Tuesday, February 27, 2024

BWorld 682, The nuclear option for Asian industrialization

The nuclear option for Asian industrialization
February 15, 2024 | 12:03 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.

It was a successful forum we held last week on Feb. 8. The 2nd Ruperto P. Alonzo Memorial Lecture, “The Nuclear Option,” saw about 160 audience members filling the UP School of Economics (UPSE) auditorium. This was not counting the hundreds who tuned in via Zoom, YouTube, and Facebook.

The forum was organized and funded by the UPSE Program in Development Economics Alumni Association (PDEAA) and Philippine Center for Economic Development (PCED).

The main speaker was Energy Undersecretary Sharon Garin, and the emcee and moderator was UPSE alumnus Jay Layug, Jr., who is a Senior Partner of Divina Law. The five panelists were: geologist Dr. Carlo “Caloy” Arcilla, Director of the Philippine Nuclear Research Institute (PNRI); Froilan Savet, 1st Vice-President and Head of Networks of Meralco; Lino Bernardo, Head of Special Projects of Aboitiz Power; Paulo Pagaduan, Senior Lead of Renewable Energy and Just Transition, Asian People’s Movement for Debt and Development; and this writer.

Undersecretary Garin discussed the past, current, and future regulatory environments in the Philippines’ nuclear power development, with a best-case scenario being starting construction of the first nuclear plant by 2028, with it being operational by 2032. I hope this will materialize.

Doc Caloy explained the technical feasibility and security of nuclear energy, saying that most of the public’s fears about it are not based on actual experiences of its safety. The two engineers from the energy companies emphasized the need for power stability and reliability to solve the problem of power insecurity coming from intermittent sources. Mr. Pagaduan explained their advocacy for more renewable power sources and non-support for nuclear power. I discussed the links between nuclear power, security, and GDP growth performance of many countries.

I saw some good data from the World Nuclear Association on the number and capacity of currently operational nuclear power plants by country, power plants under construction, and those planned to be built soon. I added data on actual power generation from nuclear plants over the two-decade period 2002 to 2022. In dealing with the data, I arranged the countries into three: in Group A were the Americas, in Group B the Europeans, and in Group C the Asians.

The US and Canada lead in the Americas both in operational and planned nuclear plants; France and Russia lead in Europe, but France is de-nuclearizing with no new plants being planned while Russia will keep adding new nuclear capacity, huge at 23,500 megawatts (MW).

The Asians, led by China, and with the exception of Taiwan and Japan, will keep adding more nuclear capacity.

It is interesting to note that the United Arab Emirates (UAE), an oil-gas producer and exporter, has three operational nuclear plants and will build another one. Pakistan might soon leapfrog into becoming an industrializing country with six nuclear plants operational plus one being planned. And Bangladesh is currently building two plants with a huge capacity of 2,400 MW (see the table).

Saudi Arabia has two proposed nuclear plants with a capacity of 2,900 MW. They will follow the UAE model — use nuclear power to light their roads, and export more oil gas to earn more revenues.

Other Europeans with modest nuclear power generation in 2022 were: Switzerland with 23.1 TWH; Slovakia with 15.9 TWH; Bulgaria with 16.4 TWH; Hungary with 15.8 TWH; Romania with 11.1 TWH; Slovenia with 5.6 TWH; and the Netherlands with 4.2 TWH.

Now that the Philippine economy is growing fast, with low and declining inflation and unemployment rates, the momentum will be high and power demand will also be high over the short to long-term. Nuclear energy — cheap, stable, reliable, safe — can provide the necessary solution to high energy demand to sustain high economic growth and job creation towards the Philippines’ long-term industrialization.

Once again, I and the rest of the PDEAA board thank the three corporate sponsors of the UPSE PDEAA-PCED forum — Meralco, Aboitiz Power, and Robinsons Retail Holdings. Not for funding the forum but for donating funds for the future PDEAA room in the expanded and modernized UPSE building. Thank you, guys.

See also:
BWorld 677, Coal power and higher life expectancy, February 11, 2023
BWorld 678, Philippines has third-fastest growth among world’s top 40 largest economies, February 19, 2024
BWorld 679, Growth forecasts vs actual growth, and agriculture performance, February 20, 2024

Ukraine War 3, The need for negotiations and stop the fighting

Below are some of my notes/comments this morning in a civil debate with some friends in the "Oplas Perspectives" viber group. Enjoy.

About potential NATO-Russia war, they should NOT do it. Also the potential Taiwan+US vs China war, they should NOT do it.

Ukraine-Russia war should have stopped weeks or few months after it started. Both sides shd have negotiated and external forces like UK, US should have stepped back. This did not happen and endless deaths and destruction continue until today. Some clear proof of the evil of continued fighting here.

War in Ukraine at 2 years: Destruction seen from space – via radar
Sylvain Barbot February 23, 2024

Ukraine is the weaker force vs Russia, it should have negotiated in 2021 or earlier.

Taiwan is the weaker force vs China, it should negotiate now before any missile flies.

PH is the weaker force vs China on the SCS/WPS, it should negotiate before jumping into a P2 trillion AFP procurement alone on top of existing hundreds billions AFP budget.

What Russia wanted before the invasion? No NATO membership for Ukraine. Stay neutral, neither pro Russia nor pro-NATO. Is this sooo hard to comply? Plus denazification of Donbas region.

What China wants in Taiwan? Unification, even via long-term transition, maybe by 2070 or 2060. Sooo hard to comply that TW should prepare for large-scale war and destruction?

People want the macho stand. No real negotiation in 2021 or earlier, happening in 2024. Patayan lang endlessly.

Extend that philosophy, PH should not negotiate with CN over WPS/SCS. Just hop on to P2 trillion AFP procurement, plus possibly P1 trillion PCG and PNP procurement. On Top of their hundreds billions pesos existing budget.

Rural infra, who cares? Prioritize purchase of missiles, submarines, battle ships. awww. 

Europe should step back from the Ukraine-Russia war. Address their own internal problems -- like so many illegal immigrants, huge annual deficit and public debt, expensive energy due to dependence on wind-solar and foreign oil-gas, etc. 

Let Ukraine negotiate with Russia. Stop the fighting now.

Since about 1991, Russian leaders negotiated with NATO. Russia (then headed by Gorbachev?) disbanded the Warsaw Pact, the military alliance like NATO, hoping that in exchange NATO should not expand towards Russia.

Russia fulfilled its promise, NATO did not. Now Estonia, Latvia are NATO members, right beside Russia.  Ukraine is even bigger. Length of border with Russia is 2,300 kms. Compare Manila-Davao distance only 964 kms. So finding and anticipating missiles along that 2,300 kms border will be impossible.

There was deliberate but silent invitation by US for Ukraine to join NATO. 2008 Putin negotiated with Obama but the latter did not make a categorical No to Ukraine membership in NATO. Putin asked again Biden in 2021, latter did not give that assurance.

Angela Merkel too indirectly admitted that the Minsk talks were meant to buy time for NATO to train more Ukraine soldiers, transfer more armaments.

In case of war with NATO, if NATO missiles for Moscow would come from Poland, maybe 8 mins flying time to reach Moscow, plus Belarus will see these and alert Russia. But if NATO missiles would come from Ukraine, it's near, it's dispersed, and Belarus won't see them. Estonia and Latvia as unfriendly neighbors, Russia may manage because of the short border length. 

