Slowdown

We should have made hay while the sun was shining.

The IMF forecasts a gloomier year for the global economy. This week, the multilateral institution cut its global growth forecast by another 0.3% to just 3.5% in 2015. The forecast for 2016 was reduced to just 2016.

Explaining the reduced growth forecast, IMF chief economist Olivier Blanchard said: “New factors supporting growth – lower oil prices, but also the depreciation of the euro and yen – are more than offset by persistent negative forces.”

Leading those “persistent negative forces” are: the slowdown in China’s growth, the contraction of the Russian economy due precisely to the collapse of oil prices, the onset of deflation in Japan and the continuing financial troubles of the Eurozone economies.

The IMF forecasts the Russian economy will contract by 3% this year and by another 1% in 2016. The contraction of the Russian economy affects thousands of European companies selling to the Russian market. It could also open new political uncertainties harmful to the whole region.

China’s growth rate is forecast to slow down to 6.8% this year and 6.3% in 2016. The world’s second largest economy is expected to be the main driver of global growth. Hobbled by the demographic consequences of the country’s one-child policy, China actually confronts the curious problem of population shortage.

Japan, despite all the stimulus efforts of “Abe-nomics,” slid into deflation. Even as the yen has tumbled, prices continue to recede. This is the reason Japan has become a favored tourist destination for Filipinos with some cash to spare.

In Europe, Greece continues to teeter on the brink of financial collapse. Growth continues to be limited. Deflation remains a looming peril for several European economies.

The European Central Bank, trying to devalue the euro and stoke economic activity, has prepared a hefty stimulus package. Ahead of that, however, the Swiss central bank unhitched the Swiss franc from the euro, producing financial volatility.

The only economy enjoying an upgraded growth forecast from the IMF is the US. The forecast for the world’s largest economy was revised upwards to 3.6% this year.

The US benefits hugely from the drop in oil prices. Dramatic increases in shale oil production will make the US a net exporter of the commodity this year.

Given the growth forecasts, the US dollar gained in value against other currencies. The strong dollar may serve to curtail America’s ability to sell to the rest of the world — especially if the euro continues to slide.

The Philippines’ growth prospects have been trimmed by several investment banks and multilateral institutions. The best estimates  of 2014 Philippine growth is 5.9%. That number may seem healthy compared to the low growth rates of the mature industrial economies, but it is below par for the region.

The main reason our economy could not expand to match its potential is limited investment. We are getting the least direct investments in the region, limiting our ability to create jobs, induce wealth creation and reduce poverty.

Low investments, in turn, are due to delays in modernizing our infrastructure, inaction on reforming bureaucratic hindrances to the ease of doing business and corruption at all levels. Public economic investments remain poor. There was no clear strategy to take advantage of favorable global conditions from 2010 to 2014.

In a word, our economic management was poor.

Pope-mobile

Now it can be told: the Vatican asked for the Isuzu Pope-mobile. In fact, the Vatican is requesting for another one, exactly the same design but painted black.

Pope Francis apparently liked the ride. The Swiss Guards approved of it.

The Isuzu vehicle was built by Gencars and designed by talented Filipina industrial designer Maru Almazora. Weeks before the Pope arrived, Swiss Guards came to test the vehicle. Six burly men boarded it and shook it madly. The Pope’s driver took it for a spin. The vehicle passed with flying colors. The minimalist design appealed to a Pope known for his simplicity.

Strangely, another “Pope-mobile” materialized. It was overdesigned and looked like a parody of the jeepney. The Swiss Guards rejected it.

There was, however, “strong political pressure” to use the awkward vehicle. The organizing committee partially yielded to the pressure, allowing the use of the vehicle for the Luneta mass. We all saw how the Pope’s driver has difficulty steering the vehicle to make the sharp turns around the quadrants.

The Kia vehicle used in Tacloban was built for Pope Francis when he visited South Korea (although donated by a Filipino businessman). It was hurriedly transported to Leyte for use while the Pope was there.

Curiously, there seems to be powerful interests rooting for the jeepney-based “Pope-mobile.” Before the Pope arrived, they “leaked” the vehicle by driving it on Manila’s streets. Against the judgment of the Swiss Guards, they lobbied hard for the vehicle to be used at least once by the Pope. Now, they are saying the jeepney will be shipped to the Vatican.

That jeepney used a second-hand engine. If they send it to Rome, it is unlikely this monstrosity will pass Euro emission standards. Its strange appearance will, at any rate, distract attention from the Pope.

Cardinal Chito Tagle, no less, solicited the Isuzu-based vehicle from Ambassador Antonio Cabangon Chua. The jeepney, for its part, is of slightly mysterious provenance –  although its donors appear politically well connected. Now, it appears, they are rushing to ship that jeepney to Rome – whether the Vatican wants it or not. 

Only in the Philippines: the vehicle the Pope uses became the subject of politicking.