Consumption Driven Philippine Economy

[jpdm]

Attention: Philippine government!

‘Consumption driven’



December 3, 2013 8:01 pm
by MIKE WOOTTON
VIEWS FROM A BRIT

Well, the Philippine economy is certainly consumption driven, to a fault it seems and what is more the government pundits boast about it—well in the Philippines it is not something to boast about. China is trying to get their economy more consumption driven but the Chinese won’t spend money—the “savings bug” will be with them for a long time yet. Of course, there is nothing much easier than spending money in one of the many glittery shopping malls that continue to mushroom all over the place. Like the United Kingdom’s High Streets, they all have much the same outlets in them but occasionally you see something different, then you go back to have another look, and “poof” it’s gone! Something “a bit different” tends not to last too long around here.


Much of the money that is spent in retail outlets is from the $14 billion a year remitted by the overseas Filipino worker community of about 10 million or 36 percent of the workforce. Filipinos, it seems, have a proclivity for shopping. Christmas is coming and providing the annual occasion for the regular gluttony of shopping; even this last weekend the traffic was getting very congested around the drop off points for the malls.

What are sold in the malls are rarely made in the Philippines out of natural products grown in the Philippines, thus what are sold are in the vast majority imported goods and the majority of those imports come from China, from which the Philippines sources 13 percent of its $78 billion’s worth per year of imports (based on official statistics and therefore not including the reported $20 billion per year of “smuggled goods” which if counted would knock the even now fairly dismal balance of trade figures very significantly).


The more malls there are, the more sales of expensive imported goods there will be, and the more exporting will be required by the Philippines in order to offset massive import dependency; but consumption as a major contributor to economic growth will surely rise to keep Chinese and other exporter nations workers in jobs!

Rather than developing real estate for retail purposes, perhaps a bit more emphasis could be given to using those same investment monies for developing manufacturing facilities which would produce good quality products from local materials, and create jobs with higher skill levels than required for five million sales assistants and managers . . .? In the long run, short of a miracle or two or the creation of more real skilled jobs, the market for expensive imported consumer products must diminish.

Mike can be contacted at mawootton*gmail.com

source: ?Consumption driven? | The Manila Times Online

[vinj]

This has been the obvious quite a while unfortunately.

We don't have a strong manufacturing sector but rather rely a lot on services and remittances. Pag pasok ng OFW money then it's off to the mall to buy-buy-buy. We will not have a strong manufacturing sector because of cost of high electricity costs, labor issues (just ask those idiot leftists), logistic concerns, red tape (and that is an understatement), and lack of a market that can meet real economies of scale unless you are a regional trader.

[uls]

posted 01-23-2010

http://tsikot.com/forums/politics-ec...ucky%92-67113/

from the article posted above:

Boasting of her accomplishments after nine years in office, Arroyo said the peso was stronger, tax reforms were in place, and social services available to most Filipinos.

"Ito lang yata ang administrasyon na lumakas ang piso kaysa humina [This seems to be the only administration where the peso got stronger instead of weaker]," she said.

GMA, you are not responsible for the strong peso

the peso is strong coz 10% of the population is working abroad, sending foreign currency to the Phils., pumping up the country's foreign currency reserves

and thank the US Fed's monetary policy for the weak dollar

don't thank yourself

we're not stupid

kaya mo bolahin ang mga ignorant masses

di kami

“Ang papel ko ay ihanda ang pundasyon. . . . Andyan na yan, ang pundasyon ng matatag na ekonomiya at inaasahan natin na itutuloy niya iyon para maramdaman ng mga Pilipino [My role is to lay down the foundation…It’s there, the foundation of a strong economy and we expect that this will be felt by the Filipinos],” Arroyo said.

pundasyon my ass

your pundasyon is an economy that's entirely dependent on labor export

you have an economy that's mostly end-user consumption, very little production

a lot of businesses here are trading businesses, not goods-producing businesses

we import everything

and we use dollars earned by OFWs to pay for imports

that's our economy

you think the Phils. is getting richer coz OFWs keep sending dollars?

NO

our OFW dollar earnings go to exporting countries

we are tranferring our wealth to other countries

we make other countries richer (like China, Japan, Korea etc) coz we buy their goods

they invest in more production, which employs more of their people, their people have more money, their people's standard of living rises

that makes them richer

get it?

the OFW trend will go on for years (and decades) to come

coz our country is already addicted to OFW earnings

soon 15%, 20% of the population will be working abroad

the Philippines has become a manpower agency

that's your economy GMA

again, we are not stupid

BTW,

coz the Phils. has a steady stream of forex earnings,

our govt uses that as "collateral" to borrow money

(hey, may pera kami pumapasok, pwede niyo kami pautangin, may pambayad kami)

coz our forex earnings keep growing, it allows more borrowing

foreign banks love lending us money coz they make tons of money underwriting our bonds

and bond investors love our bonds coz of the high yield

as long as OFWs keep sending money to the Phils.

