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Tag: Numbers Don’t Lie
In the early days of the ECQ, the Department of Finance (DoF) announced that the economy could still eke out growth of .08%. A month later, it adjusted its forecast and predicted a contraction of -3.4. Last week, Moody’s Analytics said that the economy will likely contract more acutely at -4.5%. Meanwhile, 7.6 million Filipinos are now unemployed, five million more than in the beginning of the year. All these are happening amid the backdrop of a budget deficit which could reach 8.5% of GDP.
Had it not been for the work from home (WFH) arrangement, government’s quarantine measures would not have been sustainable. Corporations and citizens would have insisted on going back to work to survive — and this would have caused a spike in infection rates. Without WFH, the economy would have collapsed in a matter of months. Thus, it could be said that the WFH arrangement saved the economy while acting as an important tool in combating the Wuhan virus.
The tourism industry is among the strong drivers of the economy. Before the onset of the Wuhan virus, tourism accounted for 12.7% of gross national product (GDP) or roughly $46.5 million worth of goods and services. Its hefty contribution to the economy was achieved on the back of 8.2 million foreign visitors and more than 120 million domestic travelers.
British banking giant HSBC recently published its forecast for the Philippine economy and the outlook is bleak. After clocking-in a 0.2% contraction in gross domestic product (GDP) in the first quarter, the bank forecasts a deep contraction of 7% in the second quarter, another contraction of 4.3% in the third quarter, and yet another shrinkage of 3.9% for the fourth quarter. This will bring the full year contraction rate to 3.85%. The last time the Philippines posted negative growth was in 1998.
Thirty one leading business groups including the prestigious Financial Executives Institute of the Philippines (FINEX), the Management Association of the Philippines (MAP), the Philippine Chamber of Commerce and Industry (PCCI), GoNegosyo, and the Chambers of Commerce from the Americas and Europe recently signed a manifesto expressing their support for the passage of the Corporate Recovery and Tax Incentives for Enterprises Act or the CREATE Law.
The prognosis for the economy is becoming progressively worse. Last month, our economic managers were hopeful that 2020’s gross domestic product (GDP) would expand by 2.5% on the premise that we are able to catch up on the second semester. Two weeks ago, the National Economic and Development Authority (NEDA) adjusted its forecast, saying that the economy could no longer post positive growth and that we are now looking at a contraction of 2% to 3.4%.
THE RETAIL TRADE is among the hardest hit industries in this COVID crisis. The bloodbath has cut across all sectors -- from clothing to food, appliances to motor vehicles, electronics to gasoline. No sector is spared except for those relating to health, sanitation, and wellness.
Despite our fervent hopes for gross domestic product (GDP) growth in the four to five percent range, the National Economic Development Authority (NEDA) announced last Thursday that it actually contracted by 0.02% in the first quarter. This was due to the combined effects of Taal Volcano’s eruption in January, the tourist travel ban in February, and the enforcement of the Enhanced Community Quarantine (ECQ) in March. This is the first time the economy contracted in 22 years.
Governments around the world have a conundrum. Should they order longer quarantine periods to flatten the pandemic curve even if it would mean a longer and deeper recession? Or should they shorten their quarantine periods at the risk of instigating a second spike in infections?
In the early 2000s, the rise of fast-fashion brands like Zara, Mango, H&M, and Topshop caused a bloodbath among traditional fashion retailers. Unable to compete in price, style turnover, and vastness of selections, brands like Nine West, Diesel, and The Limited either filed for bankruptcy or were absorbed by bigger firms. Years later, when fast fashion brands hit the Philippines, local clothing retailers such as Regatta, Tab, Monakiki, Tyler and many others were either bought-out or closed.
Contrary to what many believe, the concession agreement between the government and the two water concessionaires, Maynilad and Manila Water Company (MWC), will not be amended despite threats from Malacañang to do so. It will stay the way it is until its expiration in 2022, said Emmanuel Salamat, the Administrator of the Metropolitan Waterworks and Sewerage System (MWSS). For the water consumers of Metro Manila, this means no significant changes in water services or rates for at least two years.
Last week, the Sandiganbayan convicted Al Vitangcol III, former general manager of the Metro Rail Transit (MRT) 3, of graft and for violating government procurement laws. Among the incorporators of PH Trams was Arturo Soriano, Vitangol’s uncle-in-law.
After decades of lethargic growth, the Philippine tourism industry is finally riding on strong tailwinds. From January to November last year, foreign tourist arrivals topped 7.46 million, which translates to 15.58% year-on-year growth. This is nearly four times the average global growth rate and 2.5 times more than the Asian average. Although whole year statistics have not yet been consolidated, it is almost certain that the country surpassed its 8.2 million foreign visitor target.
Following the Philippines’ successful hosting of the 30th Southeast Asian Games, the Philippine Olympic Committee announced its intention to bid for the 2030 Asian Games. Other countries vying for the hosting rights are Qatar, India, Thailand, Taiwan, and Uzbekistan. If successful, this would be the second time the Philippines would host the Asiad -- the first time being in 1954.
On Aug. 15, 1945, Emperor Hirohito announced Japan’s surrender following its invasions of countries in the Asia Pacific region. Its colony in Korea was divided into two spheres, with the south administered by the United States and the north by Russia. The two Koreas existed with tension between them and this culminated in June 1950 when the North invaded the South. The two Koreas have been at war ever since.