Meanwhile, good data from statista here.

by Martin Armstrong, Feb 23, 2024

Sunday, February 25, 2024

BWorld 681, Low inflation, low unemployment, high growth — this is the Philippines

Low inflation, low unemployment, high growth — this is the Philippines
February 13, 2024 | 12:02 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.

Last week, the Philippine Statistics Authority (PSA) released two important monthly reports, on the country’s unemployment rate for December 2023, and the inflation rate for January 2024. They show really good results — unemployment is at a 19-year low, inflation at a three-year low. See these stories in BusinessWorld: “Inflation sharply drops to 3-year low” (Feb. 7), “Jobless rate hits record low in 2023” (Feb. 8).

I am updating this column’s monthly monitoring of global and regional inflation and unemployment data. I have put together in Group A the G7 industrial countries, in Group B are the big South Asian nations, and in Group C are the big East Asian countries (see the table).

Budget Secretary Amenah F. Pangandaman has asserted again the optimistic trajectory of the Philippine economy, saying that “We are now in a low inflation, low unemployment, high growth path, the best situation that any economy can hope for. Our budget priorities will remain on improving both the hard and soft infrastructure for our people that will further raise their productivity, income and social well-being, their overall quality of life in the long term.”

Well said, Madam Secretary. In fact many G7 countries now have higher inflation than the Philippines — the UK, the US, Canada, France, and Germany. And the G7 unemployment rates are all higher than the Philippines’ except for Japan. High inflation, high unemployment, and low growth (even contraction in Germany) is the worst combination that any economy would wish to have.

One disturbing trend globally is that food inflation is higher than overall inflation. For instance, in January 2024, food inflation and overall inflation rates were, respectively: Germany, 4.2% and 2.9%; France, 5.7% and 3.1%; Italy, 5.9% and 0.8%; South Korea, 5.9% and 2.8%; Taiwan, 4.1% and 1.8%; Indonesia, 5.8% and 2.6%; and the Philippines, 3.5% and 2.8%.

These countries’ agriculture, climate, and energy policies have made big contributions to this ugly trend. Imposing high taxes on diesel (used by tractors, harvesters, trucks, irrigation pumps, fishing boats, etc.), for example, raises the cost of farming and transportation of produce. The Philippines’ diesel tax until 2017 was zero, then it became P6/liter after the TRAIN law of 2018 (RA 10963) was passed. And then there is land conversion from agriculture to solar farms.

Also last week, on Feb. 5, the Development Budget Coordination Committee (DBCC) held its first meeting this year, with new members Finance Secretary Ralph Recto and Special Assistant to the President for Investment and Economic Affairs Frederick Go, joining the old members, Economics Secretary Arsenio Balisacan, Budget Secretary Amenah Pangandaman, and the Bangko Sentral representative.

Secretary Recto postulated that economic targets should be revised towards more realistic levels and rates. See another story in BusinessWorld: “Growth, fiscal goals need to be ‘more realistic,’ says DoF chief” (Feb. 12).

Given the declining trend in growth globally, a mild reduction in the Philippines’ growth target, from 6.5%-7.5% to 6%-7%, is not a bad idea, to avoid future disappointment if targets are high and not attained a few months later.

There are three important policy measures that I think must be held and sustained.

One, control spending and limit public borrowings, from P2.2 trillion/year average in 2020-2023 to below P1.8 trillion/year in 2024-2028. This way, the target of reducing the Debt/GDP ratio, from 60% in 2023 to possibly 40% to 45% by 2028, has a higher chance of being attained.

Two, distortionary policies in agriculture and energy must be revisited if not reversed. This is to help reduce food inflation and, hence, overall inflation rates.

And three, avoid any new tax hikes in 2024 and possibly beyond. The Philippines’ current situation of high growth (3rd highest GDP growth in 2023 among the top 40 largest economies in the world), low inflation, and low unemployment (as discussed above) happened without any tax hikes.

On controlling spending, I want to mention that we should not entertain the lobby of the country’s defense establishment and their allies in media, academe, and think tanks, to purchase $36 billion (P2.016 trillion at P56/$) worth of military hardware (submarines, new battleships, missiles, and jetfighters). Excluded in their P2-trillion costly and impractical budget are spending for ammo, spare parts, and training. The Philippines should focus on diplomacy and negotiations, not war mongering.

And not only the military establishment but also the police, coast guard, and other agencies will be lobbying for their own trillions of pesos for additional acquisitions and manpower expansion. The Philippines may not prosper anymore as the agencies will just invent new spending, new borrowings, and new taxes.

If the military and various agencies push hard for their trillions of extra spending, one possible option is the massive, large-scale privatization of the land and assets of the Armed Forces of the Philippines, the Philippine National Police, and the Philippine Coast Guard. Use the proceeds of this privatization for their costly modernization, don’t pick the money from the taxpayers’ pockets.

See also:
BWorld 677, Coal power and higher life expectancy, February 11, 2023
BWorld 678, Philippines has third-fastest growth among world’s top 40 largest economies, February 19, 2024
BWorld 679, Growth forecasts vs actual growth, and agriculture performance, February 20, 2024

Economists and their bashers, quotes from Thomas Sowell

On July 16, 2009, The Economist (I call it The Statist) pilloried economists with a paper, "What went wrong with economics" https://www.economist.com/leaders/2009/07/16/what-went-wrong-with-economics.  They wrote, "In the public mind an arrogant profession has been humbled...."

Two days after that I wrote a blog post about it. I said,

Economics' simplest definition is that "it is the study of proper allocation of limited resources"... 

So, what's wrong or what went wrong with economics?


What's wrong with economists?

They sometimes behave like politicians throwing away subsidies, expensive welfare programs and various political favors.

What's wrong with this article?

The author forgot the definition of Economics when he took Econ. 11 several decades ago.


I followed it up, "What's wrong with economics, part 2" (Dec. 6, 2010),

So why did modern economics – as practiced by known economists – go into the policy of endless borrowing, endless taxation, endless welfarism and subsidies, knowing that resources (money from taxpayers especially) are limited, while those who seek welfare and subsidy, those who seek corporate bail-outs, those who seek rackets in governments, and even those who simply want to steal in government, are unlimited?

The quick answer would be the central planning mentality of many – but not all – economists.

Recently, another economist-bashing article,

Economists pilloried for getting forecasts wrong
February 4, 2024

“Many economists are actually a tribal clique,” she said, referring to a lack of openness to other scientific disciplines.

“They quote each other — men more than women but that’s another story,” the former IMF chief and French finance minister said. “But they don’t go beyond that world because they feel comfortable in that world.”

-- Christine Lagarde, former European Central Bank (ECB) President, former IMF Managing Director, former France Finance Minister.

That article to a certain extent is correct. Many economists are braggart, mayabang, especially those from the multilaterals and the big global banks. And Ms Lagarde is part of this cabal and now she criticizes the cabal, hehe. 

Multilaterals like the IMF, WB, ADB, are into global economic central planning.  

Same way, the UNEP, UNWMO, UN IPCC, the above multilaterals, are into global ecological central planning and energy rationing.

The WHO and above multilaterals are into global health central planning.

