Current economic realities—like it or not
WHen you are young, you dream of a wide future. When you are old, you focus on today and tomorrow. Pondering the future is more of an intellectual exercise rather than preparing an action plan. For my generation, it is now about doing what we can do today because tomorrow may never come. Our children are our future.
“The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country,” wrote American revolutionary Thomas Paine.
A study by the University of Washington published in the British medical journal The Lancet says, “The planet is not prepared for an ongoing global population crash with 23 nations projected to see their populations fall by 50 percent by 2100. There will be twice as many people over 80 years old as there will be under five years old.”
Nonetheless, there may be some more immediate concerns.
One more time. If the Philippine economy contracts by 15 percent in 2020, the size of the economy will be at almost the same level as at the beginning of 2016. The more accurate and rational way to measure an economy is by using gross domestic product per capita adjusted by purchasing power parity. While denominated in US dollars, PPP factors in currency exchange rates and inflation, giving a truer value of the economy.
At end 2019, this amount for the Philippines was $8,900. Reduce that by 15 percent and you get $7,570. At the end of 2015 the amount was $7,300 and at the end of 2016 that amount was $7,700. These are the facts, whether one chooses to accept them or not. Ignorare periculum
We can weather this storm. However, at every opportunity —and let me stress this in capital letters—buy PHILIPPINE MADE. Every “Made in China/usa/japan” product we buy literally takes food out of the mouths of Filipinos and gives it to another country. nolite fieri imprudentes — “do not be foolish.”
tuo—look it up. Ok, “Ignore at your own risk.”
Examining data back to 1871, there has never been—even during the Great Depression—a global economic downturn of the current magnitude. Over 92 percent of the world’s economies are contracting. In 1931 it was 84 percent of the world’s economies. In the 2009 debt crisis, that figure was 62 percent. Recessions are deeper or longer lasting when a high percentage of the world’s economies are contracting.
Overall global corporate debt is increasing at an extreme pace. In the first quarter, US corporate debt jumped to a record 48 percent of the nation’s GDP. This is unsustainable, of course. But to keep that economy alive, private capital expenditure cannot be allowed to die.
Philippine corporations will not take on new debt to fund expansion. That is not favorable for the short term but is critical in the long run.
How bad is the overall situation? The European Union just reached a deal to provide nearly 1 trillion dollars in loans and grants to member countries that are in economic trouble. The EU will borrow the money. But no worries. They promise that the loan will be paid back by 2058. All the leaders that signed that deal will be dead. Pace requiem.
We can weather this storm. However, at every opportunity—and let me stress this in capital letters—buy PHILIPPINE MADE. Every “Made in China/usa/japan” product we buy literally takes food out of the mouths of Filipinos and gives it to another country. Nolite fieri imprudentes— “Do not be foolish.”
Balancing immediate health needs with longer economic concerns is not even close to being easy. But it can be made more sensible if we realize that we must be flexible as we go down the path.