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Saturday, July 20, 2024

This year’s pig ain’t so fat

"Expectations about the Year of the Earth Pig should be tempered with the realities of the world economy."

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My mother, who was half-Fookienese, once told me that those born in the Year of the Pig are lucky.

When I asked why, she replied: “Pigs are always well-fed.  So those born in the Year of the Pig do not have to worry about their food.  They will be well-provided.”

Reflecting on her simplistic observation afterward, I thought to myself that pigs are well-fed to fatten them for their eventual slaughter.

Feng shui experts differ on how they interpret this year’s Earth Pig and the portents it brings.  Some say it will be a good year; others say it will be so-so, and particularly, they warn those born in certain Chinese zodiac signs to be extra careful about money matters, or health, or marriage.

But let’s not delve on the metaphysical, if feng shui can be considered as such.  The empirical evidence for 2019, insofar as the economy is concerned, shows that this year’s pig ain’t gonna be so fat.

Trade uncertainties amid tensions between the two largest economies in the world, the US and China, will significantly affect Philippine exports this year.  So thinks Sec. Ernie Pernia, our NEDA director-general.  

Even last year, our export value contracted by 1.8 percent over the previous year, while imports in this yet consumption-driven economy grew by only 2.8 per cent.

The Chinese economy, as well everyone knows, has been quite sluggish these past few years.  Even as it posts 6 percent or so growth, this compares to the heady days when on an annual basis, 11-12 percent GDP growth has been the norm.

Donald Trump’s hard-line bargaining for “fair” trade, which means “fair” in terms of benefits to American business, is in sharp contrast to the US doctrine of free markets competing worldwide, which the Chinese have utilized to their advantage over the last two decades of amazing export and manufacturing growth.

“Merchandise trade in all the monitored Asian economies continued to weaken in the last month of 2018, as the region began to feel the impact of the weakening Chinese economy and the US-China trade tension,” Pernia observed.  The continuing uncertainty threatens the growth of global trade, the flow of investments and output.

For the Philippines, election spending this year should drive greater consumer spending, while the Build, Build, Build projects fueled by government spending on badly needed infrastructure will, we hope, remain as positive factors contributing to our 2019 GDP.

The influx of Chinese and Korean tourists are expected to increase, also contributing to the economy this year.  We hope agriculture, the laggard in 2018, will show considerable improvement in 2019.

Thus, most analysts believe the Philippines will continue to grow at a healthy, though unspectacular 6 to 6.5 percent.

We need more than similar average growth rates to be able to catch up with the rest of our Southeast Asian neighbors, particularly Vietnam, even Indonesia.  But at least, the economy under successive leaderships beginning with President FVR has been consistent in policy and direction.

But what remains problematic is uneven implementation of good policy.  And the requisite political will that seems to be demonstrable only now under President Duterte after a long desert of patchwork and discontinuity.

2019 will also be experimental for our amended rice policy.  Rice plays such a critical role because it is the staple grain, the availability—or lack of which—affects inflation rates, and public temper as well.

We will be weaning away from quantitative restrictions on rice imports after 23 years of dodging the WTO’s liberalization of trade on the staple.  Before 1995, we had a highly protectionist food security policy centered on NFA’s monopoly of grains.  But starting this year, the National Food Authority will cease to be an operator in the rice market, and will be confined to buffer stocking.

How government can manage the rice market to avoid shortages and over-pricing, as against the impact on farmer incomes and agricultural productivity, will be a delicate balancing act minus the intervention of the NFA.

While awaiting the implementing rules and regulations of R.A. 11203 which liberalizes rice importation, one can only hope that the NFA and the economic managers who comprise its governing Council have been prescient enough to stock up on rice reserves for this year.

The allocation of a 10 billion peso Rice Competitiveness Enhancement Fund, which when tarriffs are collected from free-for-all imports should correlate to some 1.2 million tons (assuming the world rice pricing does not spike upwards) will be effective only, and ONLY IF, the handling of the fund is done without the endemic corruption that has characterized similar safety nets legislated in the wake of our accession to the WTO.

Remember the ACEF, or Agricultural Competitiveness Enhancement Fund, derived from tarriffs on MAV imports, as well as budgetary outlays?  Gone to uncollected anomalous loans, to fertilizer scandals, overpriced projects and other scams.

Whether the RCEF will go the way of the ACEF or whether it will answer the “safety net” that even Vice President Leni Robredo belatedly worries about will be a function of bureaucratic competence or incompetence, and whether the usual “sticky” fingers will or will not make a mess of the fund.

As for attracting foreign investments, we have to understand that we are in competition with our ASEAN neighbors and even India in getting these much-needed transfers of both capital and technology.

The restrictive provisions of our 1987 Constitution do not make for an attractive venue.  Neither do our labyrinthine bureaucratic procedures.  And while we have a good, young and English-speaking labor force, the same is being wooed away from the domestic economy by overseas employment opportunities.

The US-China trade war should attract transfers of capital and technology from China to our country, but as stated earlier, we are in competition with other Asean countries, where every effort is being made to attract foreign investment. In Vietnam for instance, which is authoritarian in politics but very open in economics, the levels of FDI’s for the past decade have been astounding.

Getting our act together is imperative.  And expectations about the Year of the Earth Pig should be tempered with the realities of the world economy, even as we reform, as we must, the strictures that bind our country to sluggish growth in foreign capital and technological catching-up.

We must guard against a return of the boom-and-bust cycle that has plagued our efforts at economic development while our neighbors have long sustained their crest.

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