All central planners invent certain narratives. Like energy/oil crisis, hunger/food crisis, NCDs/smoking crisis, virus crisis, garbage/plastic crisis, climate crisis,... And there is only one solution -- more government, more UN and multilaterals as saviors.

Among my favorite economists, Thomas Sowell (US) @ThomasSowell. Among his recent tweets:

Jan 31, 2024
There was a time when we honored those who created the prosperity and the freedom that we enjoy. Today we honor the complainers and sue the creators. Perhaps that is inevitable in an era when we no longer count our blessings, but instead count all our unfulfilled wishes.

Feb 6
There was a time when most Americans would have resented the suggestion that they wanted someone else to pay their bills. But now, envy and resentment have been cultivated to the point where even people who contribute nothing to society feel that they have a right to a "fair share" of what others have produced.

The most dangerous corruption is a corruption of a nation's soul. That is what this administration is doing.

Feb 9
When slavery is mentioned, too many people automatically think of whites enslaving blacks. That is not even one-tenth of the story of slavery, which existed on every inhabited continent. The very word "slave" derives from the word for some white people who were enslaved on a mass scale—the Slavs—for more centuries than blacks were enslaved in the Western Hemisphere.

Feb 10
There is nothing that politicians like better than handing out benefits to be paid for by someone else.

Feb 14
I don't understand how people who cannot predict the weather five days in advance can predict the climate decades from now.

Global warming, due to greenhouse gasses, is the latest in a long series of one-factor theories about a multi-factor world. Such theories have often enjoyed great popularity, despite how often they have turned out to be wrong.

Feb 17
Liberals try to show their concern for the poor by raising the level of minimum wage laws. Yet they show no interest in hard evidence that minimum wage laws create disastrous levels of unemployment among young blacks in this country.

Feb 25
One of the reasons it has taken so long for some people to finally see through Barack Obama is that people do not like to admit, even to themselves, that they have been played for fools by a slick-talking politician.

Saturday, February 24, 2024

BWorld 680, The nuclear option to energize growth

The nuclear option to energize growth
February 8, 2024 | 12:02 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.

The 2nd annual Ruperto P. Alonzo (RPA) Memorial Lecture will happen today, 3 p.m., at the University of the Philippines School of Economics (UPSE) in Diliman, Quezon City. The topic is “The Nuclear Option” and the economic implications. The event is jointly sponsored and funded by the UPSE-based Program in Development Economics Alumni Association (PDEAA) and the Philippine Center for Economic Development (PCED). PDE is a dear program of the late Prof. Ruping Alonzo who passed away in 2017 — today would have been his 76th birthday.

The main speaker will be Energy Undersecretary Sharon Garin, the panelists are Dr. Carlo Arcilla, Director of the Philippine Nuclear Research Institute (PNRI); Froilan Savet, First Vice-President and Head of Network of Meralco; Lino Bernardo, Head of Special Projects of Aboitiz Power; Paolo Pagaduan, Senior Lead for Renewable Energy and Just Transition, Asian Peoples’ Movement for Debt and Development (APMDD); and this writer as a PDE alumnus, batch 33rd (SY 1997-1999). The panel moderator will be Jay Layug, Senior Partner of Divina Law and a UPSE alumnus.

So, why the “nuclear option”?


1. Almost all major industrial countries in the world have been powered partly or largely by nuclear energy since the 1960s and ’70s. The United Kingdom (UK) opened its first nuclear plant in 1956, and by 1965 its nuclear power generation was already 15.1 terawatt-hours (TWH) or 15,100 GWH. In 1965, the United States of America (US) was already generating 3.1 TWH through nuclear power, while that of France was producing 0.9 TWH.

2. Nuclear power is generally safe, cheap and highly reliable. Since the 1970s, there was only one major nuclear accident with high fatality, in Chernobyl, Ukraine in 1986. The latest nuclear accident in Fukushima, Japan in 2011 after a big earthquake and tsunami has zero fatality.

3. Even when some Western countries have reduced their nuclear power capacity, more Asian countries are turning to nuclear power to sustain their growth. From 2002 to 2022, these Asian countries have increased their nuclear power generation: China from 25 to 418 TWH, South Korea from 119 to 176 TWH, and India from 19 to 46 TWH. Major oil-gas producer and exporter United Arab Emirates quickly expanded its nuclear power generation from zero in 2019 to 10.5 TWH in 2021 and 20.1 TWH in 2022. Pakistan had 22.3 TWH generated by nuclear power in 2022.

4. Many countries that started “denuclearization” experienced slower GDP growth. In Table 1, one can see that France, the UK, Germany, Spain, Japan, and the US have shown this trend. In contrast, countries that expanded their nuclear power generation have experienced faster growth (at least 2.7% yearly), namely China, South Korea, India, and Pakistan. Taiwan has seen a trend in growth deceleration too, but it is still at 3.2% in the last decade.


5. Particularly for the Philippines, we need nuclear because it was coal power that saved us from possible daily “Earth Hours” every day for the past few decades and yet government has banned the building of new or greenfield coal plants since 2017. From 2008 (when the renewable energy law or RA 9513 was enacted) to 2022, the average increase of power sourced from wind was only 69 GWH/year, from solar, 94 GWH/year, and from biomass, 130 GWH/year. Power from geothermal and natural gas (Malampaya) was flat and even declining. Coal power was expanding by 3,620 GWH/year.

The implied capacity factor (ICF) — which compares the installed capacity with the actual generation — of intermittent renewables is low: 28% for wind, 25% for biomass, and 14% for solar. And yet they are favored by law and pushed by many sectors in the country and the world. Coal has a higher ICF of 61%, natural gas has an ICF of 55% (see Table 2).

The mothballed Bataan Nuclear Power Plant (BNPP) could have contributed some 4.6 TWH/year, assuming a capacity factor of 85%. That is bigger than the combined generation of solar plus wind of only 2.9 TWH in 2022. Small modular reactors (SMRs) and even micro modular reactors (MMRs) will greatly help many power-deficient on-grid islands and off-grid islands and provinces like Palawan, Mindoro, Masbate, Marinduque, Camiguin, Batanes, and so on.

I will discuss more of this in the PDEAA forum this afternoon. The event is open to the public and media, with no registration fee for both physical and online participants and will be streamed live on the UPSE Facebook page.

Again, the event is organized and funded by the PDEAA and PCED. But to be transparent, the PDEAA solicited some corporate donations and support, not for this particular forum but for the future PDEAA room at the expanded UPSE building. Our initial supporters are the Aboitiz Power Corp., Manila Electric Co. (Meralco), and Robinsons Retail Holdings, Inc. Thank you, guys, for your generosity and support. Your companies will be recognized inside that room once it is finished.

See also:
BWorld 677, Coal power and higher life expectancy, February 11, 2023
BWorld 678, Philippines has third-fastest growth among world’s top 40 largest economies, February 19, 2024 
BWorld 679, Growth forecasts vs actual growth, and agriculture performance, February 20, 2024

Ukraine War 2, Two years of war and oil prices

Today is two years of the Russia invasion of Ukraine. US, EU, NATO imposed various economic and military sanctions. Like price cap $60/barrel on Russia (Urals) oil. Initially it was followed by some importing countries but abandoned in a few weeks. Today WTI crude is $76.5/barrel ,Urals crude $76.2/barrel, almost zero price difference between the two. Start of price cap, difference between them  was up to $20/barrel, now zero. 

