Should be better

CEBU, Philippines — Emerging from the challenges posed by the pandemic in 2020 and super typhoon Odette in 2021, Cebu business community leaders are cautiously optimistic about the prospects of the upcoming  Year of the Wood Dragon .

Anticipating a marked improvement over the difficulties faced the past three years, industry captains are hopeful for a more stable year ahead economically.

 We have seen the worst, 2024 should be better,  said Cebu Chamber of Commerce and Industry (CCCI) president Charles Kenneth Co,

He hoped for the resolution of conflicts, like the Israel-Hamas war, and for the fluctuating exchange rates to find a stable footing in 2024.

While the economy has seen a dramatic rebound in 2023, despite the bumps caused by high inflation, expensive oil prices, and wild interest rates, Mandaue Chamber of Commerce and Industry (MCCI) president Kelie Ko believed that the Philippines  economic struggles, experienced since 2020 and lingering into 2022 and 2023, have hit rock bottom, signaling that the only direction from hereon is upward.

Ko s concern, however, stemmed from the potential shifts in global political and economic dynamics due to upcoming high-profile international elections.

This uncertainty casts a shadow over what was supposed to be a promising outlook for the Philippines in 2024.

 What remains to be seen is whether we will go up an escalator or do we tread up the stairs slowly,  Ko said.

 Critical to reaching our turning point is interest rates,  added Ko, who expressed relief because Bangko Sentral Ng Pilipinas (BSP) is seen to keep interest rates at elevated levels, at least up to the early part of 2024,  to keep inflation at bay.

He is convinced that borrowing for expansion and home buying would not be robust in 2024, and the pressure of geopolitical tensions may also pose a risk.

According to Chinese horoscope predictions, 2024 as the year of the Wood Dragon represents authority, prosperity, and good fortune.

Cebu business leaders, though, are approaching the year with a  heavy cautious  optimism, said MCCI past president Steven Yu.

 With lagged effect on high-interest rates starting to set in, exhausted savings and waning initial excitement, there are some real worries of subdued growth and slower economic activities in 2024,  he warned.

Yet, Yu is seeing  a light at the end of the tunnel , saying that lower inflation, both here (Philippines) and in the United States, will lead to rate cuts as early as March 2024.

 The rate cuts and lower oil prices are major determining factors for our fate in 2024,  he said, noting that what aided the Philippines to stay on track in its post-pandemic economic recovery journey is the current administration s efforts to do the rest of the  ground works , starting with the early signing of the budget.

 With favorable external developments, there is nowhere to go but up with big credit to the stabilized domestic environment being paved and readied by the current administration,  Yu said.

Cebu Investments Development Concierge Center (CIDCC) chairman Jay Yuvallos conveyed similar expectations for 2024, saying,  Armed with growing awareness on possible headwinds geopolitical and global health threats, we will continue to be stronger and growth will be sustained.

Inflation target

In a Dec. 15 meeting, the Development Budget Coordination Committee (DBCC), in consultation with the Bangko Sentral Ng Pilipinas (BSP), decided to retain the current inflation target of 3.0 percent   1.0 percentage point (ppt) for 2024 to 2026.

The inflation target range of 3.0 percent   1.0 ppt remains an appropriate representation of the medium-term goal for price stability, given the current structure of the Philippine economy, recent economic developments, and the overall macroeconomic outlook for over the next few years.

The current and projected inflation environment continues to support the steady growth of the economy.  At the same time, the enactment of structural reforms is expected to help boost prospects for domestic economic activity, raise productivity, and help build sustainable non-inflationary economic growth.

The latest BSP forecasts indicate a likely deceleration in inflation in 2024 to 2025, given limited demand-based inflation pressures amid improving supply conditions.  However, the risks to the inflation outlook remain strongly tilted to the upside for both years, which requires close monitoring as well as readiness for further action, as needed.

The prevailing higher-for-longer stance of monetary policy, together with the implementation of the non-monetary measures by the government, is intended to ensure the sustained return of inflation to the medium-term target and keep inflation expectations anchored.

The government s decision to retain the medium-term inflation target underpins the BSP s resolute commitment to take all necessary action to bring inflation to a target-consistent path over the medium term.

Looking ahead, the BSP is seen to remain vigilant and data-dependent in deciding on monetary policy to steer inflation to a target-consistent path, fostering price and financial stability in the country.

 We survived 2023 despite the continued uptick in interest rates and almost six percent inflation, due to the good stewardship of the current administration. The geopolitical situation heightened towards the end of 2023 with an additional war in Israel-Gaza but despite that, oil prices declined, inflation stabilized and there was a pause in the interest rate increase,  Yu said.

This global development, Yu further explained, contributed a lot in salvaging a declining economic growth trajectory  and gave us a lot of hope and promise for 2024 that rate cuts will happen as early as March 2024.