the Phils. can keep borrowing money

it's clear the govt, and the country, will fail without OFW remittances

that's your economy, GMA

and the next president will have no choice but to pick up where you left off

he will just keep encouraging pinoys to go abroad

[uls]

from the article posted by jpdm:

The more malls there are, the more sales of expensive imported goods there will be, and the more exporting will be required by the Philippines in order to offset massive import dependency; but consumption as a major contributor to economic growth will surely rise to keep Chinese and other exporter nations workers in jobs!

like i said we make China and other exporters richer

Rather than developing real estate for retail purposes, perhaps a bit more emphasis could be given to using those same investment monies for developing manufacturing facilities which would produce good quality products from local materials, and create jobs with higher skill levels than required for five million sales assistants and managers . . .? In the long run, short of a miracle or two or the creation of more real skilled jobs, the market for expensive imported consumer products must diminish.

we've discussed this before. remember those threads about building a pinoy car? my side is it's not gonna happen. people said i'm too negative

well years have passed and there still isnt a massed-produced original pinoy car

it's not coz there's no capital

there's a lot of capital out there

but investors aren't willing to direct capital toward mass-producing original pinoy cars coz it's too risky

that was my argument

our capitalists would rather invest their capital in real estate (building malls and condos)

the other side kept posting about how talented pinoys are. that pinoys can design cars and all that. but what are you gonna do with designs when nobody is willing invest in turning those designs into reality?

[vinj]

^ Hehe... looking at what's been happening, Aquino ver 2.0 has been less than lucky.

[kinyo]

proverb of the day

"Ang kurap na gobyerno, paborito nya OFW"

[Stoner]

Because majority of our officials have no long term goal beyond the next election and/or are busy trying to cover their tracks when they end up getting sued after stepping down.

[Monseratto]

Nowhere to go but up, since we are at the bottom and have a lot to cover...

The 5 Fastest-Growing Countries in the World
by Dan Carroll, The Motley Fool Dec 7th 2013 10:00AM
Updated Dec 7th 2013 10:02AM

The recession took a sledgehammer to global economic growth, particularly in advanced economies such as Europe, Japan, and the United States. It's been a tough road back for many of these leading nations -- and for some, like Europe's hardest-hit countries including Italy and Spain, growth's remained elusive five years after the 2008 financial crisis's climax. While some economies are bouncing back slowly, let's look at the best economic outlooks going forward. Just which nations are the five fastest growing countries in the world?

Using data from the International Monetary Fund and based on projected 2014 nominal GDP growth rates for the 50 largest economies in the world:

3. Philippines, 6% GDP growth
The Philippines, a member of the blossoming Association of Southeast Asian Nations, or ASEAN, has become a big player in the region recently because of its regional spats with power player China over control and influence in the South China Sea. However, this country's more than just an opponent for Asia's top economy: It's a growth story all on its own, and the Philippines has quietly risen to become the 31st largest economy in the world, ahead of developed nations such as Austria, Sweden, and Singapore. While the IMF projects the Philippines's economic growth to slow down to 5.5% in the years following 2014, this country's still on pace to emerge as a top player in fast-growing Asia.

However, the country's growth projection might not live up to its hype in the new year. The Philippines still suffers from poor infrastructure in many parts of the country, a hindrance to business and growth. Easy credit has also led to inflating housing and consumer prices.

However, the country's dominant business process outsourcing industry, or BPO, should keep on churning out growth for the Philippines. Many top BPO and IT firms operate out of the country, including Accenture . Accenture targeted BPO as one of its key growth markets in its recent 10-K annual filing, and overall outsourcing revenue rose 7% year over year at the company in its most recent fiscal year. The Philippines' economy might not be sturdy enough to trust across every sector, but for Accenture and other BPO leaders, it's hard to pass up.

The 5 Fastest-Growing Countries in the World - DailyFinance

[Monseratto]

Just compared to our Asean Neighbours, we're dead last in almost everything...

Philippines fastest growing yet still poor | Free Malaysia Today

Philippines fastest growing yet still poor
December 8, 2013
By Arno Maierbrugger

MANILA: The Philippines, although now the fastest-growing member of Asean, however remains the poorest among the five major economies in the group. This was disclosed by its National Statistical Coordination Board (NSCB) recently.

NSCB secretary-general Jose Ramon Albert, citing the 2012 Asean community progress monitoring system report, said after growing by a better-than-expected 6.8% in 2012 and by 7.6% in the first half of 2013, “the Philippine economy is now the fastest growing among the five largest economies in Asean.”

Asean 5, which is composed of Indonesia, Malaysia, the Philippines, Singapore and Thailand, is expected to be the key growth driver not only in Southeast Asia but also in the greater Asia-Pacific region.