EU sanction is a failure, Putin is richer, have more funds to sustain the war. While Germany, UK etc have high inflation and negative or crawling growth in 2023.

The so-called "axis of evil" Russia, Iran, China, happen to be among the biggest producers, biggest reserves, of oil-gas, and CN is the biggest manufacturing base. Their capacity to supply the world with oil, gas and manufactured goods means many countries would not want to antagonize them.

This is not just a military conflict but also of an energy and economic conflict. The old dominant powers vs the emerging powers.

Us small countries should stay neutral as much as possible. We prioritize our economy and jobs, not the military political interests of both sides.

If we read or see some groups, academics, think tanks, etc. pushing for soft or hard support for the US, NATO position, very likely they are on the payroll of the US. Conversely if pushing for soft or hard support for CN or RU, very likely they are on the payroll of CN or RU.

Very easy to be swayed to either side then overlook our own interest as a nation -- jobs, economic and energy security. Taiwan, they should negotiate with China or face heavy and very expensive military preparations. Why should we be taking side in that boiling military and political situation? 

The main lesson of Ukraine two years war of endless destruction and deaths on both sides -- early negotiation is still the best option, stay away from using  missiles and tanks. Hardline position on either or both sides leads to hard losses in lives and properties.

See also:

Tuesday, February 20, 2024

BWorld 679, Growth forecasts vs actual growth, and agriculture performance

Growth forecasts vs actual growth, and agriculture performance
February 6, 2024 | 12:02 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.

Among the important reports published in BusinessWorld is the quarterly poll of economists and analysts on their GDP growth forecast, reported few days before the Philippine Statistics Authority (PSA) releases the official GDP data. This is on top of the monthly poll of the same group of economists and analysts for the monthly inflation rate forecasts.

I checked the infographics and reports on the quarterly GDP growth forecast polls for all four quarters of 2023 and came up with an analysis.

The forecasters are the chief economists of banks and consulting firms or one of the faculty members of academe. They are from banks, consulting and finance firms, and the academe.

The organizations were: Bank of the Philippine Islands (BPI), Banco de Oro (BDO), China Banking Corp. (CBC), ING Bank NV, Maybank Investment Banking Group, Philippine National Bank (PNB), Rizal Commercial Banking Corp. (RCBC), Security Bank Corp. (SBC), Standard Chartered Bank (SCB), Union Bank of the Philippines (UBP) for the banks; ANZ Research, Capital Economics, HSBC Global Research, Moody’s Analytics, Nomura, Oikonomia Advisory & Research, Inc., Oxford Economics, Pantheon Macroeconomics, Ravelas (eManagement for Business, later Reyes Tacandong & Co.), S&P Global, Sunlife Investment Management & Trust Corp., for the consulting and finance firms; and, the Asian Institute of Management (AIM), Ateneo Center for Economic Research and Development (ACERD), Colegio de San Juan de Letran Graduate School, De La Salle University (DLSU), University of Asia and the Pacific (UA&P), and the University of the Philippines School of Economics (UPSE) for the academe.

I created a category based on how near or how far the forecasts were from the actual growth, represented by “plus or minus” (+/-). “Good” forecasts are those with an exact number and those +/- 0.3%. “Fair” forecasts are those with +/- 0.4% to 0.6% from the actual GDP. “Not Good” are those with +/- 0.7% to 1.1%, and “Outliers,” or far out forecasts, are those +/- 1.2% or higher.

Not all economists and analysts participated in the quarterly poll, some participated in Q1, but not in Q2 or Q3, but on average, 21 to 23 analysts join the quarterly poll.

Q2 of 2023 is notable because all the analysts were wrong and gave outlier forecasts. Q1 and Q4 had many analysts forecasting correctly (see Table 1).

So the best forecaster is BPI’s Emilio “Jun” Neri, with three out of four forecasts that were good. Congrats Jun and the team, you are brilliant. The organizations with the greatest number of outlier projections are Pantheon (4 of 4, with no good forecast) and Oxford (3 of 4).

This exercise shows that in general, human action and reaction to certain natural and social changes are still far from being accurately predicted by humans and trained professionals, no matter how elaborate and modern the mathematical models and tools they use are. That is why government and multilaterals’ central planning, one-size-fits-all policies are likely to produce more harm and disaster than the stated goals.


There are at least three ways to measure the performance of the agriculture sector. The first is the Agriculture, Forestry and Fishing (AFF) sector in the GDP by industrial origin or GDP by supply side. The second is manufacturing of the food products sub-sector under the industry sector. And the third is the food and beverage service activities (FBSA) sub-sector under the services sector.

We must look at the two sub-sectors because there is heavy underreporting in the output of raw agricultural, animal, and fishery products as shown by AFF growth which is always very low, with a maximum 1.2% growth in the last six years even if overall GDP grew by 7.6%.

Growth in the manufacturing of food products reached 4.8% in 2022. This is not possible if there was no growth of at least a similar level in raw agricultural products. So, by proxy, AFF should be growing 2.3% to 4.8%, not just 0.5% to 1.2% as officially recorded.

FBSA is a better proxy because it includes directly cooked and served food like those in restaurants, hotels, carinderia and litson-manok stalls. Meaning non-manufactured, preserved, and canned foods are included. Annual growth in FBSA was 4.6% to 26% (see Table 2).

So, if AFF output is actually growing by 4% to possibly 26% and not 0.5% to 1.2%, then many agricultural subsidies and freebies (free irrigation, free tractors, free seeds, etc. with no timetable to end the subsidy) and the large and elaborate agricultural bureaucracies may not be justified. Instead, the government should focus on more rural infrastructure like longer and wider paved barangay roads that benefit everyone, not just farmers and fisherfolks.

Related here are taxation and energy policies that distort agricultural production. Like the imposition of diesel tax — from zero to P6/liter under the TRAIN law of 2017 (RA 10963) implying that expensive diesel for tractors, harvesters, trucks, irrigation pumps, fishing boats is necessary to “save the planet.”

Then there is a growing trend of land conversion from agriculture to solar farms. This has short- to long-term adverse impact on food production and food inflation. This must stop. Expanding food production, saving the poor and hungry, should be prioritized over “saving the planet” because the weather is uncertain.

See also:
BWorld 676, My Economic Forecast for 2024 – 6.5%, February 10, 2024
BWorld 677, Coal power and higher life expectancy, February 11, 2023
BWorld 678, Philippines has third-fastest growth among world’s top 40 largest economies, February 19, 2024

Fiscal Irresponsibility 34, On sectoral parochialism and rising public debt

Sectoral parochialism, I just spontantaneously invented it to refer to being gung ho (in spending , subsidies etc.) on a particular sector to the detriment of the overall fiscal and macroeconomic  condition. I googled the term, there's no mention or definition yet, so I may have accidentally coined it :-)

I think almost everyone has sectoral parochialism so the result is ever expanding spending and borrowings even with zero economic or financial crisis. The overall fiscal condition is massaged to appear "fiscally sustainable".

Public economics is very different from household economics. In the latter, if you are always in debt, you can be called "Maluho, magastos, matabang, gastador,..." and people will avoid lending you until you become poor and forced to change ways.

In government, regardless of administration and country, endless borrowings and rising debt are always justified.

One reason why the US avoided recession in 2023 was the huge spending and borrowings by Biden. Federal debt $31 trillion in 2022 jumped big time to $34 trillion in 2023.

