(1987 in Retrospect)
Aggravated by the confusion and uncertainty brought about by the Comprehensive Agrarian Reform Program, agricultural production may be somewhat lower than what Government wishes to admit and could spell rice imports this coming year.
In real terms, imports rose 20.7% while exports dropped 3.8%.
The bulk of merchandise exports were non- traditional manufactures which in the first 10 months showed a 25.1% increase over nontraditionals exported in the comparative 1986 period. Traditional exports, such as coconut and sugar, registered a negative 0.9%.
On the other hand, the bulk of merchandise imports were raw materials and intermediate goods, consumer goods and fuel, with only $935 million going to capital goods against total merchandise imports of $5,305 million in the first 10 months which meant that inputs of most locally manufactured exports were primarily also imported. Export earnings from nonfactor services such as invisibles and worker’s remittances spiralled downward by 20.3% while import expenditures for non-factor services went up by 34.7%. In effect there were more dollars going out than coming into the country thus placing pressure on the international reserves of the Central Bank which as of November dwindled to slightly over $1.77 billion from over $2.57 billion in January.
The bulk of this, or $ 1.2 billion, said a former top official are just paper, representing unused trade credits with the CB made possible with the loan restructuring and which also makes current a total trade facility of roughly $3 billion.
On the other hand, the pesodollar exchange rate has been holding out quite well primarily because of Central Bank intervention and is expected to remain so,at least until after the elections.
The economy remained rather liquid in 1987 with banks awash with funds except that interest rates began to climb up in the last quarter possibly in anticipation that the Central Bank may move to sop excess funds after the elections to halt progressive increase in prices. The inflation rate as of November was 6.63% from -0.53% in January.
A legislated wage increase of P10 took effect in the last quarter and is expected to change the profitability picture of some companies. On the other hand, this added cost may be passed on to consumers putting added push on prices.
Drowned by rhetoric, no major economic measures except the last minute approval of the budget, the wage bill, and tariff came out of the legislative mill.