APRIL 16, 2009
(STAR) By Ma. Elisa P. Osorio - Majority of Filipinos are still scared that they will lose their jobs and have cut their spending habits in light of the weak economy, a survey by a global market research group showed.

The financial crisis has also forced 66 percent of Filipinos surveyed to postpone big decisions such as getting married, having children, moving house, changing jobs as well as pursuing higher education.

A study conducted by Synovate showed that 92 percent of the surveyed Metro Manila residents have already slowed down their spending due to the crisis while 69 percent said they are fearful that they would lose their jobs and household income.

Likewise, 43 percent still perceive the economy as weak in spite of assurances from the government. However, the respondents believe that the situation will soon improve.

“Filipinos definitely have a more positive outlook on the economy when compared with bigger markets. For instance, close to two thirds of respondents in the US (63 percent), Japan (63 percent) and France (64 percent) believe that their economy is going downhill and will get worse before it gets even better compared to only 28 percent of Filipinos.” said Carole Sarthou managing director of Synovate Philippines.

“It’s evident that the current economic situation has impacted the lives of everyday Pinoys but in spite of this worrying trend, the people we interviewed were generally determined and upbeat with over three quarters (89 percent) agreeing that they will always find a way to afford some items that make them feel good,” she added.

The company surveyed 1,000 Metro Manila residents from the ages of 15 to 64 across all income levels, as part of a global ‘State of the Economy’ survey.

Consumers were asked if they had made changes in their monetary habits in the last six months. It revealed that 39 percent were saving less and investing less. The study showed that generally, the spending was the same but less on luxury items. Close to two-thirds or 61 percent admitted that they had done less impulse related buying in the last six months.

“We found that Filipinos were not the only ones to cut back as comparisons with other Asian markets showed that people from Malaysia, Japan and Taiwan also shared the same sentiments,” she added.

Filipinos were paying more attention to food prices with a majority acknowledging that they are now more likely to check the price of their food items and make price comparisons with other food related products before making a purchase decision.

“Interestingly enough, more than half (55 percent) said that they have resorted to storing more food at home in case prices go up,” Sarthou said.

When it came to salaries and income, 22 percent of all Filipinos believed that they were earning the same amount of money while 23 percent said that they were taking home less. Close to half or 44 percent said that they had earned more money in the last six months.

The survey also asked people which items they had already given up and which other items they were prepared to give up in the next six months in view of the current economic situation. It found that high tech gadgets and big ticket items such as plasma TVs and electrical appliances were the first items to be sacrificed while holiday and leisure travel as well as dining out were next on the list.

So far so good. DEMAND AND SUPPLY By Boo Chanco Updated April 15, 2009 12:00 AM

(STAR OPINION) I just got back from a trip to Singapore and Penang and it seems that Asians take their difficulties better than the Westerners. It was obvious that the global financial crisis has affected the Singaporeans and the Malaysians but they are carrying it off a lot better… none of the whining you feel in a Western city. It is business as usual in these Asian cities and the taxi drivers and other common folks are as confident and optimistic about the future as one could be at these times.

As for the Philippines, no one knows how to bear a crisis better than us. We know how to survive these things in our patented easy going ways. And sometimes, it is precisely our easy going ways that make us late for the parties but save us from the trouble that too much partying brings. How else can one explain our seeming good fortune compared with our neighbors in the region?

There was a time when we were envious of the high economic growth rate enjoyed by some of our Asean neighbors with so-called tiger economies. Well… not anymore… at least I didn’t get that feeling any more and for good reasons. A fairly recent paper (dated April 3) of UBS Investment Research should give us plenty of reasons to feel good about our pussy cat economy and maybe to commiserate with our previously high achieving dragon economy neighbors.

The Philippines economy, UBS Research observed, has performed relatively well in recent months. “Firstly real GDP actually grew 1 percent on the quarter (seasonally adjusted) in the final quarter of 2008 against a contraction in every other Southeast Asian economy. Secondly Philippine FX and bond markets have performed relatively well during a period of extraordinary turmoil.”

It is because, UBS Research pointed out, our “relatively limited financial and trade vulnerabilities.” The Philippines’ limited financial vulnerabilities reduce the chance of a risk event that might push the Philippine economy off the rails, the Swiss bank reassures.

The paper showed that the higher the financial vulnerability, the greater the tendency for GDP to fall sharply in the face of the financial market turbulence of late 2008. “It also appears to be the case that the more export orientated Asian economies have experienced a greater shock for a given financial risk score.”

