"Here are what made the headlines this year."
"Here are what made the headlines this year."
Though anything could still happen between today and yearend, I believe it can be safely said that the following are 2018’s most significant stories:
Inflation: Undoubtedly the most significant story of the year about to end has been the surge in consumer and producer prices. It began in the year’s fist quarter, when the increase in prices coincided with the beginning of its implementation. Blame for inflation -the worst since the world economic crisis of 2008-can be rightly laid at the door of the first TRAIN (Tax Reform for Acceleration and Inclusion) package. The administration of President Duterte has sought to blame it on the mismanagement of the national rice situation, but the structure and workings of the Philippine economy suggest that the greatest culprit was TRAIN I’s raising of the excise taxes on petroleum products, adverse impact on fuel prices was exacerbated by the resurgence of world oil prices after a period of weakness. Conforming the close inter-relation between fuel prices and CPI (The consumer price index), Congress, at the Duterte administration’s urging,agreed to the suspension of the fuel excise taxes programmed by TRAIN 2.
Weakening of the peso. The year that’s about to end saw the peso at its lowest level in 12 years. Given the impact of a weakening currency on a country’s imports, the steady decline of the peso, the scissors-like movement of Philippine external trade-burgeoning imports and stagnant exports-has cassed the nation’s external trades deficit to balloon to a staggering near-$40 billion. The deficit has placed heavy downward pressure on the peso, which in turn has made life difficult for the inflation managers.
External Trade gap. As already started, that year’s Philippine’ external trade deficit was, at year-end, on the way to the $40-billion level. There’s nothing wrong with an import trade that’s mostly composed of goods for production- machinery and equipment, intermediate goods and raw materials- but there has to be a balancing trend on the export side of the ledger. Unfortunately, no such balancing trend can be discerned, and DTI (Department of Trade and Industry) does not appear to have any kind of robust export program in the works.
At the rate things are going, this country could well incur another gargantuan external trade deficit in 2019. Something’s got to give; in the absence of any support on the exports side, it is the Duterte administration’s Build Build Build program that will have to give.
General Appropriation Act. As the period for Congressional action on the 2019 GAA (General Appropriation Act), better known as the national budget, draw to a close, the air was full of charges and counter-charges regarding the crafting of who is indisputably the single most important document of the management of a modern dichromatic economy. A senator, with the apparent concurrence of Secretary of Budget and Management Benjamin Diokno, charged the Speaker and Majority leader of the House of Representatives. With humongous insertions in the proposed GAA, the Speaker’s men, on cue, made counter-charges against Mr. Diokno and demanded his resignation. How the final GAA will look like is uncertain; what is certain that the 2019 national budget will be far from being the document that idealistic economists dream about.
BSP Intered Rate Increases. The BSP (Bangko Sentral ng Pilipinas) raised its basic leading rate three times a total of 175 basis points- bringing it to 4.75 percent, its highest level in nine years. Considering that the objective of an interest rate hike is to discourage borrowing, questions were raised about the properiety of rising a monetary tool to address a problem essentially fiscal in nature. Many have argued that the inflation has been caused not by excessive aggregate demand but by more expensive supplies of goods and services, but the BSP remains convinced that it has been doing the right thing.
Third Telcos Industry Player. After much regulatory debate and bureaucratic hassle,the government delivered year-end, on candidate Rodrigo Duterte’s company’s promise to put an end to the Smart-Globe Telecommunications industry duopoly. The winner of the third-telco bidding was Mindanao Islamic Telecommunications Co. Needless to say, the 40-percent interest of Chinese government-owned China Telecoms Co. in raised questions related to national security.
Draft of proposed New Constitution. In keeping with the six-month deadline set by President Duterte, the 21-member commission charged with drafting a Basic Law to replace the 1987 Constitution completed its work as mid-year and presented the document to the Chief Executive. Because it embodied a shift to a federalist form of government, the Consultative Commission’s handiwork was quickly opposed by the Duterte administration’s economic managers speaking in unison. With the economic managers’ from opposition, the future of the proposed new Constitution must be said to be doubtful at best.
Rehabilitation of Boracay and 2019 Electoral Exercise. Other significant stories of 2018 were the six-month closure of Boracay Island for rehabilitation and the filing of CoC (certificates of candidacy) for the May 19, 2019 election.