It’s Valentine week but somehow, recent developments have not been helpful in making us feel that love is in the air. The Taal volcano eruption, nCoV epidemic, cases and pronouncements against big businesses all help create an almost chaotic economic environment.
A couple of weeks ago, I discussed Availability Heuristic, a mental shortcut that relies heavily on immediate examples that come to mind when evaluating something.
With all the negative news on top of everyone’s minds, it won’t be a surprise to just throw in the towel and say we will miss our chance again. Foreign investors will just not bother to invest in our country anymore.
But let’s try to activate our rational mind and really see the facts, the cold data in order to avoid being victims of availability heuristic.
Last Friday, I attended the Economic briefing of the Ateneo Center for Economic Research and Development (ACERD). Every semester, ACERD holds this and opens it to the public for a fee. This is where one can get top of the line economic data analysis by no less than the team that has historically given the closest projections on growth, inflation, etc. Last Friday, the speakers were the following:
Cielito F. Habito, Ph.D. – former Director General of NEDA and Socio Economic Planning Secretary under Ramos administration
Alvin Ang, Ph.D. – Ateneo Economics Professor, Director of ACERD
Luis Dumlao, Ph.D. – Dean of the Ateneo JG School of Management
The half-day event presented a lot of data that can’t be discussed in one article so I will just discuss a few key elements.
1. Inflation
Our 2019 inflation rate was 2.5% in 2019, down from 5.2% in 2018. January 2020 was reported at 2.9%. In the fact-checking part of Habito’s presentation, he pointed out the 0.8% inflation rate claimed as one of the highlights in the Duterte legacy. Let me put that side by side with the historical inflation rate since 2014.
It is not helpful (in fact, it’s misleading) to pick out that low inflation rate in October 2019 which is just one month and stake a claim as if it were representative of the regime. That is spinning data. And if you take a look at October 2018 level, that was the peak inflation. In case the makers of this legacy chart are not aware, inflation is computed on a month-on-month basis – i.e. the October 2019 prices as compared to the peak October 2018 prices. :)
2. GDP/Growth
I looked back at our 2016 growth projections and the average was 7%. We were starting off with a president with a very high political capital enjoying a 91% trust rating. Build Build Build was the slogan. So far it has been 6.9%, 6.7, 6.2, 5.9% from 2016 to 2019. While the figures are very decent, there is a downtrend, which Habito calls Diffused Momentum.
The reason given by the government for the inability to attain the adjusted growth rate projection for 2019 was the budget delay. I remember reading and hearing this from different news channels even before the end of 2019. It also came with a rosy projection on 2020 GDP due to the expected carry-over effect.
Ang discussed in his presentation that unfortunately, the real bottleneck was not the budget delay, but our absorptive capacity for all the lined-up projects. We lack the equipment and skilled labor to do all the projects.
In a private conversation with Ang, I asked if TESDA was helping out in this arena. He said yes, however, it will take time for skills to be developed.
3. Coronavirus
Ang wrote a piece discussing the economic effect of the virus (Click link). In the report of Dumlao, he mentioned the virus effect on tourist arrivals can mean a loss of 0.4% of GDP, and this does not yet include other lost revenues such as cancelled events, delays in import/export movements due to quarantines, and other things.
4. Is our Demographic Sweet Spot really sweet?
We have been happy about the fact that in 2015 we entered what we call the demographic sweet spot, the state wherein the larger percentage of our economy is the working age and therefore productive age, outweighing dependents. This will run its course until 2053. While this is generally expected to propel economic growth, the quality of that population is also critical. If we do not solve our malnutrition and education problems, the demographic sweet spot may actually turn into a demographic time bomb.
5. Steep slide in FDI (foreign direct investments)
Let these graphs of Habito speak for themselves.
Unfortunately, we have a lot of catching up to do in terms of FDIs. I remember when I was still in investment banking and in a conference abroad, I was so shocked to hear my counterpart from Thailand say, “We are poised to grow now because we just established our Securities and Exchange Commission.” In my mind, “What? Really? We are so way ahead of you folks, we established ours during my grandfathers’ time back in the 1930s, you have a lot of catching up to do!” But look who now has a lot of catching up to do?
It is worth noting that a big part of the government’s duty is to make sure that contracts are followed. This is what investors, both local and foreign, require before making investments. This is not the image that we are sending out there.
6. Poverty is declining, Mindanao is unleashing its economic potential
It is good to note that more families are moving up from the poverty threshold. Call it favoritism, which always happens anyway, but the attention on Mindanao is already long overdue and hopefully the economic growth in this region will be sustained no matter who the president is.
7. Seven trillion sleeping in SA & TD
Again, let this slide speak for itself.
That’s just way too much money sleeping. To give you a comparative picture, the total amount in UITFs, Mutual Funds and Stocks is less than one trillion.
E ano naman sa akin?
If you tell the above to the regular Pinoy, chances are he will tell you, “E ano naman sa akin ‘yan? Mapapakain ko ba ‘yan sa pamilya ko?”
Sagot: Hindi po nakakain ang mga datos na ito. Pero ‘pag nauunawaan po natin, mapapabuti rin natin ang kakayahan nating pakainin ang pamilya natin.
1. ‘Yong inflation po ay patunay na talagang tumataas ang mga presyo ng bilihin natin. At napakaraming bagay ang sangkot sa pagtaas nito. Kaya mainam na alam natin kung ano ang needs versus wants natin para maisaalang-alang natin ang panggastos sa mga needs.