This 2024 out of around $6.7 trillion total federal budget, $1 trillion of that is interest payment alone. More ratings downgrade could be coming, overall econ condition would be tighter and riskier.


Four good articles I saw.

1. Massive Money Printing Will Accelerate as Debt Soars
Daniel Lacalle 02/19/2024

... between October and December 2023, the deficit ballooned to a staggering $510 billion....

The Congressional Budget Office (CBO) expects an unsustainable path that still leaves a 5.0% deficit by 2027, growing every year to reach a massive 10.0% of GDP in 2053 due to a much faster growth in spending than in revenues. 

Why America Will Never Surmount Its Mountain of Debt

The Federal Mega-Debt is Here to Stay
Jane L. Johnson 02/16/2024

There are only four means by which government can capture resources for its own use:

1. Outright confiscation of property for public use, which is prevented by the US Constitution’s “taking clause” without just compensation of the property owner.

2. Taxation.

3. Debt issuance.

4. Inflation that erodes the nominal amount of the debt over time, harming lenders.

Some observers would argue that this fourth strategy is perhaps what we are beginning to observe in the US and some other countries around the world...

Jim Grant: We’ve Yet to Feel the Full Consequences of the “Era of Free Money”

See also:
Fiscal irresponsibility 31, Another US government shutdown, implications for PH and other countries,
September 28, 2023 
Fiscal Irresponsibility 32, US public debt rising by $7.7 B/day, October 29, 2023
Fiscal Irresponsibility 33, More about the US deficit and debt, November 18, 2023.

Monday, February 19, 2024

BWorld 678, Philippines has third-fastest growth among world’s top 40 largest economies

Philippines has third-fastest growth among world’s top 40 largest economies
February 1, 2024 | 12:02 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.

THE PHILIPPINE Statistics Authority (PSA) released the fourth quarter (Q4) 2023 GDP data yesterday — it showed that GDP grew by 5.6%. Full year 2023 growth was also 5.6% — good.

For this column, I monitored the growth of the top 40 largest economies in the world, those with GDPs of at least $700 billion in purchasing power parity (PPP) values in 2022. Two of the countries had no quarterly GDP data: Bangladesh and Pakistan. One country had data for Q1 and Q2 2023 only (for an average of 3.8%), the United Arab Emirates (UAE). So these three countries are not included among the 37 countries listed in Table 1.

I grouped the countries into three. Those in Group A have full 2023 data with growth of 2.5% and above. Those in Group B grew by 2.4% and below. And those in Group C had data for Q1-Q3 2023 only, with no Q4 data available yet. The results are interesting.

1. The Philippines has the fastest growth among the countries with full 2023 data. If those in Group C are included, the Philippines had the third-fastest growth after India and Iran.

2. The Philippines’ 5.6% growth in 2023 is high growth over a high base (which was the high growth in 2022) and hence, there is no so-called “base effect.” China’s 5.2% growth in 2023 is high growth over a low base, since it had low growth of 3% in 2022.

3. The European economies, except Spain and Turkey, are either crawling at 0.1% to 1.5% growth, or are contracting (Germany, Sweden, Ireland, Poland). Other European countries not in the top 40, those ranked among the 41st to 50th largest economies, are also contracting — Austria (-0.6%), the Czech Republic (-0.5%), and Finland (-0.5%) (see Table 1).

The US growth of 2.5% seems deceptive, as it is due to heavily debt-driven government spending. The US federal debt has increased from $31 trillion in 2022 to $34 trillion in 2023, a huge $3 trillion increase in just one year. In their fiscal year 2024 budget of about $6.7 trillion, $1 trillion is earmarked for interest payments alone. Meaning their leeway for public infrastructure and social services is now drastically affected. As of Jan. 29, 2024, the US federal debt was $31.14 trillion.


GDP is measured in two ways: by expenditure or demand side, and by industrial origin or supply side. GDP by demand is equal to GDP by supply.

In the Philippines’ GDP by demand, household consumption constitutes 73% of GDP and it grew 5.6% in 2023. Investments grew by 5.4%, but government consumption tanked at 0.4%. This is mainly due to base effect.

Budget Secretary Amenah F. Pangandaman noted that: “There were some large government spending and subsidies in Q4 2022, like high vaccine procurement and ‘Libreng Sakay’ for Metro Manila buses, that were downscaled or discontinued in Q4 2023 to help control the deficit and borrowings. That fiscal consolidation move will give us wider fiscal space this year to continue high government spending on infrastructure. Public infrastructure last year remained high but is counted in investment or capital formation where there was high growth of 11.2% in Q4.” Good decision there, Madam Secretary.

In GDP by supply, the services sector constitutes 61% of GDP and it grew by 7.2% last year. The industry sector makes up 29% of GDP and it grew at a modest 3.6% (see Table 2).

The world economy will remain in a bad shape this year, led by the US and Europe, but Asian economies will anchor modest to high growth levels, led by India, China, Indonesia, Japan, Iran, Vietnam, and the Philippines.

A debt-financed growth is unsustainable and will lead to the bubble bursting in the short to medium term. The economic team led by Finance Secretary Ralph Recto must continue to aim for sustained high growth of 6% and up, a low inflation rate, a low interest rate, and a low unemployment rate of below 4%.

Secretary Recto’s “no new taxes” plan for this year and possibly beyond is a brilliant move. Allow the households and companies to keep more of their income and savings because they will spend or invest it anyway, mostly in the domestic economy.

See also:
BWorld 675, Declining births, rising deaths, and economic damage, February 01, 2024
BWorld 676, My Economic Forecast for 2024 – 6.5%, February 10, 2024
BWorld 677, Coal power and higher life expectancy, February 11, 2023.

Peace and Prosperity, not war mongering

Consider the following countries with territory dispute with each other:

1. Philippines and Malaysia over Sabah. No war.

2. India and Pakistan over Kashmir. No war except occasional sporadic shooting.

3. India and China in the mountains. No war.

4. Russia and Ukraine over Crimea and Donbas regions. Big war.

5. Israel and Hamas over Gaza and other areas of Palestine. Big war.

6. Assad and ISIS over NWest (oil-gas rich) region of Syria. Big war.

What's the difference between 1, 2 and 3, vs 4, 5 and 6?

In 1, 2 and 3, the US, UK and NATO are not  involved, or not heavily engaged.

In 4, 5 and 6, the US UK are involved, NATO too in Ukraine. So whenever and wherever the US is involved, very likely there will be war.

In Taiwan, I think 95-99% there'll be war there, perhaps within 10 years. Chance of no war only about 1-5%. US is highly involved.

Below, one of my slides in my talk about Forecast 2024 (economics, energy, etc).

Sunday, February 11, 2024

BWorld 677, Coal power and higher life expectancy

Coal power and higher life expectancy
January 30, 2024 | 12:02 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.

AMONG the common arguments against the retention of existing coal power plants in the Philippines and other countries is that coal is polluting and causes more sickness, lowering lifespans.

