By Jay Ledesma

Metrics that matter 

EVERYDAY, we are being bombarded with negative news, gloomy forecasts, and government inefficiencies and ineffectiveness. If we are to believe everything that these naysayers are saying, it looks like the Philippines and the Filipinos can no longer recover from the ill effects of the pandemic. If we are to believe everything that we read and hear, it is very easy to be hopeless about the future. 

But is it really the case? Is our nation really in a deep hole that we cannot see sunshine in the near future? 

Last week, I was fortunate to have attended 4 different webinars that touched on the Philippine economy and financial management during this pandemic. All the speakers are economics and financial management practitioners and all are apolitical so I consider their views solid and objective.  

It’s refreshing to hear from all the four speakers what is being downplayed in the news by media and even by our government... that the Philippines is in a good position to rebound from the pandemic. That we have a healthy and sound economic fundamental enough for us to recover post-COVID. 

While acknowledging the difficulties and challenges brought about by the prolonged pandemic, these experts cited the different factors that should make us confident about our future amidst the pandemic. 

The different rating agencies such as S&P, Moody’s and Fitch gave the Philippines a Credit rating of BBB and an investment-grade with a positive and stable outlook. This allows our country to borrow money at lower interest rates and longer repayment periods. Very vital in funding the different recovery programs planned out by the government.

The rate of increase in the prices of consumer goods and services remain within the desirable range, with the inflation rate hovering between 2.4%-2.7%. Low inflation is generally good for consumers, as it boosts purchasing power. More can be bought and be done for every peso that a Juan dela Cruz makes. Low inflation encourages savings and investments. These money activities are needed to pump up our economy. 

One of the interventions done by the government’s economic team is to maintain a low-interest-rate environment.  When interest remains low, businesses needing funds to keep afloat or to grow can borrow more readily. Low-interest rates allow business borrowers to have more cash after their loan payments. Cash which they can plow back to their businesses. This translates to business growth and to more jobs. More jobs mean more money activities for our faster recovery. 

While other currencies are depreciating in value, the Philippine Peso continues to be strong against the dollars this year.  Bloomberg reports that the Philippine Peso is the best performing currency in Southeast Asia. Our strong Peso helped pushed down the prices of some of our basic goods as it made imported raw materials and other goods cheaper. This again equals to more money activities for the Filipinos. 

While we hear about OFWs repatriation, our OFW remittances continue to be strong now at around  $18.6 billion. On a macro level, OFW remittances account for at least 10% of our country’s GDP. It is said to be the country’s second-largest source of foreign capital. It is also a major source of private domestic consumption. The money goes straight to families and relatives to finance their basic needs such as food, shelter, education, and medicines. If the household already has a source of local income, OFW money adds to the disposable income. With more income, household consumption rises. Consumption makes up 75% of our GDP. 

And of course, there is the government’s stimulus package. We had the Bayanihan Act 1 which was implemented during the early months of the pandemic. And now the Bayanihan Act 2 which aims to cover what was missed in the first version, such as providing low-interest loans to industries hit hard by the COVID-19 pandemic such as the thousands of MSMEs, air, land, and sea transportation, retail trade, accommodation, and tourism services. Add to the Bayanihan Act 2, is an economic recovery plan to create jobs and sustain growth under a post-quarantine scenario.

Each time, I come out from the webinars more informed, more hopeful, and more mindful of the metrics that matter for our recovery as a nation. Am mindful that while pandemic is still here, this too shall pass. And when that happens, my country is in a position to make the recovery.

How I wish that more newspaper articles, more TV and radio airtime, and more social media feeds can be devoted to spreading and explaining these metrics so more Filipinos will do their best to survive and thrive this 2020 and will look forward to a great rebound in 2021! 


About the Columnist

Image of Jay Ledesma

Ms. Jay Ledesma writes about local tourism and business bits that delve on investments and insurance.