* BusinessWorld April 10, 2023.
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On April 12, the Philippines’ economic and infrastructure teams will hold another Philippines Economic Briefing, this time in Washington DC. The economic team is composed of Finance Secretary Benjamin E. Diokno, Budget Secretary Amenah F. Pangandaman, National Economic and Development Authority Secretary Arsenio M. Balisacan and central bank Governor Felipe M. Medalla.
The US-Canada-Europe economies are generally in bad shape, suffering from high inflation and low, decelerating GDP growth. I computed the average first quarter or January-March inflation rates of countries in 2020-2022, and the US and UK lead in this very bad trend. Many businesses there would experience losses or flat revenues and will consider moving to emerging economies where growth is generally faster and inflation is lower (Table 1).
The Philippine economic and infrastructure teams should further assure US-based investors that their money and resources will have better returns here than in Europe or other continents, or at least comparable returns as in other East Asian economies.
In projecting future inflation rates, the “base effect” of the consumer price index (CPI) is an important consideration because inflation is the percent change in CPI a year ago. So, the high Philippines inflation in January to March was partly due to low CPI base a year earlier. With high CPI base from April to December 2022, we can expect lower inflation or percent change in CPI this coming April to December.
The transportation and storage sector accounts only for 3-4% of total GDP but it is an important enabler of production of more goods and services. More mobility of fertilizers and crops, fishery and livestock, steel and cement, people and services across islands and provinces means more growth in agriculture, manufacturing, construction, tourism and other sectors and hence, in overall GDP.
In 2020, GDP contraction was 9.5%, but the transportation and storage sector’s contraction was deeper at -30.6%. In 2021 and 2022 recovery, GDP growth was 5.7% and 7.6% but the sector’s growth was 6.3% and 23.9%, respectively. The main enemy of transportation and overall GDP growth is lockdown dictatorship that was unleashed in the Philippines in 2020 and 2021.
With the “pull up” effect of transportation in overall GDP, we should have bigger, more modern airports, seaports and rail system in the country. The big exodus of people from Metro Manila and neighboring provinces to other provinces during the Holy Week long holidays, moving by air, sea and land highlighted once again the role of the Department of Transportation.
I checked the transportation projects both solicited and unsolicited, from the Public-Private Partnership (PPP) Center. There are many huge projects and the big private proponents are San Miguel Corp. (SMC, Ramon Ang), Prime Assets (Manny Villar group) and GMR-Megawide (Table 2).
Transportation Secretary Jaime Bautista as a member of the infrastructure team that will also fly to Washington DC this week to complement the presentations by the economic team in the economic briefing has a big challenge and opportunities in his shoulder when he speaks and meets with US-based investors and infrastructure players. Good luck, Secretary Jimmy.
There are already many PPP projects in urban rail transportation. They are mainly transportation and real estate projects at the same time. We need bigger, more modern seaports and modern, bigger shipping lines that will transport more trucks, cars and people across islands faster and safer.
We also need bigger, more modern international airports in more provinces and more airlines that will transport foreign visitors and investors to these provinces. The newly amended Public Service Act will make it easier and safer for foreigners to invest in airports and seaports, airlines and shipping lines, power and other infrastructure in the country.
More investments mean more jobs and less poverty. Growth and job creation in the Philippines will become more broad-based, more geographically dispersed and more economically sustainable. And there will be more political empowerment, more economic freedom in more provinces and their people.
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See also:
BWorld 591, Devolution and rightsizing the bureaucracy, April 04, 2023
BWorld 592, On LBP-DBP merger and MUP pension reforms, April 08, 2023
BWorld 593, Low power supply and Meralco distribution cost, April 09, 2023.
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