I intend to verify and quantify how honest or dishonest this statement is. For international data, I got the total coal consumption (in exajoules, EJ) by country, then divided it with their population in a given year, then I computed the coal consumption in gigajoules (GJ) per capita. I divided the countries into three. In Group A are the countries in Europe and North America, in Group B are selected Asia-Pacific countries plus South Africa, and in Group C are East Asian countries. The results:

1. Many countries in Group A had huge coal consumption until 2022. “Greenie” Germany had 43 GJ/capita, the US had 66, and Estonia had 90. In Group C, Indonesia had only 2.6 GJ/capita, Vietnam had 2.5, and Philippines had only 1.6. Yet the Philippines and other Asians are being bullied constantly to retire their coal plants soon — and prepare for blackouts and underdevelopment.

2. Despite repeated mantras of “decarbonization” and “exit from coal,” coal per capita consumption has generally been flat over the past two decades in many countries including greenie Europe and North America.

3. Countries with high coal consumption per capita also have long life expectancies of up to 82 years (Canada, Finland, Belgium). So there is no truth that as countries consume more coal power, their sickness incidence is high and life expectancy is low. It is a dishonest narrative (see Table 1).

The Philippines should expand our coal capacity, which is very small on a per capita level compared to greenie countries in the West. But there is endless bullying to decommission many of our coal plants, and opposing the expansion of existing ones, like the proposed coal expansion in Toledo, Cebu, partly on health grounds.

I computed the coal capacity per capita in some provinces in the Philippines. These are Bataan, Quezon, Batangas, and Pangasinan (see Table 2).

Bataan’s coal capacity per capita is 17 times larger than Cebu’s, Quezon’s is six times larger than Cebu’s. Are the people in Bataan and Quezon more sickly, dying faster, than the people in Cebu, or in provinces with no coal plants like the Cordillera and Cagayan regions, the Bicol region, the Negros provinces? Far out.

The Department of Energy (DoE) and other government agencies, national and local, should ignore the infantile concerns of the anti-coal groups based on dishonest health claims. The DoE should also consider allowing coal plants in greenfield investment while nuclear power development is still being discussed. Help enable the economy to have cheap and stable electricity, and help sustain fast growth.


The University of the Philippines School of Economics (UPSE) Program in Development Economics Alumni Association (PDEAA) will hold the second annual Ruperto P. Alonzo (RPA) lecture on the topic, “The nuclear option and economic growth” on Feb. 8, Thursday, 3 p.m., at the UPSE in Diliman, Quezon City. It will be open to the public and media.

The main speaker will be DoE Undersecretary Sharon Garin, and the panel discussants will be Irma Exconde (PDE batch 37); Dr. Carlos Arcilla of the Philippine Nuclear Research Institute (PNRI); a physicist, Paolo Pagaduan, of the Asian Peoples’ Movement on Debt and Development; and representatives from Aboitiz Power (AP) and MGen/Meralco. The moderator will be Jay Layug, an UPSE alumnus.

Sponsors of the event are AP, Meralco, and Robinsons Retail Holdings, Inc.

It will be good to hear from the only energy companies in the Philippines which have explicitly declared their intention to develop nuclear energy in their future power portfolio. Robinsons, in the meantime, is one of the biggest power consumers in the country because of their many business units.

See also:
BWorld 674, Nuclear energy and the UPSE RPA-PDEAA lecture, January 24, 2024
BWorld 675, Declining births, rising deaths, and economic damage, February 01, 2024
BWorld 676, My Economic Forecast for 2024 – 6.5%, February 10, 2024.

Saturday, February 10, 2024

Deindustrialization 24, UK and Germany degrowth and high food inflation

Germany and UK are Europe's two biggest economies and they -- plus many other Europeans -- are in degrowth economic trend. Germany contracted in Q3 and Q4 2023 at -0.2% while UK has a crawling growth of only 0.3%.

Food inflation, until Jan. 2024 Germany has 4.2% and UK has 8% in Dec. 2023. An industrial country is not supposed to have this situation because... they are industrialized. They can mass produce, mass transport, mass storage food. But their climate-energy policies are simply leftie greenie, and they suffer high energy and food prices while pursuing degrowth econ, the worst that any country can hope for. And this trend is replicated in Italy, France, many other European countries.

Source: Trading Economics.

The Philippines and other developing countries should never follow Europe's climate and energy policies that are leftie-greenie, stay the usual route and attract companies leaving Europe.

Meanwhile, some recent reports I saw.

(1) Britain is on the brink of another 1973-style disaster
SAM ASHWORTH-HAYES  18 January 2024

Between the race to net zero, the failures of the Bank, and the dysfunction of the British state, we could be well on our way to a repeat of 1973.

Right now, Britain makes it through dark, windless days by turning to fossil fuel generators – mainly gas power plants. These could be manipulated into net-zero compliance through carbon capture and storage, but as intermittent renewables account for an ever larger share of generation and demand grows – particularly as gas heating is phased out for heat pumps – we may find we need more than the existing capacity to back up our grid.

(2) ‘Very worrying’: Trade unions alarmed by EU’s industrial collapse
By Thomas Moller-Nielsen | Jan 17, 2024

Fears were compounded after a Eurostat study published on Monday (15 January) found that … Year-on-year industrial output was also down 5.8% in November after declining by 5.4% in October.

“We are facing a very worrying situation,” European Trade Union Confederation Confederal Secretary Ludovic Voet told Euractiv. “

Judith Kirton-Darling, the acting joint general secretary of industriALL Europe, similarly told Euractiv that her organisation, which represents some seven million European workers, “has been raising the alarm about industrial decline and the threat of deindustrialisation in Europe for some time”…

“Deindustrialisation is a clear and present danger, especially for energy-intensive sectors vital to downstream ecosystems,” said Tobias Gehrke, a Senior Policy Fellow at the European Council on Foreign Relations…

Ben McWilliams, an energy policy analyst at Bruegel think tank, agreed that high energy prices bear most responsibility for Europe’s industrial decline.

(3) Sickest Economy In Europe: Green Policies Corrode Business, Germany’s Economy Plummets
By P Gosselin on 16. January 2024

Green policies causing energy shortages and price rises

The truth behind the country’s demise has much more to do with the government’s green policies, which are driving the prices of energy up and industries out of the country.

(4) Germany 'in permanent crisis mode' as two-year recession looms
Economy shrinks as country rocked by high rates and energy costs
Tim Wallace  15 January 2024

Germany’s economy shrank by 0.3pc last year after it was hit by higher interest rates and elevated energy costs, with economists warning that the industrial powerhouse faces a two-year recession.

Carsten Brzeski, an economist at ING, said Germany has been “in permanent crisis mode” ever since the pandemic, as it has suffered from an “energy crisis, surging inflation and tightening of monetary policy”.

Germany was the worst-performing major economy in the world last year
Financial Times (pay-walled)

(5) Number of UK households failing to pay energy bills jumps by 39%
The Direct Debit failure rate in December 2023 increased by 15 per cent when compared to the previous year
Joe Middleton January 13, 2024

This was mostly driven by increases of 39 per cent in the “electricity and gas spending category and 20 per cent in the “mortgages” category, the Office for National Statistics (ONS) said.

At the beginning of the year Ofgem increased the energy price cap by 5 per cent from the previous £1,834 for a typical dual fuel household to £1,928. By comparison the energy cap was £1,277 per year in October 2021.

(6) Davos Devotees Deindustrialize Europe
In the name of green utopia, political leaders are quietly killing vital energy-intensive industries.
By Peter Huntsman  January 12, 2024

According to a recent report from the think tank Agora Energiewende, German greenhouse-gas emissions dropped 20% in 2023 to their lowest levels in 75 years primarily due to a collapse in energy-intensive manufacturing….