2. ‘Yong paglaki (o growth) ng ating ekonomiya ay tanda na umaasenso tayo. Ang nagiging problema natin ngayon ay kahit maraming perang ilalaan ang gobyerno para sa paggawa ng mga kalye, tulay at iba pa upang maiusad ang ekonomiya, kulang po tayo sa skilled labor. Kung wala po kayong trabaho pati na rin ‘yong mga kapitbahay niyong nakatambay sa kanto, pwede po sigurong pumunta sa TESDA para may matutunang skill at makakuha ng trabaho.
3. Nakakatakot po talaga ‘yong coronavirus gaya ng napapanood niyo. Imbes na mag-panic po tayo, siguro balikan na lang natin ‘yong mga itinuro sa atin noong bata pa tayo – Maghugas ng kamay bago at pagkatapos kumain at gumamit ng palikuran; Kumain ng masustansyang pagkain, mag-exercise at matulog para malakas ang immune system natin; Umiwas sa mga may sakit, at huwag din tayong pakalat-kalat kung may sakit tayo para hindi makahawa. Magsuot na rin ng mask kung kailangan.
4. Demographic sweet spot. Siguraduhin po natin na masustanya ‘yong pinapakain natin sa mga anak natin at nakakatulog sila nang sapat na oras. Bantayan natin itong mabuti lalo na sa unang limang taon para hindi po maudlot ang paglaki nila. Papasukin po natin sila sa paaralan para maging matino at produktibong mamamayan sila pagdating ng araw.
5. FDI. Mahalaga po na pumasok ang mga dayuhang namumuhunan para lalong mapaunlad ang ekonomiya natin. Isa po tayong global economy kaya kailangang maganda rin ang imahe natin sa buong mundo. Dawit-dawit po lahat. No country can do it all on its own.
6. Lumalaki na raw ang kita ng mga pamilya. Siguraduhin po nating sa tamang bagay napupunta ang kita. Kung kayo naman po ay taga-probinsya, lalo na sa Mindanao, paki tingnan po kung mas mabuti na diyan na kayo maghanapbuhay imbes na makipagsiksikan pa sa Maynila.
7. Nasaan po ba nakatago ang pera ninyo? Nasa savings account at time deposit po ba lahat? Mainam po na may pera tayo na inilalaan din para sa mga long-term needs natin – ‘yong pang retirement, pang kolehiyo ng mga anak niyong nasa elementarya pa lang, at ‘yong para sa iba pa ninyong pangmatagalang pamumuhunan. Kasi po kung nasa savings account lang o nasa ilalim ng kutson niyo, uubusin nga po ito ng pinag-usapan natin sa number 1 – inflation. Mas malapit din po sa tukso na gamitin ito kung hindi naka-invest. At hindi rin po dahilan yong kaunti lang ang kita para hindi tayo mag save and invest. Wala pong exempted dito kung balak niyo pong magkaroon ng maayos na buhay.
Sana po nakatulong nang kaunti ang mga paliwanag ng pitong puntos na ito. Sabihin niyo rin po sa mga kakilala niyo para maintindihan nating lahat kung paano ba tayo makakatulong sa pag-unlad ng Pilipinas, at pag-unlad ng bawat pamilyang Pilipino.
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ANNOUNCEMENTS
1. I have received several queries on my next public talks. Here’s one that you can attend and you will not just learn from me and my family but also from other speakers. Come to the Money and Family Summit on April 4 to 5, 2020 at SMX Aura. Register here: www.finlitsummit.ph.
2. Mom and Son Podcast - Year 2 Episode 6 (Expressing love the high FQ way)
It’s almost Valentine’s Day! Whether you’re in a romantic relationship or not, Valentine’s is an opportunity to show your love and appreciation for your loved ones. Because of societal pressures and marketing tactics, we are sometimes led to believe that we must spend a lot of money to show our love. We may believe that the more money we spend, the more love we prove, but that’s not the case. There are different ways to show your love and we discuss the five love languages people possess. It is good to know which language resonates with you the most, and especially with that of your partner or loved one you want to show appreciation for. Spread the love and join in on the conversation now!
#MomAndSonPodcast
Spotify
https://open.spotify.com/episode/6nR1kXN6mnGM8wdFQajOLe?si=LJ6TdElAR1yy-iEhPaEk4w
Buzzsprout
https://www.buzzsprout.com/241447/2671420
Apple iTunes
https://podcasts.apple.com/ph/podcast/mom-and-son-podcast/id1449688689?mt=2
Google Podcasts
https://podcasts.google.com/feed=aHR0cHM6Ly9mZWVkcy5idXp6c3Byb3V0LmNvbS8yNDE0NDcucnNz
YouTube
Originally uploaded on Anton Fausto's YouTube channel https://www.youtube.com/watch?v=6JdQVoG0bJs
FQ Mom Link: https://www.youtube.com/watch?v=YmnBX3Td58A
3. If you want to include better Financial Health for 2020 and the new decade, take the FQ Test now. Click link. http://rebrand.ly/FQTest
4. Have a healthy relationship with money, start by reading “FQ: The nth Intelligence” and sharing the lessons with your loved ones.
You may purchase the book in major bookstores, or if you want autographed copies, please go to FQ Mom FB page (click SHOP), or FQMom.com (click BOOKS), or email us at FQMomm@gmail.com.
Rose Fres Fausto is a speaker and author of bestselling books “Raising Pinoy Boys” and “The Retelling of The Richest Man in Babylon” (English and Filipino versions). Click this link to read samples – Books of FQ Mom. She is a behavioral economist, a certified Gallup strengths coach and the grand prize winner of the first Sinag Financial Literacy Digital Journalism Awards. Follow her on Facebook & YouTube as FQ Mom, and Twitter & Instagram as theFQMom. Her latest book is "FQ: The nth Intelligence."