High anxiety
Over the past few days, a number of friends and column followers have been asking me on the right thing to do as some people see the world markets collapsing and how sub-prime loans will affect us in the
Let me share with you the views of well known economist and finance expert Romeo Bernardo, who in the past was a bit pessimistic about the Philippine economy and is now quite bullish. In his paper, together with Marie-Christine Tang, published at The Global Source, he cited the “relative political calm and improved macroeconomic fundamentals as good combination that may enable the economy’s growth pattern to take on a more Asian character, (i.e., a more extended period of high growth). At the center of the current growth story (6.9 percent for the first quarter of 2007) is the growing remittance inflows from over eight million OFWs, which has benefited the balance-of-payments picture and contributed to the pesos’ continuing strength. Remittance inflows posted a compounded annual growth rate of 11 percent in the last 10 years to 2006 and comprise over 10 percent of GNP in the first quarter of 2007. According to the report, these income flows have been driving not only consumption growth but also investments in housing and deepening of financial markets as new savings and investment products aimed at capturing more of these flows, have developed.
Another factor that contributed to a good run are the recent high profile investments (e.g. purchase of Mirant Philippine assets for $3.2 billion by Tokyo Electric/Marubeni, $1-billion investments of Hanjin in shipbuilding, Texas instruments $1.8 billion) suggesting improved business confidence. The private sector has also started to increase its manufacturing capacity (75-percent capacity utilization for Jan-May 2007) after a decade of low investments. The government’s improved tax collection efforts also significantly improved primary surpluses and the government is expecting revenues from some upcoming asset sales (e.g. PNOC, SMC, FTI) that will offset the P48-billion revenue shortfall.
The other day I also invited Vinci Zaragoza together with some trustees of the Philippine Center for Entrepreneurship hopefully for him to support the GoNegosyo advocacy and shed light on what is happening in the world markets. Vinci Zaragoza is an esteemed investment banker based in
What was good to hear from Vinci was that while the markets will remain volatile, he said that the central banks of the world will not allow the banks to go bust and that he sees a lowering of US interest rates and the continued support to create liquidity. In the end, the markets should recover.
I think the benefit for the
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After the successful caravans in
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[For feedback, you can email me at [email protected] or thru sms at 09175591245. For free business advice, visit www.gonegosyo.org or watch the GoNegosyo Bigtime TV Show every Monday,
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