To stop this Continental calamity, business and government leaders must redouble their focus on basic economics and science. It will mean European governments increasing their domestic extraction of fossil fuels and minerals, as well as the refinement of these elements into chemicals, steel and the products that power advanced economies.

(7) German Industry Shrinks for Sixth Month as Recession Looms
Industrial production declined 0.7%, economist est. 0.3% gain
Economy probably contracted in final quarter of 2023
By Sonja Wind 9 January 2024

Production declined 0.7% from October, led by capital goods, and intermediate goods, the statistics office said Tuesday. That’s the sixth consecutive drop and defies economists in a Bloomberg survey, who’d predicted a 0.3% increase.

See also:
Deindustrialization 21, UK update, Net zero religion, November 13, 2023
Deindustrialization 22, EVs impracticality, Energizing growth series, December 19, 2023
Deindustrialization 23, Germany economic decline, January 14, 2024.

BWorld 676, My Economic Forecast for 2024 – 6.5%

My Economic Forecast for 2024 – 6.5%
January 25, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.

In this column’s piece “Economic Forecast 2024” (Nov. 21, 2023), I presented a table showing the 2024 GDP growth forecast for the Philippines by the IMF’s World Economic Outlook (October 2023) which was 6.2%, the ADB’s Asian Development Outlook (September 2023) which was 6.2%, and Trading Economics (November 2023) which was 6.4%. 

Recently, the ASEAN+3 Macroeconomic Research Office (AMRO) projected that the Philippines’ GDP growth this year would be 6.3%. See BusinessWorld’s story “PHL to grow fastest in the region this year — AMRO” (Jan. 19, 2024).

For the latest in my “Economic Forecast 2024” series (the second part came out on Nov. 24, 2023), I have produced my own forecast for the 4th quarter (Q4) of 2023 — hence full year 2023 — then my predictions for 2024. For the sake of brevity, I have taken the GDP by expenditure or demand and set aside GDP by industrial origin or supply side.

GDP by demand is composed of Household Consumption expenditure (C), Capital formation or Investment (I), Government consumption expenditure (G), and net exports of goods and services (exports minus imports, X-M). In short: GDP = C + I + G + (X-M).

A forecast is only as good as the assumptions made. Mathematical and econometric models may be beautiful and sophisticated but if the assumptions are not realistic, then unrealistic numbers (positive or negative) will be generated.

I have made the following assumptions:

Household consumption (C), which is 73% of GDP, would grow in both 2023 Q4 and all of 2024 due to high consumer confidence. There are two reasons for this: when it comes to electricity demand, data from the Independent Electricity Market Operator of the Philippines (IEMOP) showed that average demand was 10,444 megawatts (MW) in Q4 2022 and 13,107 MW in Q4 2023, or a big 25.5% increase year on year (yoy).

In addition, vehicle sales data from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) showed that total vehicle sales in 2023 reached 429,807 vs. 352,596 units sold in 2022, a big 21.9% increase yoy. See the report in BusinessWorld, “Vehicle sales surpass target in 2023” (Jan. 18, 2024).

Investment (I) is 23% of GDP. Foreign direct investment (FDI) and portfolio investment could tank but domestic investment would make up the gap. As reported in BusinessWorld, net FDI from Jan.-Oct. 2022 was $7.92 billion, and Jan.-Oct. 2023 it was $6.53 billion, a contraction of 17.5% yoy. Net foreign portfolio investment from Jan.-Nov. 2022 was $793.8 million, then contracted in Jan.-Nov. 2023 to $42.1 million.

But the decline in unemployment from 6.5% in November 2021 to 4.2% in November 2022, and 3.6% in November 2023 is a clear case that domestic investment is taking the weight when it comes to job creation.

Investments this year are projected to be high mainly due to the operation of the Maharlika Investment Fund and the attraction of more investments from other countries’ sovereign wealth funds and investment funds. I see about 5.5% growth over the 2023 level.

Government consumption (G) is 14% of GDP. It would keep a modest growth of around 2% yoy. Budget Secretary Amenah F. Pangandaman argued that “government needs to balance the gains from productive public spending especially infrastructure and safety net spending like Protective Services of Individuals and Families in Difficult Circumstances (PSIFDC) vs. the pains of heavy borrowings and high interest payment plus the need for higher taxation to retire those debt in the long-term.” That is a good and practical balancing act there, Madam Secretary. Thank you.

Exports of goods and services (X) would have minimal growth because of two things: merchandise or goods exports at $73.2 billion in Jan.-Nov. 2022 declined to only $67 billion in Jan.-Nov. 2023, a -8.4% change yoy. Meanwhile, OFW remittances from Jan.-Nov. 2022 of $29.4 billion increased slightly to $30.2 billion in Jan.-Nov. 2023, or growth of 2.8%.

Imports of goods and services (M) would have modest growth of around 3%. Merchandise or goods imports in Jan.-Nov. 2022 of $126.9 billion declined slightly in Jan.-Nov. 2023 to $116 billion. The net exports (X-M) is -10% of GDP.

The Top 5 export markets of the Philippines are the US, Japan, China, Hong Kong, and South Korea — they buy 61% of total Philippine merchandise exports. And all of them are experiencing economic hardships. Their growth performance in Q1-Q3 2022 and Q1-Q3 2023 respectively were: the US, 2.1% and 2.4%; Japan, 1% and 2.1%; China, 3% and 5.2%; Hong Kong, -3.5% and 2.8%; and, South Korea, 2.6% and 1.1%.

Such modest growth by our major trading partners is not conducive to the expansion of our exports. Luckily our neighbors in the ASEAN — like Indonesia, Malaysia, and Vietnam — are growing somewhat faster and they may purchase more of our excess exports.

The accompanying table shows the numerical results of these assumptions.

The Philippine Statistics Authority (PSA) will release the 2023 Q4 GDP data on Jan. 31. I will write about it and compare how the numbers in this exercise would fit or diverge from the actual performance of the Philippines economy.

Nonetheless, we should remain optimistic about the state of the country’s economy and business. The economic team remains intact despite the change in leadership at the Finance department. The new Finance Secretary, Ralph Recto, has the economics training, business partners, and a political network to advance market-oriented reforms.

See also:
BWorld 673, Revenue challenges faced by new Finance chief, January 18, 2024 
BWorld 674, Nuclear energy and the UPSE RPA-PDEAA lecture, January 24, 2024
BWorld 675, Declining births, rising deaths, and economic damage, February 01, 2024.

Thursday, February 01, 2024

Macroecon 23, GDP forecasting and the forecasters

Forecasting GDP growth is a passion for many economists, in academe, banks, government and multilateral institutions. But reliability of forecasts can be wild, the projections are often far out from the actual. Examples below for Q1 to Q4 2023 forecasts.

(1) Q1 2023 Philippines GDP, median growth forecast by 23 economists was 5.1%. Actual growth was 6.4%, many got it close enough. But there were a number of outliers. On the low side -- Oxford Econ (4.4%), Pantheon Macroecon(4.8%, and Sunlife Financial (4.7%). On the high side, Ateneo (7.4%).

