The Crystal Ball
The SONA speech of PGMA was great. This is the usual comment of fellow entrepreneurs. The President showed that she really means business and she wants to seriously leave behind a deep and solid legacy. She did speak in full confidence since the Philippine economy is indeed much better than what we had during her last SONA. The peso has hit the Php 44 mark and the stock market has risen almost 2 to 3 times. Even the attitude of other people who wanted to see her impeached has totally changed. This is proof again that the bottom line of every President’s performance or report card is the Philippine economy. Whatever people say, it’s the economy of the country that will gauge the success of the President.
So what does the crystal ball say for the Philippines? Exciting times are ahead for many people who want to be part of this ‘gold rush’. Still, many questions are raised. What happens to those in the C, D and E sector and how can they benefit from this gold rush? It’s been only less than a year since we have seen this stock market and the peso appreciated. On the peso appreciation, despite the world price of oil hovering at $73 per barrel, the peso appreciation definitely tempered the world oil price impact on local fuel and power prices. Can you imagine the impact if the dollar were at Php56/$1, with oil price at $73? People even say that oil prices may even hit 100 dollars/barrel. What would its impact be? Also, commodity prices all over the world from corn, wheat, sugar, milk etc. have increased, partly due to impact of oil price inputs and also due to supply contraction in some commodities. The current trend of traders betting or hedging on commodities also magnifies the issues. Moreover, uses and demand for these commodities have expanded that drive up their prices. For example, there are moves to use alternative energy sources like bio-fuels using sugar and corn. Weather patterns are also changing that affect supply conditions and prices of these commodities. Almost all these commodities are imported, including some medicines and other critical products. Thus, a much stronger peso has significantly minimized the cost pressures of these items thus leading to relatively more stable consumer prices. This is where the ordinary Filipino has benefited.
Now what about the stock market? As more companies are able to raise cash thru IPO’s and follow-on offerings, they can now rapidly expand their business. The property sector has remained so exciting. I recall this was the sector that was hit hard by the Asian crisis 10 years ago, and it is now back on its feet. More entrepreneurs are starting to develop houses and subdivisions. Buildings will be built for offices, call centers, BPO’s as a big shortage is expected. Interest rates will remain low pushing banks to lend again aggressively. Furthermore, much needed government infrastructure projects are all moving forward as mentioned in the SONA and this will further propel regional development, and in a general sense, greater confidence that will translate to stronger investment inflows and employment and income opportunities for Filipinos. And with better confidence in the economy, further Peso appreciation can take place. This in a way is the virtuous economic cycle we all want to see.
How long will the good times last? My crystal ball says it has just begun. To those who have doubts and are still doubting, having a pessimistic attitude and complaining, I pity these people. I always say that for people to benefit more in this growth stage, they have to act and do something productive. We are all living in the most exciting times and I hope to see more millionaires and billionaires created before PGMA hands over this presidency. If she graduates with honors, we will all benefit. Let’s support a Go Negosyo climate because this is what’s going to change our country’s future.