Recovery of exporters is not enough

IDEA’s NewsBriefs is a regular digest produced by the Institute for Development and Econometric Analysis, Inc. (IDEA) whose Chairman, Dr. Cayetano W. Paderanga Jr., is my former President/CEO. IDEA’s NewsBriefs’ purpose is to highlight the most recent national and international economic events.

The following are excerpts from said publication reprinted here to share some interesting news and figures pertaining to real sector, prices sector, corporate sector, and financial sector. I am sharing them to you my dear readers for these news really matter.

On Real Sector, the automobile industry has recorded a 13.1% growth in sales for the eight months till August, but recorded a 14.9% decline in August sales from July, according to Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI). CAMPI added that this decline is primarily due to seasonal cyclicality; nevertheless they expect the sales to grow in the coming months with the launching of new models.

On the other hand, the Prices Sector, oil firms defended their pricing schemes in the face of complaints that they are not reducing the price along with the decline of crude in the world market. In a meeting with the Department of Energy, these oil companies explained that they price in accordance with the market forces. Amid the reductions in the oil prices, the said companies are noncommittal to future rollbacks.

While on the Corporate Sector, business process outsourcing firm Convergys Corp. will hire about 600 agents for its 14th site located in the city of Manila which will start operations by the first quarter of 2009. According to Jomari Mercado, business development director of Convergys Philippines, the new office to be built in Sampaloc, Manila will increase the company’s seats by 10% to 6,000. He added that Manila is a good location and they are confident that the business will run successfully from the capital.

Lastly on the Financial Sector, the Bangko Sentral ng Pilipinas (BSP) data revealed that foreign portfolio investment posted a net outflow of $209.5 million from January to August, a reversal of the previous year’s $3.37 billion net inflow for the same period. BSP Governor Amado M. Tetangco, Jr. said that the deteriorating global economy has made investors more risk averse. Furthermore, it was further revealed that the Bangko Sentral ng Pilipinas has reported a 57.9% decline in net foreign direct investments for the first half of the year at $813 million. BSP Governor Amado M. Tetangco, Jr. said that the figures reflect cautious investor sentiment amid negative effects of global financial stress on global demand. Despite exporters’ recovery amid the peso depreciation, industry leaders claimed that it is not yet enough for the closed shops to reopen. Philippine Exports Confederation (Philexport) president Sergio Ortiz-Luis, Jr. said that the gains from the peso slide were offset by rising costs due to inflation, and the current rate is far off from P56:$1 levels in 2004 and 2005.

IDEA is a non-stock, non-partisan institution dedicated to high quality economic research, instruction and communication. IDEA is committed to pursue independent inquiry into the workings of the economy, to propagate the techniques for doing this and to communicate the results of analytical studies to the public.

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