The year 2019 will be a banner year for Philippine tourism. If we are to go by the trends from January to September, the Philippines is poised to surpass its 8.2 million visitor target, clocking in a growth rate of 14.37%. At this pace, we are likely to supersede the 12.5 million arrival target by 2022.
Last week, we received the unwelcome news that the Philippines fell eight notches in the World Economic Forum’s (WEF) Global Competitiveness Report for 2019. From being among the most improved countries in 2018 with a 12-notch leap to 56th position, we slid to 64th place out of 141 countries this year. We are at the same level we were in 2012. While utterly disappointing, it serves as a wake up call to our policy makers.
Pending final clearance from the Department of Agriculture (DA), Spanish beef will soon be available for Filipino consumers to enjoy. It will compete head to head with beef imported from the US, Australia, New Zealand, Canada, and Japan, all of whom have dominated the premium segment of the market. Spanish beef promises superior quality across its entire range of cuts and grades at more competitive prices. With more options and greater value, this development is a win for the Filipino consumer.
Following the enactment of the Clean Water Act (CWA) of 2007, the two water and wastewater services providers of Metro Manila, Maynilad and Manila Water Company (MWC), were given five years to connect the existing sewer lines of homes and commercial establishments to the main sewerage system of the city. Both companies failed to meet the deadline due to various reasons which I will explain later. Suffice it to say, the Supreme Court ruled against the two companies and slapped each of them with a P921.5 million fine, plus rolling penalties until the interconnection is completed.
In my hands is a copy of the “Roadmap for Transport Infrastructure Development for Metro Manila and its Surrounding Areas.” Formulated by the Philippine government in cooperation with the Japan International Cooperation Agency (JICA), this roadmap outlines the ways in which Metro Manila traffic can be properly addressed today, all the way to the year 2030.
At 2:30 a.m. on Sept. 16, 1810 in Dolores, Mexico, Father Miguel Hidalgo ordered the church bells rung as he gathered his congregation. There, he cried out against the abuses of the Spaniards and the many Criollos (wealthy Mexican mestizos) who oppressed the Mexican masses. He urged the faithful to revolt against Spain. That event, known today as “Grito de Dolores” (“Cry of Dolores”), marked the start of Mexico’s 11 year struggle to be a self-governing republic. On Aug. 24, 1821, Mexico’s fight for independence came to a victorious end with the signing of the Treaty of Cordoba. Mexico considers Grito de Dolores as its spiritual day of Independence.
An amendment to the excise tax structure for alcohol and tobacco products recently passed the third reading in the lower house. It will now be deliberated upon at the Senate and nursed to passage by Senator Sonny Angara who heads the committee of ways and means.
Last week, the Department of Tourism (DoT) announced that foreign arrivals breached the 4.1 million mark in the first semester of the year, an 11.43% increase from last year. It expressed confidence that it would meet its whole year target of 8.2 million visitors.
Last year, my wife and I went on a trip to Spain, specifically to visit the wine vineyards of Bodegas Frutos Villar. Situated in the city Valladolid in Castilla y León, the city is where the Pisuerga, Duero, and Esgueva rivers converge. These bodies of water are what help irrigate five famed wine regions -- Ribiera del Duero, Rueda, Toro, Tierra de Leon, and Cigales. Valladolid was the capital of Spain during the era of King Philip III in the early 1600s and the center of Spanish political life. The city is teeming with historical sites and old world splendor.
Filipinos are known the world over for being meticulous, diligent workers. Unfortunately, the lack of education prevents many of our countrymen from realizing their full potential. Studies from the Commission on Higher Education and Technical Education and Skills Development Authority show that for every three Filipinos, one is unable to complete their college education primarily due to financial reasons.
The high cost of building bank branches, coupled with the scarcity and ever increasing salaries of skilled banking professionals, are factors that discourage banks from expanding in far flung areas of the country. As a result, banks have concentrated their branch networks in central business districts and areas where corporate offices and mid- to high-net-worth customers are located. This has made banking inaccessible to millions of Filipinos as well as scores of micro, small- and medium-sized enterprises (MSMEs) in the countryside.
I had my reservations when Mark Villar was named Secretary of the Department of Public Works and Highways (DPWH) back in 2016. While I have known the young Villar to be smart, diligent, and good natured, I thought that he lacked the political experience and engineering savvy required of a DPWH Secretary. Sure, he was raised to be an entrepreneur and trained in the family business, but this was not enough for him to take on one of the most difficult jobs in the cabinet. Worse, he was coming on the heels of Babes Singson, a highly respected engineer and technocrat.
On July 22, President Rodrigo R. Duterte will deliver his state of the nation address (SONA) before a joint session of congress and before the Filipino people. Last week, however, the economic cluster of the President’s cabinet gave a comprehensive report on the state of the economy in a pre-SONA conference. In attendance were the diplomatic corps, members of the business community, and select members of media.
The world’s leading climate scientists agree that the planet’s greenhouse situation has reached crisis levels. This is mainly due to the uncontrolled amount of waste generated by our cities and from the hazardous contaminants resulting from overusing fossil fuels.
A part from being an economist and columnist for this paper, I am also a business owner of a medium-sized food group and a country head of an American multi-national firm. Like many involved in the food business and investments, 2017 and 2018 were good years for us. The favorable business conditions in our industries is something we are grateful for and do not take for granted.