WHILE it rightly praises our economy for its “strong fundamentals”–which it has had for a decade or more–credit rating firm Fitch has just reaffirmed its BBB grade for the Philippines. Fitch continues not to join Moody’s and Standard and Poor’s in giving us their higher ratings.
Fitch’s has its reasons for not giving us a more enthusiastic thumbs up, of course.
One is that our banking system is not as large as those of really mature and robust economies. Two, there are fears that our buoyant real estate sector — made profitable for the condominium builders and capitalists by our 10 to 11 million economic heroes, the Overseas Filipino Workers–will suffer when the “bubble bursts.” The experts, however, say there is no real estate bubble at all.
Property in the Philippines is priced just right–if not even lower than it should be compared to the prices in our neighboring countries whose economies are lethargic compared to ours.
Fitch’s third reason is to us the more telling. It sees something wrong with the Aquino administration. Aquino has not improved the embarrassingly miserable poverty situation in our country. It has not made an appreciable dent in the unemployment and underemployment situation, by launching all kinds of projects. That could easily make some of the massive poverty disappear.
Why? It is hard to understand since Mr. Aquino’s government has the largest budgeted funds available for its use in memory. Is it because Aquino and his Liberal Party and other collaborators want to hoard the money and spend it all next year because of the presidential elections. Fitch’s politely sees this failing as the Aquino regime’s “propensity to underspend.”
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. has gamely welcomed Fitch’s assessment, but–like his boss the de facto president who loves to whine– Finance Secretary Cesar Purisima complains about Fitch’s underrating of our country.
OFWs are remitting less
What to us is more worrisome than Fitch’s less than gung-ho attitude, is the decline of OFW remittances.
If the Philippines has been able to withstand global economic crises, it’s both because our economy is so small to be shaken by big financial earthquakes abroad (our overseas participation is not big enough to threaten our banks) and because our OFW Heroes of the Economy have been sending lots of money faithfully to their families and in bigger and bigger amounts. These remittances make our Bangko Sentral among the most solid central banks, foreign exchange-holdings-wise, on the planet.
But figures released early this week show that there has been a decline and slowdown in OFW remittances. Apparently, the average per-worker remittance amount has decreased. POEA figures show that in January 2014 OFWs remitted an average of $896.30 but last January the average per-OFW remittance was only $837.91.
That’s a substantial decline.
We hope it’s not a sign that the economy in the rich people’s world, the countries where most of our OFWs work, has shrunk to the point of impacting on our economic heroes’ earnings.
Let’s pray this is only temporary.
Otherwise, it will bring about something very bad.
Our stressful socio-political and poverty problems caused by our liar, hypocritical, and criminally incompetent and negligent de facto President BS Aquino and his men (and women) will be made worse by a decrease in the relative wealth of our OFW families.
Our GDP growth rate will go down–because much of our GDP is driven by families’ consumer-spending. GDP is just statistics. But real poverty and want will increase.