(May 8, 2023)

(2) Q2 2023, median growth forecast was 6.0%. Actual growth was 4.3%.

https://www.bworldonline.com/top-stories/2023/08/07/538039/q2-gdp-growth-likely-slowed-further/ (Aug. 7, 2023)  

The outliers, really far out forecasts were again Oxford Econ. (7.5%) and Pantheon Macroecon (6.9%). Ateneo also went overboard with 6.5%.

(3) Q3 2023, median growth forecast was 4.9%, actual growth was 6.0%.

(Nov. 6, 2023)

Only Michael Ricafort of RCBC (6.0%) and Jun Neri of BPI (6.1%) got it close. The outliers again  were Pantheon Macroeconomics (3.1%) and Oxford Econ (4.3%). Also Oikonomia Advisory & Research (4.0%), ING Bank (4.2%).

(4) Q4 2023, the median forecast of 5.7% was close to the actual 5.6%.


Still the same outliers -- Oxford (3.6%) and Pantheon (4.8%), plus Capital Econ (3.9%) and Moody's (4.9%). The other outliers on the high side were Maybank, Oikonomia, and RCBC with 6.5% forecast. My own projection for Q4 was 6.0%, I wrote here, https://www.bworldonline.com/opinion/2024/01/25/571009/my-economic-forecast-for-2024-6-5/

So Oxford and Pantheon have 0 out of 4 forecast batting, very poor bordering on lousy forecasting. I wonder what kind of macroeconomic business advice they give to their clients.

On Moody's, a friend sent me this: On January 29, 2024, Moody’s Analytics forecasts a 4.9% PH GDP growth for the fourth quarter of 2023 saying that “improving private consumption amid fading inflation, a tight labor market should support economic growth of 4.9% year over year”.  What happened, Moody's?

Meanwhile, here's the quarterly growth data from PSA.


See also:
Macroecon 21, Presentation on inflation, gloal and national pictures, November 01, 2022
Macroecon 21, Tax revenues, PH outstanding debt, February 17, 2023
Macroecon 22, Econ performance of Marcos Jr administration in year one, July 30, 2023.

BWorld 675, Declining births, rising deaths, and economic damage

Declining births, rising deaths, and economic damage
January 23, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.

Last Friday, Jan. 19, the Philippine Statistics Authority (PSA) released the “Birth, Marriage and Death Statistics for 2023.” I downloaded the Excel file and compared it with my monthly database for these subjects from 2019. To make a comparison for 2023, I got only the first six months of each preceding year.

The results:

1. Births are declining — from 133,400 in January to June 2019, to 102,000 in the same period in 2021, and 110,400 in 2023.

2. Deaths are rising — from 51,500 in January to June 2019, to 64,500 in 2021, and 56,500 in 2023.

3. The net population increase is also falling — from 81,900 in January to June 2019, to 37,500 in 2021, and 54,000 in 2023 (see Table 1).

This is not yet a “depopulation” trend because the net increase (births minus deaths) is still positive, not negative — but the number is declining and so if this trend continues, we should be in a depopulation situation several years from now. That is not good.

Also last week, supersally.substack.com released similar reports about Hong Kong and Thailand. “Hong Kong… Births are Dropping & Deaths are Rising with Deaths nearly Double Births” and “Thailand’s MSM Finally Picks Up Vaccine Harm!” citing the report, “Long COVID, vaccines may cause disease and death: Chula, Rangsit” (Bangkok Post, Jan. 14). The report refers to studies from Chulalongkorn University and Rangsit University.

Since I just came from Hong Kong last week and I saw many old people still working (the HK Jollibee branches, for instance, have local staff who look like they are 60+ years old) or resting in public parks, I pursued the statistics for HK. Also those of Thailand, and Australia. I summarized the numbers below.

Hong Kong births are declining fast, from 52,900 in 2019 to only 32,500 in 2022, while their deaths are rising from 49,000 in 2019 to 63,700 in 2022.

Thailand births also declining, from 596,740 in 2019 to 485,000 in 2022, while deaths are rising from 509,100 in 2019 to 536,700 in 2022.

Australia’s births declined slightly, from 305,800 in 2019 to 300,700 in 2022, while deaths are rising fast, from 164,800 in 2019 to 190,800 in 2022 (see Table 2).

China has a terrible trend: the National Bureau of Statistics reported that in 2023, there were only 9.02 million births (only half as many as in 2017), while there were 11.1 million deaths (up 500,000 on 2022). China’s population shrank by 0.85 million in 2022 and by 2.08 million in 2023, a loss of 3 million people in two years (“China’s falling population could halve by 2100” by Xiujian Peng, AsiaTimes, Jan. 20).

In Europe, these reports somehow summarize the situation: “The decline in birth rates is a widespread trend across Europe” (by Solène Cordier, Le Monde, Jan. 18), “Declining birth rates: A challenge for France’s social model” (Editorial, Le Monde, Jan. 18).

About the decline in births in the Philippines, I hypothesize that there are three reasons why this happened:

1.) State-sponsored population control via the Reproductive Health (RH) law of 2012 (RA 10354);

2.) State-sponsored population control via the COVID-19 lockdown dictatorship plus the implicit mandatory vaccination in 2021-2022; and,

3.) Couples’ voluntary limiting of childbearing.

The reasoning behind No. 1 is wrong because a bigger population is a virtue, not a burden. A bigger population means more entrepreneurs and workers, more producers and consumers. All rich countries take in more (legal) migrant workers and professionals, plus use more robots and machines to sustain their production. But while machines are producers, they are not consumers like people. Robots do not drink and eat in bars and hence do not contribute to growth in the restaurants, hotels and service sector.

Among developing Asian countries with populations of at least 100 million in 2023, one sees that as their population expanded their per capita income also expanded at a much higher rate. Their per capita GDP at purchasing power parity (PPP) values from 2002 to 2022, respectively, were: China, from $4,001 to $18,128; India, from $2,476 to $7,112; Indonesia, from $6,048 to $12,439; Vietnam, from $4,012 to $11,250; the Philippines, from $4,625 to $8,889; Bangladesh, from $2,543 to $6,751; Pakistan, from $3,766 to $5,670. So, the narrative that “more people = more poverty” is false and dishonest.

No. 2 is bad because the lockdown dictatorship unless vax-vax-vaxed caused the Philippines to have the worst GDP contraction in Asia at -9.5% in 2020. The 5.7% growth in 2021 was insufficient to recover the economic damage in 2020. I believe that there is something about the COVID vaccines that contributed to a trend of declining births and rising deaths in many countries around the world.

Reason number 3 is voluntary, couples (married or not) decide what is best for them and their households given their specific needs and aspirations.

Declining births plus rising deaths are terrible trends, economically damaging trends. We should reverse this early via a reversal in public policies now that official data are confirming this trend.

The government procurement of experimental, emergency-use COVID vaccines must stop for public health and economic-fiscal sustainability reasons. Kudos to the Concerned Doctors and Citizens of the Philippines (CDC PH), Juan Dakila Movement, and allied organizations for continuing the campaign on health and individual freedom.

See also:
BWorld 672, Stabilizing growth with low unemployment and high manufacturing PMI, January 14, 2024
BWorld 673, Revenue challenges faced by new Finance chief, January 18, 2024 
BWorld 674, Nuclear energy and the UPSE RPA-PDEAA lecture, January 24, 2024.