Albert said while the country outpaced the economic growth of its peers last year and in the first half of 2013, “the Philippines still has the lowest per capita GDP [in purchase power parity terms] of US$4,339 (RM13,027). ”

Meanwhile, it turned out that the Philippines remains one of the poorest in terms of overall infrastructure quality within its peers in Asean.

The World Economic Forum Global Competitiveness Report 2013 said the Philippines ranked fourth out of five countries.
Philippines scored 98, just above Vietnam’s 119, which ranked more poorly.

The Philippines ranked the worst in quality of sea port and air transport infrastructures with scores of 120 and 112, respectively.
Malaysia led the group with a score of 29 in overall infrastructure quality, followed by Thailand and Indonesia with scores of 49 and 92, respectively.

[rollyic]

sabi ng officemate kong indian...
no.1 that drives the economy of india is their OFW.
2nd country nila ang ME.

[uls]

the taipans are the only ones getting richer

their businesses are capturing all the consumer spending

they own the malls and major retailers

they own the biggest real estate devt companies (that's where people invest their savings)

[uls]

from the article posted by Monseratto

Easy credit has also led to inflating housing and consumer prices.

exactly

aside from OFW money flooding the economy consumers also have easy access to credit (credit cards, car loans, personal loans, housing loans)

you'd think everyone's getting rich

many are just piling on debt

[safeorigin]

A contrarian view, however, would say that we are getting richer since foreign countries are willing to export their resources for less.

but then,

Tim: Writers such as Bob Murphy had given you a hard time on what seemed to be your anti-trade deficit views, though Murphy has since admitted that you are right in your assessment of our current mess. Do you think a trade deficit is always bad for a country?

Peter: No. Trade deficits are OK under certain circumstance. 1. An emerging nation imports capital goods necessary to enhance its productivity. 2. A developed nation, with a current account surplus, uses some of its investment income to finance the purchases of additional consumer goods from abroad.

The problem with our deficit is that we import consumer goods we can not afford to pay for with either exports or foreign earnings. As such we accumulate external liabilities that we will never be able to repay and our nation’s future productive capacity continues to deteriorate. We are de-industrializing and are condemning ourselves and future generations to falling standards of living.

Interview with Peter Schiff

[uls]

^^^

Trade deficits are OK under certain circumstance. 1. An emerging nation imports capital goods necessary to enhance its productivity. 2. A developed nation, with a current account surplus, uses some of its investment income to finance the purchases of additional consumer goods from abroad.

The problem with our deficit is that we import consumer goods we can not afford to pay for with either exports or foreign earnings.

but the Philippines imports more consumer goods than capital goods

it's not like we're importing industrial robots and machines for manufacturing

we import tons of consumer goods just like the US

[jpdm]

the taipans are the only ones getting richer

their businesses are capturing all the consumer spending

they own the malls and major retailers

they own the biggest real estate devt companies (that's where people invest their savings)

Agree here.

[rollyic]

the taipans are the only ones getting richer

but before they become millionaires/billionaires, the Philippines is dominated by mestizos...
they just work hard.
and that should be we all do to replace these taipans ;)

[uls]

but before they become millionaires/billionaires, the Philippines is dominated by mestizos...
they just work hard.
and that should be we all do to replace these taipans ;)

the mestizos became complacent

they rested on their laurels thinking they'll never lose their place in the social-economic order

succeeding generations are too spoled to work. they only know how to spend. businesses failed. property sold off to finance their high living

while the mestizos were squandering their wealth chinoys were accumulating

kaya ganun

__


when i said "the taipans are the only ones getting richer" i didnt mean it in a bad way

and i wasnt referring only to ethnic chinese

kasama doon mga Ayala and other non-chinese billionaires whose businesses capture most of the consumer spending

[_Cathy_]

Good for the Ayalas that they are able to hold and grow their wealth for over a century.

Sent from my GT-N7100 using Tsikot Car Forums mobile app

[jpdm]

^^^




but the Philippines imports more consumer goods than capital goods

it's not like we're importing industrial robots and machines for manufacturing

we import tons of consumer goods just like the US

Again I agree. We import more consumer goods than capital goods used to produce other goods. So our huge trade deficits year after year are not healthy.

[Ry_Tower]

the mestizos became complacent

they rested on their laurels thinking they'll never lose their place in the social-economic order

succeeding generations are too spoled to work. they only know how to spend. businesses failed. property is sold off to finance their high living

while the mestizos were squandering their wealth chinoys were accumulating

kaya ganun

__


when i said "the taipans are the only ones getting richer" i didnt mean it in a bad way

and i wasnt referring only to ethnic chinese

kasama doon mga Ayala and other non-chinese billionaires whose businesses capture most of the consumer spending

My boss told me na may chinese philisophy din daw na usually, even sa chinese, third gens yung umuubos din nang pera kasi nga spoiled na eh. So even now na they are on top, they are wary of that pitfall. So that bodes well for them because they have learned from history.