June 19, 2017 – Philippine economic reality – “Here is the economic reality. All sectors of the Philippine economy—government, corporate and particularly consumer—are arguably some of lowest in the world. A cash-based economy, particularly on the consumer side, may grow more slowly but that growth will be more sustainable and robust.” [WORKERS WITHOUT GAINS IN REAL WAGES IS A GLARING REALITY – TUCP.] Read more.

Published by reposted only Date posted on June 18, 2017

Philippine economic reality

By BusinessMirror Editorial, Jun 18, 2017

The Philippines faces many problems. Some are critical, like the Marawi rebellion; others are merely annoying, like the fact that when school starts, so does the rainy season. However, overall, the Philippines does not have economic problems despite Filipinos being told constantly that we do.

The academics and other experts sit around a massive table in a wood-paneled boardroom, wearing Western-style suits, which cost could feed a rural Filipino family for a year, and talk, for example, about “inclusive growth”. One problem is that, while they wear their sober faces, they cannot even measure “inclusive growth”, the “equitable opportunities for economic participants during economic growth with benefits incurred by every section of society”. It is a “concept” that’s unlike any sort of a data-defined model.

The negative bias is glaring and never ending. The headline about a new World Bank study reads, “Filipinos are working hard but remain poor”. But for us, the most interesting part was this statement: “This new report shows that, contrary to some (actually should be all) perceptions, economic growth in the last 10 years has created enough jobs to absorb the growing labor force. Still, many workers remain underemployed,” World Bank Country Director Mara Warwick said.

And, of course, why isn’t the local stock market at its historic high like in the US?

But let’s talk about the stock market. As recently pointed out, the net profit growth for all Philippine Stock Exchange-listed issues grew by 17.8 percent in 2016 over the previous year. By contrast, the 30 listed issues of the Dow Jones Industrial Index posted a 0.00-percent growth.

An expert questioned how this was possible since total revenue growth was only 6.6 percent higher. This is not a person that you want running your business if you are a for-profit company. Profits that grow faster than revenues show higher efficiency and profit margins. Most business people—unlike the deep thinkers—would consider that a success.

Further, a major potential net profit-killer is debt service. So, if a business grew profits faster than revenues, there is a strong likelihood one important reason is that the company spent less on paying offer debts than it did in the previous years probably due to having less debt, another sign of business success.

Here is the economic reality. All sectors of the Philippine economy—government, corporate and particularly consumer—are arguably some of lowest in the world. A cash-based economy, particularly on the consumer side, may grow more slowly but that growth will be more sustainable and robust.

When you hear negative comments about the Philippine economy, please remember: There is more to the story than the headlines.

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