Bad news, good news, bad news

I was in Makati last week to attend the 2023 Convention of the Chamber of Thrift Banks (CTB), and the conference theme was, “Taking the Lead to Economic Recovery through Digitalization.” It is/was an appropriate theme with the Philippine economy coming out from the pandemic with a 7% GDP growth in 2022, but with the unexpected slower 4.3% annualized GDP growth in the 2nd quarter of 2023. The topics taken up in the sessions were very relevant with powerhouse speakers from the government and the private sector.  DOF Sec. Diokno, Sen. Mark Villar, BSP Deputy Governor Fonacier, DICT Sec Ivan Uy, UAAP/CRC Professor Villegas and Professor Philipp Kwa from AIM making their presentations. Due to circumstances and maybe in keeping with the theme of the convention, the presentations of Diokno and Fonacier were virtually/digitally flashed in the big screen with their larger than life pictures and accompanying charts/graphs.

BSP’s Fonacier touted the mandate and success of BSP in managing and controlling inflation, and the healthy condition of the thrift banks and the banking system in line with the growth of the Philippine economy. She also pushed for more banking digitalization especially the E-payment system to have a more inclusive banking system. These were later seconded by Sec. Diokno with his proposal pending in the Senate on simplifying passive income taxation and Sen. Villar’s Anti-Financial Transactions Act, to encourage digital banking while minimizing digital scams and frauds. These are double-edge words and swords, as the growing digital economy which is now P2.3 trillion also increases cyber scams and other cybercrimes. So, while DICT Sec. Ivan Uy is increasing connectivity and inter-operability they are also crafting a National Cybersecurity Plan.

The more interesting speakers were Professors Villegas who spoke on the “Philippine Economy and the Consumer,” and Professor Phillip Qua on “Cyber Security.”

The bad news is that Dr. Villegas confirmed the slowdown of the Philippine economy in 2023 and the political/economic headwinds that will affect our economy. The Russian invasion of Ukraine and other wars, the disruptions in the global supply chain, the slowdown of the Chinese economy are some that immediately come to mind that will slowdown global and national economic growth. However, the good news according to Dr. Villegas, is that the Philippine economy could still grow by 6% to 6,5% in 2023 due to the 70% component of our GDP. The return of face to face schooling with increased enrollment, will jumpstart consumption which is additionally fueled by the increasing remittances of OFW workers to their families in the Philippines for school and other expenses. The government component in the GDP funded by borrowed money is one-fifth the consumption component that according to Villegas, “even if Vice Ganda is the President,” the Philippine economy will still grow by 6% in the coming years. It is the Filipino people that is propping up the economy with their purchasing power from domestic and foreign earnings.

Then, the bad news again. According to Dr. Villegas, the Philippine economy has to grow by 9% to 10% to lower the poverty level in the country and catch up with our Asian neighbors. One way to do this is to improve the share of agriculture in the economy by increasing productivity and crop diversification. Land consolidation via cooperatives and nucleus estates could be the only way now as the land reform and rice sufficiency program of Marcos Sr. was an error and worse in implementation. We. should also not be obsessed with rice self-sufficiency as the Philippines is an archipelago and does not have large rivers and streams ideal for growing rice. We should be growing cacao, coffee, more bananas and pineapples, and improving coconut productivity.  Dr. Villegas is hoping BBM is getting good advice and heeding his economic and agriculture advisers. Or we will still be in the bad news era.

We will take up the presentation of Professor Phillip Teow Huat Kwa, who is a Certified Clinical Professor and Academic Program Director/Master in Cybersecurity at the Asian Institute of Management, in another column.