This is why our situation is better than the rest. “With a comparatively low export to GDP ratio and a relatively slight financial risk score, the Philippines was somewhat insulated from the financial shock that hit the globe and the trade shock that hit Asia.”

Just like many of us skeptics, the UBS research paper also wondered why we seem to be just getting along fine. “To be sure, one can argue that the Philippines’ performance may be a little too good to be true. We suspect that when the dust settles and Philippine Q4 growth is put in the context of the (likely lower) growth rate in Q1, the performance will look less positive.”

“But,” the study continued, “the key point is that the Philippines economy may avoid the extent of the contraction seen in Thailand, Malaysia and Singapore. In particular the changes in the Philippines economy that led to a low financial risk score – subdued domestic credit growth, the rise in the current account surplus and the related fall in the fiscal deficit – have combined to allow an almost virtuous feedback loop where domestic and external financial stability enabled relatively real economy stability which in turn supported the FX and bond markets.”

Where do we go from here?

The UBS paper expects “slower Philippines growth going forward, and the peso remains at risk from meaningful deterioration in the current account or fiscal balances. We do not anticipate such a deterioration at this stage. Nonetheless, remittance flows, the trade balance and the fiscal balance will be important signposts in coming months.”

UBS expects the peso to be at P48 to the USD at the end of 2009. “Despite the financial market turmoil of the last year, the peso has essentially performed in line with the ringgit and the Singapore dollar, while significantly outperforming the Indonesian rupiah against the US dollar.”

UBS thinks the level of remittances has fallen, but “are clearly not plummeting in the same way as regional trade.” The paper warns that the decline in GDP globally must mean that declines in employment in Asia and further a field should be expected. This in turn will weigh on remittances. UBS is assuming a five percent average decline in remittances, but acknowledge a larger decline is possible.

UBS finally warned that “if the some of the improvement in Philippines financial vulnerability is not to be undone the National Government’s fiscal policy must be seen as sustainable. We expect the fiscal deficit to rise to 2.6 percent of GDP or 200bn pesos, wider than the government projection of 2.2 percent of GDP. In our view this is sustainable ...”

UBS expects “real GDP growth will slip below two percent in 2009 remains in place, with a point forecast of 1.8 percent.” We may feel good about our economy in comparison with our neighbors but as UBS points out, “there is no question that the trade and financial market shock of recent quarters is impacting the Philippines.”

UBS thinks “the outlook for fixed investment and OFW employment prospects are not bright. Nonetheless, it seems increasingly likely that the Philippines may have avoided the worst of the shock.”

Just as I said… so far… so good!


Penang is an island state of Malaysia on the Andaman Sea side. It is 80 percent Chinese in terms of ethnicity and probably has more in common with Singapore than the rest of peninsular Malaysia. When Intel established a base in Malaysia, it selected Penang. So did a number of other semiconductor firms.

Penang was an important trading post in the East India/British crown days. Today, tourism is an important industry for Penang (as with the island of Langkawi a little further north) and for good reasons. The people are a natural to this kind of business and the island is endowed with interesting natural beauty that tourists look for. And both Penang and Langkawi benefit from established tourism infrastructure and a highly integrated tourism marketing campaign that does not change whimsically with every change of a tourism minister.

I first visited the island way back in 1969, as part of a student group from UP on an exchange visit with our counterpart student leaders from the University of Malaya in Kuala Lumpur. We took a school bus up North from KL and visited Penang. We had to take a ferry because the bridge that connects the island to the mainland didn’t happen until 1986.

Today, Penang is a far cry from the Penang I first saw. I was amazed to see feverish construction activity on the island when I visited it last week. I wondered if there are enough rich people to buy all those luxury condominiums and I was consistently assured that there is a strong market. More astonishingly, I was told the buyers are mostly island residents rather than rich folks from KL who want a vacation place away from the city.

Indeed, if prosperity can be measured by the severity of the traffic jams, Penang’s claim to riches is instantly validated. But then again, I was told that while the island has the largest concentration of cars in Malaysia per square kilometer, lack of road infrastructure is a better explanation for the traffic jams. I can understand that… coming from a metropolis suffering from the same malady.

We stayed at the Golden Sands Resort, a Shangri-la hotel that is a very poor version of our own Mactan Shangri-la resort. My son got a good deal for our room on the Internet but I must say I expected more from a Shangri-la property. Maybe it needs upgrading in terms of the physical plant and the service. I am happy to report it is nowhere near our own Mactan Shang.

I am convinced more than ever that we have more to offer in terms of tourism and there should be no reason why our neighbors are luring more of them to their shores.

Chief News Editor: Sol Jose Vanzi

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