Time to focus on the economy

While people continue to quibble about Con-Con, Con-Ass or whatever mode they want to use in changing the Constitution, the effects of the worldwide recession are slowly creeping into our “e-con.” If anything, our legislators should heed the appeal of local and foreign investors to prioritize 12 pieces of legislation to keep the country globally competitive and attract more investors. Some of the most important measures politicians should focus on include those that would lower power costs, the anti-smuggling bill and a pre-need code law.

The global crisis is making a lot of companies examine their workforce and reevaluate operations, compelling many to “trim down the fat” to boost efficiency, like the popular social networking site MySpace which is cutting down 420 jobs or about 30 percent of its workforce. According to reports, the US has lost six million jobs since December 2007, with “sizeable” additional job losses expected until next year.

In the Philippines, a number of companies have been laying-off people, and some of those getting hit are US-connected multinationals. Though a National Statistics Office survey says there were less jobless Filipinos (aged 15 and above) as of April last year, there are a number of indicators that an economic slowdown is happening.

National Economic and Development Authority chief Ralph Recto told me that the economy is indeed showing signs of slowing down, with a 0.4 GDP growth projection for the quarter. The figure may be low but this is not so bad considering that some of our neighbors have been posting negative growth such as Thailand at -7.1 percent, Hong Kong with -7.8 percent and Singapore with -10.1 percent. Even Australia is reeling from the effects of the meltdown. According to Australian Treasurer Wayne Swan, “the global recession will continue to batter” the Australian economy, with more job losses expected as the global recession widens. 

The effects of a slowdown are usually felt much later, although the Philippines’ economic managers see some signs that our economy is still buoyant especially with the continued dollar inflows from overseas Filipino workers (OFWs). The Bangko Sentral ng Pilipinas does not expect double digit growth rates for OFW remittances, but initial reports show no decline and in fact, total remittances are expected to reach the same 2008 levels at $16.4 billion.

Weak consumption in the first quarter contributed to slower growth with OFW families holding on to their money, spending less since they seem to be on a saving mode, triggered by fears that OFW breadwinners may lose their jobs. BSP officials however are confident that demand will eventually pick up, with surveys indicating that a lot of Filipino families are planning to buy “big-ticket” items such as houses, cars and appliances.

Among the industries that have been affected by the global meltdown are the travel and tourism sectors, especially with the swine flu pandemic forcing a lot of people to become “stay-at-home” tourists. However, the slow buildup to announcing a pandemic has lessened what could have otherwise been a hysterical reaction to the disease, because people are now more informed about the swine flu and the fact that there are many ways to prevent it from spreading rapidly.

The telco sector also showed signs of slowing with reports that the world’s top 20 service providers showed little or no signs of growth in terms of revenue for the first quarter. In which case, Senate President Juan Ponce Enrile may not have to worry too much about ring tones since there seems to be lesser demand for these services. There’s a continued demand for text messaging, however, with the Philippines reportedly averaging one to two billion text messages per day – making the country truly the texting capital of the world.

Elections are supposed to drive growth due to enhanced political spending, but the financial meltdown could also be constraining companies from contributing for the 2010 elections. That’s probably the biggest reason why Ping Lacson bowed out of the race this early, since the prospect of lesser contributions and even less contributors is not very attractive for prospective candidates especially for the top post.

On the other hand, those with deep war chests plus a well-oiled grassroots machinery could have the edge over their rivals. Which could mean that the administration candidate – whoever he turns out to be – will have a better than even chance to win the race since he will have the full backing of the Lakas-Kampi party machinery and the resources of Malacañang at his disposal.

In any case, the NEDA chief is optimistic that the country will not go into a recession, but he has warned legislators about the negative impact of pushing through with Con-Ass since it could cause additional shocks to the economy. What we need are ways to attract more investments to build infrastructure and develop the domestic economy, and to focus on the widening fiscal deficit since it is the country’s biggest threat, Ralph Recto said.

There’s a Bible verse saying that to everything there is a season: “…A time to plant, a time to reap… a time to build up…” For sure, now is not the time to restructure the government (Con-Ass), but to build on its strengths and focus on the economy.

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