Economy predictions

WE are passing through some difficult times but in my view it is not from our fault. The main source of our problems is the price of oil in the world market. This is something over which we have no control. If the price of oil keeps within the $85 range, we should weather this crisis with passing colors. However, if it shoots up to the $100 a barrel range, it may take us a couple of years to adjust. However, American oil should keep the range within or below the $85 range. From what I hear it costs less than $65 for the U.S. to produce with their costlier way of pumping up the oil from the shale deposits. In that case our problems of adjustment should be over within the year. So we should accept that there will be some inflation that will make it harder for Filipino consumers. We had some three years or more when we hardly had any inflation. That honeymoon period is over. Also there are some mitigating prospects in the area of oil. We have had some oil exploration that have recently hit oil in the Palawan area that could give us some cushion of 10 to 15 percent of our consumption.

Rice is a problem at present but this is something we have to face. We shielded our rice from the world market to protect our rice farmers and our consumers. Sooner or later we have to make the adjustment to the open market. And I think that will have a rather smooth and easy transition. Rice production will have the help of both mechanization, and the availability of hybrid varieties that can produce a lot more rice per unit area planted. In mechanization the huge combines would be a great help but we need a transition period for them. However, the hand-held transplanters and harvesters are also now available This would increase the productivity of our farm labor. For the consumer, the spike in rice prices is speculative. I understand that NFA authorities made the mistake of paying off loans instead of concentrating on inventory that triggered speculation of shortage. This is being remedied. How can there be a shortage when all they have to do is import rice.

Our stock market has recently suffered with the flight of speculative investments. This is to be expected with the uncertainty of the new TRAIN and TRABAHO laws. This is a normal uncertainty in any new legislation. But the danger here is not from what is happening locally but the possible effects on the US stock markets. There is the uncertainty of President Trump’s economic wars. We are usually affected by what happens in the US stock market. And in the US, October is the month when crashes happen. October is the bad month; both the Great Depression and the Big Depression of 2009 happened in October. I hope nothing happens this October but the likelihood of something happening is present.

Finally, our exports are normal but they are too small to get us out of the doldrums. I have repeated enough times that if we are to move forward we have to look to mining. We have plenty of mining and natural resources. There is no reason to ban open pit mining which is the safest of all kinds of mines. The open pit may take maximum of 300 hectares and what is that to the millions of hectares in each region. Then there is the problem of time. If you consider or your perspective is that of hundred years, open pit may look like moonscape but within a hundred years it will be as green as any field in the country. How can that be a problem for our environment?

In sum we are still enjoying an economic prosperity which could be better and more inclusive but pretty good compared to others. Thank the Lord.