On declining inflation and unemployment, and trade with China
May 9, 2024 | 12:02 am
My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/05/09/593582/on-declining-inflation-and-unemployment-and-trade-with-china/
This week, the Philippine Statistics Authority (PSA) released three important pieces of economic data — the inflation rate for April, and the unemployment rate and international trade numbers for March. To put the Philip-pines data in context, I update the data for other countries to see what the trends are over the past few years or quarters.
DECLINING INFLATION RATE
The Philippines’ inflation rate continues its deceleration at 3.8% in April 2024 vs 6.6% in April 2023 — this is good.
This same trend is true for many other countries and the challenge for the various stakeholders here is how to bring this down further, to below 3%, in the coming months. Especially the food inflation rate which remains stubbornly high at 5.6% and 6% in March and April this year, versus the overall inflation rate of 3.7% and 3.8% over the same period.
There have been various proposals to amend the Rice Tariffication Law and thus help reduce rice and food prices, but one thing that seems missing in these proposals is to encourage large-scale corporate rice farming to sig-nificantly increase output and reduce crop losses and waste, especially in the harvesting, drying and milling phases. Thailand and Vietnam are doing large-scale corporate farming. This plus their favorable geography — they have wide swathes of flat land with access to huge water bodies like the Mekong River and Ton le sap River — is why they are major rice exporters.
DECLINING UNEMPLOYMENT RATE
The country’s unemployment rate in January, February, and March 2023 were 4.8%, 4.8%, and 4.7% respectively. Over the same months in 2024 the unemployment rate was 4.5%, 3.5%, and 3.9%. Our job generation situation is improving — this is good.
Many countries do not share the same trend as many of them have seen either flat or rising unemployment rates in Q1 2024 vs Q1 2023, including all G7 industrial countries except Italy, and other East Asians except Indone-sia (see Table 1).
So, congratulations to the Philippines’ economic team for steering the country away from the trend of flat or rising unemployment rates seen in many countries in the world.
NO. 1 TRADE PARTNER
Looking at total merchandise trade (exports plus imports) per country from 2021 to Q1 2024, we see that China is our No. 1 trade partner, with a 19.6% average of total trade over this period. This is followed by Japan with 10.8%, the US with 10%, South Korea with 6.5%, Hong Kong with 6.2%, Singapore with 5.4%, Thailand with 5.3%, and Malaysia with 4.2%.
The yearly exports and imports over these four years are shown in Table 2. I did not include columns for total trade in million dollars and percent share to total for purposes of brevity.
But with the ongoing political noise and lobbying for war preparations versus China — a very dangerous, very costly, and backward maneuver — we have to ask our people and businesses if they are prepared for the mas-sive trade distortions that could result if the situation would further deteriorate?
We have progressed far since World War 2, which ended in September 1945. We have had nearly 80 years of peace, with no world or regional wars. People are conducting more trade and commerce, and there have been more tourism and investment flows across countries and continents for eight decades. Conflicts were discussed peacefully without resorting to shooting.
We should avoid taking sides in the deteriorating conflicts of the US vs Russia in Ukraine, the US vs Iran in the Middle East, and the US vs China in Taiwan and the South China Sea. Our main concern should remain high economic growth, sustained fast growth and job creation for our people.
We should want more trade and investments promotion, not war preparations; more negotiations and international diplomacy, not saber rattling. Our tax money should be used for more physical infrastructure here, not for the purchase of unproductive submarines, battleships, and missiles.
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See also:
BWorld 701, A dying free market movement in the world
BWorld 702, Privatize assets to cut debt
BWorld 703, Six myths about thin power reserves
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