PHILIPPINES: Should I be worried??

Today, I happened to browse the Philippines economic indicators given the Covid19 cases at 31K+ “as of this writing“. Yes, its about 31,825 covid19 cases to be exact, but what’s funny is that my news feed is full of issues on the Anti-Terror Bill, the repatriation of OFW’s, the Foreign Debt level, the Fake News and all.  Well, I guess that is how noisy both the anti and the pros are. Oh, how about that rape thingy?

Okay, anyhow, back to the board. Pretty much, the Philippine stock market is still up at 6,297.78.  Wow, isn’t that great, the PSE index was able to retain its position for the past several weeks at 6K+ level. Yey! Is this good?

However, while the stock market is up or at least on the upward trend, the employment rate, on the other hand, decreased to 82.32 percent in the second quarter of 2020 from 94.69 percent in the first quarter of 2020. Obviously, the decrease is attributable to the lock down and the pandemic as shown in the following graph.   Yes, all business establishments are on the “no-hiring” position during the lock down period.

The employment rate was justified and its all true because the Philippines unemployment rate, on the other hand, jumped to 17.7 percent in the June quarter 2020 from 5.1 percent in the same quarter a year earlier. This was the highest jobless rate on Philippine record, amid the ongoing coronavirus outbreak. The number of unemployed persons surged by 4.99 thousand to a record high  of 7.25 million as depicted in the following graph.

Aside from the huge unemployment rate and the glaring decrease in the employment rate, the retail price index is also on the downturn starting from January of this year. This trend, however, did not affect the prices of food,  which continues to rise.

Now, imagine this, no one is working, I mean minimal work force because of the lockdown. Meanwhile, companies are shutting down and/or taking drastic measure such as layoffs and freeze hiring. While these measures are happening, ironically, the price of the food is going up as shown in the following graph.

Yes, the retail price index in the Philippines increased by 0.7 percent year-on-year in April 2020, the least since last October, after a 1.1 percent gain in the previous month. Meantime, prices continued to rise for food, beverages and manufactured goods.

To make it more exciting, the consumer confidence index in the Philippines decreased marginally to 1.26 in the first quarter of 2020 from 1.31 in the previous period. Further, based on the current survey/s, households expressed concerns about the faster increase in prices of goods as well as the impact of the Covid-19 pandemic. The following graph depicts these concern.

The Philippines is really in a difficult time. Even the 10-year treasury bond yield is down. Meanwhile, the forecast is that it will go up in July, perhaps, but let us see.

So what are these indicators are telling us?

Let me tell you a story. I was a member of the several property groups, particularly, condos and house & lot. Several members who have invested in condominium projects — they are (now) looking for an exit. These people / investors are selling below the market rate, as their strategy – some way way below the market rate. I imagine many more will follow. In relation to the economic indicators, it thus, really telling us something — be prepared for the worst.

Some of my clients, they are still in a non-operating mode. Several already declared bankruptcy. Meanwhile, my other clients who are into restaurants are matching their losses and looking for options hoping to save the business. Some industry uses drastic measures such as layoffs and additional capital and/or loans.

Everyone is telling its not only the Philippines but the whole world is suffering due to the Pandemic. Yes of course its so easy to do, blame-game-pandemic or is it? But, figures don’t lie isn’t it? The basic fundamentals of the Philippine Republic are very well given — RED Flag.

IN SUMMARY:

  1. The stock market is up while most economic indicators are down. So what are these indicators are telling us? Obviously, there is disagreement in the market versus the economic indicators. Thus, there is something wrong here mainly because the trends and indicators supposedly (should be) showing harmonious relationships. So why? Bubble?
  2. Not only the stock market is up but unemployment rate is up too, the same as the retail consumer index most particularity food products that are not getting cheaper and cheaper but otherwise. So, is this good? No, of course! And hoping that it will bounce back sooner than later. Yes, but the the question is: when is sooooneerrrr?
  3. The COVID19 is still here and the number of cases is still going up. The likelihood of a vaccine is unforeseeable within the year. However, given the economic indicators above, are we saying that the pandemic, “the Covid19“, is the main culprit? Are we hoping that everything else will go back to normal as soon as the vaccine will be available? But how about our Asian neighbors, are they showing the same economic indicators as of the same period? How about the EUs and the US, well it’s given, these countries have all the backups and reserved. These countries can even extend aid and assistance in the midst of a pandemic.

While the government is busy pushing the Anti-Terror Bill, the (resurrection of) Tax on the On-line Sellers, closure of ABS-CBN and others. Oh, by the way, don’t get me wrong with the ABS-CBN topic, I have my own stand on the issue, but that is not the talking point here but the question, should I be worried?

In closing, I am looking at these indicators, the Philippines is on the RED, as in bold red. Are we still good? I must admit, the Philippines, given the indicators is not doing well. However, I am still holding on and crossing my fingers, hoping that these indicators will give us the bright side in the coming months or so. Further, I hope (really) that the Philippine Government will prioritize health (Covid19) as the top most. No questions ask, yes, as in non-negotiable. Not just some political advertisement, but the genuine “prioritization”, next is the economy before anything else. (All Graphs Credit to Trading Economics)

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