In the first half of 2023, the local business economy in Cebu experienced a stronger first half in terms of consumption and spending, but it suddenly took a turn in September  when things started to go south.

Yu said imports, consumption, and car sales, among others, dropped in a significant way.

 There was an uptick last December 16 to 25, 2023, but relatively subdued compared to expectations and last year s surge. This is a clear sign that the consumers  initial excitement of being unleashed from home-bound restrictions during Covid has started to wane and savings are exhausted,  he said.

Yu said that with higher inflation at 5-6 percent, the consumers  purchasing pattern shifted to value offerings, essentials, and experience-based activities.

Government spending

Expressing concerns about the potential uncertainties that may arise in 2024, Cebuano business leaders are urging the national government to bolster the economy through heightened spending.

Yu said that increased government spending in 2023 helped plug the gap in economic growth and may influence hitting near the lower end of the GDP (gross domestic product) growth projection, which is six percent.

Business leaders are hoping to see in 2024 government spending poured in Cebu and other parts of the Visayas.  Specifically, Co said, the realization of the City of Naga to Danao City diversion road.

The road, he said, could be a good boost for the Cebu economy, alongside the implementation of other planned infrastructure projects and the speedy completion of the P10.62-billion Cebu Bus Rapid Transport project in Fuente Osme a.

 We believe that the road map set by the government is adequate and we look forward to its early fruition,  Yu said.

Oppurtunities

Amid uncertainties clouding the optimistic outlook for 2024, business leaders take comfort in acknowledging latent opportunities poised for exploration and exploitation.

 We should continually work to improve our educational standards and intensively upscale and retool our labor force, in line with current trends on AI (Artificial Intelligence and ML (machine learning),  Yu said.

He said the drive to attain self-sufficiency in agriculture should continue to be set on full throttle while balancing local supply and demand factors to stabilize food prices. Efforts to ease restrictions on foreign ownership in certain sectors should be achieved to drive FDI (Foreign Direct Investments).

He also said that the huge potential of the Philippines  mining sector should be responsibly utilized to bring in revenues for the country.

 We have large, untapped mining resources. Issues on climate change and mobility have to be given increasing attention each year. Going green and other green solutions are the key trends in the years to come,  Yu said.

For Ko, tourism numbers are expected to improve further, although the slowing Chinese economy may prolong recovery a bit.

Hotels, Resorts, and Restaurant Association of Cebu (HRRAC) president Alfred Reyes, on the other hand, saw 2024 as a more promising year for tourism.

He anchored his optimism on the Department of Tourism s (DOT) active support in promoting the Philippines globally.

In 2023, Cebu s hospitality sector witnessed a significant upturn in occupancy rates, at an average of 60 to 70 percent, which is a marked improvement compared to the rates observed from 2020 to 2022.

Reyes attributed this encouraging performance to the resurgence of the arrival of foreign tourists, particularly from South Korea, which is a thriving domestic market; and the revival of the Meetings, Incentives, Conferences, and Exhibitions (MICE) sector, encompassing corporate events and various other engagements.

 Our trend is going up. We are hopeful that 2024 is far better than 2023 in terms of tourist arrivals and hotel occupancy,  Reyes said.

Tourism is one of the key economic boosters that should be watched out for in 2024, given its successful turnaround in 2023.

Real estate

Real estate is another low-hanging fruit that needs harvesting, said Filipino Homes founder Anthony Gerard O. Leuterio.

He said the rise of the Philippines middle class presents lucrative opportunities for property developers to channel increased investments in real estate developments. These ventures are anticipated to encompass residential, commercial, and tourism-related projects throughout 2024.

The increasing inflow of Overseas Filipino remittances is poised to sustain the enthusiasm of real estate investors.

Leuterio said the rising interest among Filipinos working abroad to invest in properties in the Philippines has become a top priority.

Property developer, Ray Go Manigsaca affirmed that the opportunities in tourism for development are apparent in 2024.

 The year 2024 is going to be a busy year for us, as we will start the construction of JW Marriott Panglao Island Resort & Spa, and JW Marriott Residences Panglao Island in Bohol. This is exciting as this development will entice local and international travelers to visit our country, and Bohol, even more now that there is a five-star resort and residences that will showcase the abundance of space for relaxation and luxury living in the province,  he said.

 We are also in the final stages of completion for our mixed-use development in Mactan, Cebu which is our Mahi Center, a development that will house commercial/retail, office, and a branded hotel by Fairfield by Marriott,  added Manigsaca who is the president and chief executive officer (CEO) of AppleOne Properties.

Despite the potential uncertainties that may cast shadows on the brighter prospects of 2024, business decision-makers are cautiously optimistic, crossing their fingers in anticipation of a strong and favorable outlook throughout the entire reign of the Wood Dragon.