LAST week, a good friend of mine, Ricky Francisco, also a staunch critic of this administration posted on his Facebook wall a litany of “facts” that were posted on a blogsite. He tagged me knowing that I may have information that can corroborate or otherwise the “facts” stated by Ding Velasco.
On the Inflation Rate. 1.4 percent in May 2016, it's 3.7 percent now. Up by 2.3 percent. Bad. According to my research, inflation rate in May 2016 was 1.6 percent. Earlier that year, in February 2016, it even reached 0.9 percent. In May of 2017, inflation rate is at 3.1 percent. The latest data is for September, and inflation was recorded at 3.4 percent; year-on-year increase of 1.8 percent. (Source: Philippine Statistics Authority)
On Foreign Direct Investments (FDIs). In Q2 2016 it stood at $1.44 Billion, it's $141 Million ending Q2 2017. Down 91 percent. Very bad.
When I checked on the information from the Bangko Sentral ng Pilipinas, direct investments recorded net inflows of US$2.1 billion in Q2 2017, lower than the US$2.4 billion net inflows recorded in the same quarter a year ago.
Furthermore, the Philippine Statistics Authority noted that total foreign investments (FI) approved in the second quarter of 2017 amounted to PhP 18.2 billion from P40.4 billion recorded in the same period last year.
The media release of the BSP dated October 10, 2017 disclosed that foreign direct investments (FDI) posted US$307 million net inflows in July 2017, lower than the US$493 million net inflows recorded in the same month last year. FDI net inflows reached US$3.9 billion in the first seven months of 2017, 16.5 percent lower than the US$4.7 billion net inflows last year.
On the Peso to Dollar. P45.00/dollar in May 2016, it is now at P52.00/dollar. Peso purchasing power down 16 percent. Not good. We need P7.00 more per liter to pay for imported fuel.
Records from the BSP show that at the end of May 2016, the Peso-Dollar Exchange Rate was P46.775:$1. The closing rate today is P51.488:$1.
On the status of economy. We have the first Deficit economy in fifteen years. Worse.
I don’t know what DEFICIT is being pertained to here in this statement.
But if it is pertaining to the Balance of Payments (BoP), the country’s BOP rebounded in Q2 2017, yielding a surplus of US$289 million after posting a deficit in the first quarter of the year. This according to the Bangko Sentral ng Pilipinas.
Based on the BSP Media Release dated October 20, 2017, the country’s overall balance of payments (BOP) position in September 2017 posted a surplus of US$24 million, a reversal from the previous month’s deficit of US$7 million. For the first three quarters of the year, the overall BOP position reached a cumulative deficit of US$1.367 billion. This was a slight improvement from the US$1.391 billion deficit recorded in January to August 2017. BoP has been in deficit for quite sometime already. So, I don’t think it’s the first time.
If it is pertaining to the budget, according to the Bureau of Treasury, the National Government (NG) ran a P90.9 billion fiscal deficit for June 2017, doubling the shortfall recorded for the same month last year. The deficit performance reflects the 23% year-on-year rise in expenditures against collection growth of 2% for the month. First Semester Deficit at P154.5 Billion.
However, if we are talking about the status of the economy, the National Income Accounts may be good measures for this. End of Q2 2016, GDP was at P3.6T; while end of Q2 2017, GDP was at P3.9T. GDP growth in Q2 2016 was at 7.0%, this same period this year recorded only 6.5%. Source: PSA
On the level of outstanding debt. It is now P6.44 Trillion from P3.754 Trillion in May 2016. Worse to become worst. When the "build, build, build" starts and loans up to $89.9 Billion from China at 6.00% per annum commences, this will shoot up to the stars.
Bangko Sentral ng Pilipinas Governor Amando Tetangco, Jr. announced that outstanding Philippine external debt stood US$73.8 billion as of end-March 2017, reflecting a decline of US$958 million (or 1.3 percent) from the US$74.8 billion end-December 2016 level. Source: BSP Media Release (06.06.2017)
On the country’s Creditworthiness. From 2010 to 2016, we received four (4) credit rating upgrades from both Moody's and Standard & Poor, while we slid 14 placed backward in business climate rating (#99 to #113) among 190 countries.
So far, Moody’s Credit Rating for us is Baa (Stable), while Fitch rates the country at BBB-(Positive) no downgrades for both since 2014. The latest data for S&P is last 2014 with the country’s rating at BBB (Stable). I don’t have enough information about the upgrades during the periods mentioned.
On Foreign Reserves. From 2014 to 2016, all time highs. We even loaned $1 Billion to the IMF in 2014. It's almost depleted now due to high credit rating and high service fees, inflation up and Peso tumbling down.
#10 GIR (Gross International Reserves) in May of 2016 was at US$82.9B, now it is down to US$80.9B.
Finally, based on the data that were either corroborated or negated or corrected, he asked me, “should we worry?”
The economy is definitely slowing down, not as bullish compared to the previous administration's performance. This administration should be reaping the fruits of the seeds sown by the previous but it is not. They are even reversing some fruits by turning off prospective foreign investors and aids, and settling with debts from China.
I believe that steps are being done for the situation not to worsen in the short-run, like managing the exchange rate by releasing some reserves to keep them at present levels, which may not be sustainable in the long run.
To answer his question, should we worry? No, not yet, but we should be VERY ALARMED. The economy is still stable so far, with the figures of various economic indicators within acceptable levels, but I don't think that it can be sustained for the next few months. It may become worse if it will not be addressed appropriately.
And yes, when the worse comes, we should really worry!