Hopeful

It is an unprecedented number.

SWS conducted a survey in the second week of this month asking respondents whether they were hopeful or fearful for the next year. A record 96 percent said they were hopeful rather than fearful.

I am not sure about the wisdom of presenting respondents with a binary choice between hope and fear. But this is a recurring survey with the same question. The uptick in hopefulness must be celebrated.

There are enough reasons to be fearful, of course.

The year we are about to close has been warped by war. The specter of inflation continues to haunt. There are signs some of the major economies will fall into recession. Tensions in the South China Sea will likely continue to spiral in the coming period.

Our domestic economy is far from spectacular – although we posted remarkably low poverty and unemployment numbers this year. We will probably grow at a little over 5 percent even as our economic planners have set “fighting targets” as high as 7 percent.

Nevertheless, we will lead the Southeast Asian region in growth. Our neighbors are feeling the pressure of the global economic slowdown more than us. This is likely because they are more trade-driven than us.

The longer-term future is not promising. We lag behind our neighbors in investment flows. Our agriculture is stagnant and inflation will continue to be driven by rising food prices. But our balance of payments picture is solid – because of stronger remittance flows from our migrant workers. Domestic consumption remains strong, inflation notwithstanding.

The high interest rate regime, imposed to curb inflation, chokes business activity. It slows down growth, even as it does not solve the cost issues that fuel price increases.

We are looking to the new economic czar to help clear the bottlenecks to investment and correct the many policy flaws that hamper our development. It still remains, however, that we are spending drastically less than our neighbors in improving our human capital. It is time to look beyond our reliance on exporting low-grade labor and feeding our young to the digital sweatshops that call centers actually are.

Then again, there are enough reasons to be hopeful.

We have an adaptive and resilient population used to struggling through difficult times. New communications technologies open more opportunities for value creation. New supply chains are helping our small enterprises generate employment.

Our economy has made significant gains in expanding green energy. Every kilowatt-hour of green energy we generate means a kilowatt-hour less of dirty power. The costs of shifting to renewable sources of energy has been declining. That is good news.

More important, our private sector is proving to be more responsive to the requirements of economic development. Humongous investments flowed into large infra projects that government could not build on its own.

The new airport rising in Bulacan is breathtaking in scale. It will be a world-class facility that will attract around it sunrise technology industries.

Spanking new expressways have been built through entirely private investment. They help clear the congestion that hampered economic activity. More than farm-to-market roads, what we need to keep pace with our neighbors is factory-to-port infra. The latter will yield much more economic value.

We will probably see better investment flows the coming year. That is easy to see. Investment flows the last few years have been paltry.

The so-called “learning deficit” may have been overstated. An economist looked into the matter and found that our private schools have produced graduates with competitive skills. It is our public school system that is killing us.

There are large private investments in large poultry and vegetable farms that will revolutionize the way we do agriculture. May we have more of them in the coming years.

Gains in renewable power generation and wider use of electric vehicles dented demand for fossil fuels. The larger trend now is towards cheaper oil – that, in turn, will help moderate inflation into the medium term.

Still, the global economy will bring headwinds to our progress.

The prospects for wider conflict in the Middle East rose the past few days as Israel launched attacks against Hezbollah bases in Iraq, Syria and Lebanon. A drone possibly launched from Iran hit a civilian vessel in the Indian Ocean. Houthi rebels, under the direction of Iran, continued attacks on commercial shipping in the Red Sea.

Putin’s war against Ukraine is likely to continue for another year. Russia has been able to tolerate massive losses in men and equipment to keep its aggression going. Domestic American politics is getting in the way of ensuring Ukraine gets enough military support to effectively counter the Russians.

The two raging wars in Ukraine and the Middle East will continue to threaten global supply routes and raw materials. Unfortunately, it is unlikely to find a negotiated solution to either of them in the near term.

As always, the indications induce both fear and hopefulness. We will have a difficult path to navigate in the next period to ensure the health and well-being of our people.

While most of the factors inducing dread are beyond our control, there are enough things we could do to correct the wrong policies that keep our economy weak. Reform is entirely within our control.

The next survey should look beyond the binary sentiments of fear and hope. We need to measure our people’s receptivity to change.