts forgotten one of the important things that a stock exchange does? The stock market is an important component of the “leading economic indicators.” That means, what happens in the stock exchange becomes clearly evident in economic numbers several months down the road.

The fact that economic growth roared in the first quarter should have been expected.

Over the last year, interest rates have decreased to the lowest level in modern Philippine economic history. When interest rates go down, money is freed for other wealth-creating purposes like spending and expansion.

Furthermore, the money supply has grown significantly over the last year. An increase in money supply, the amount of cash in the system, translates into inflation and higher prices or investment of all types. And everybody, including the “experts”, know that inflation is virtually at a standstill despite very high fuel and energy costs.

Granted that all of these factors bear on one another, it is unlikely that the stock market would rise in times of high interest rates and high inflation. However, the 50-percent increase in the stock prices since July 2006 is the best indication of the favorable climate that the Philippines has worked in for a year.

Analysts said that the 150-point increase in the PSE Index on Thursday and Friday was in reaction to the “surprise” of the gross domestic product (GDP) numbers.

Wrong. The 1,500-point increase was in anticipation of the first quarter GDP. Thursday and Friday market action was primarily from people who missed the 20-percent increase of stock prices in 2007 who suddenly jumped on board the train that left the station in July 2006.

The most amazing quote I read about the market/economy was this: “The market’s upbeat on higher-than-expected GDP growth that may translate to robust corporate earnings growth in the next few quarters.”

I will not embarrass the person who said this by naming him or her. Why is this comment so inaccurate? Simple common business/economic sense.

Look. Ask yourself this question: what is it that makes up the numbers that create a 6.9-percent year-on-year increase in growth? Answer: positive and profitable economic activity. Meaning, the GDP is high due to substantial growth in corporate revenues and earnings in the first quarter. Where has this person been hiding? Didn’t he/she see double-digit corporate profits for each of the last two quarters?

The “robust corporate-earnings growth” created the robust economic growth.

Of course, there is another viewpoint. From the Inquirer: “While the markets welcomed the higher-than-expected GDP growth, the research group Ibon Foundation Inc. pooh-poohed the growth as superficial and largely due to the ‘scandalous campaign spending’ by politicians in the May elections. Ibon research head Sonny Africa estimated the total campaign spending to be at least P31 billion and as much as P50 billion.”

The total Philippines GDP in dollar terms is approximately $120 billion. That means during every quarter, the economy generates about $30 billion. Therefore, if the highest estimate of campaign spending of $1 billion is correct, campaign spending contributed to less than 3 percent of the total GDP.

However, the most important argument against the effect of campaign spending is found in consumer-spending growth. The growth of personal spending grew in the first quarter of 2007 at nearly the same rate as in previous quarters.

The enlightening statistics that validate the GDP numbers are these. In the first quarter, construction investment grew by 7.3 percent; merchandise exports, 10.3 percent; mining and quarrying, 11 percent; and agriculture, fishery and forestry, 4.2 percent. All these sectors were up significantly from the last. And the PSE has been telling us for months that this was going to happen.

Are these economic numbers for real? Just keep checking stock prices as a very good indicator of what the economic future holds in store for the Philippines.