Good news, they are aplenty!

 Well, at least economically speaking, that is. Brushing aside the very unfortunate spate of gun-related bad news that has grimly greeted the New Year, economic managers, investors and fund managers are all wearing smiles as broad as the whole 23.8-kilometer Edsa route these days. What’s not to like? Never before has the prognosis been so bright for the economy in recent memory.

The Philippine economy is expected to grow by no less than 7 percent this year, well above the country’s growth forecast of 5 percent to 6 percent. Multilateral institutions like the World Bank and Standard and Poor’s (S&P) have also upgraded their growth forecast and credit rating for the Philippines, citing prudent economic policies of the Aquino administration and the country’s political stability. The World Bank said that the Philippine economy could grow by 6.2 percent this year, becoming one of the fastest-growing economies in the Asia Pacific Region. On the other hand, S&P upgraded its outlook on the credit rating of the Philippines from “stable” to “positive,” again based on the assessment of a favorable political situation in the country as evidenced by the ability of the Aquino administration to push for and implement vital reforms, such as the Sin Tax bill that would raise excise taxes on tobacco and liquor. This prompted Finance Secretary Cesar Purisima to express confidence that the country will finally get an investment grade this year. An investment grade would mean more confidence on the Philippines to attract more foreign direct investments and thus help in employment generation.

Remittances from overseas Filipino workers (OFWs) also reached a record high in October, as global demand for Filipino workers remained strong despite the lingering crisis in the United States and Europe. OFWs remitted $1.93 billion in cash in October 2012, the highest monthly figure so far on record, rising by 8.5 percent from $1.78 billion in the same month of 2011. This brought total remittances in the first 10 months of 2012 to $17.5 billion, an increase of 5.8 percent from $16.53 billion in the same period a year ago. For the whole of 2012, the World Bank predicts that total remittances will hit $24 billion and make the country the third biggest recipient of money from migrant workers, next to India and China.

Then, there is of course the current toast of the town, the local equities market. The Philippine Stock Exchange (PSE) composite index has been registering record highs since last year and finally breached the 6,000 mark, closing at an all-time high of 6,044.91 as of the end of trading day of January 7. Despite these gains, market experts do not expect the bourse to slow down soon, save for some probable technical correction. PSE President Hans Sicat was quoted as saying that despite the record-breaking numbers, the local stock market still has more room for growth, again owing to the favorable business environment anchored on the Aquino administration’s reforms.

Now, the question is, how will these gains and abundance of positive economic news translate into good news for the rural banking industry?

Well, obviously, a series of upticks in the stock market, even at record highs, does not impact the industry directly. But what it does is complement the already bright forecast of local and foreign pundits for the Philippine economy. As it is, there is already a strong interest in the Philippines from foreign investors, based on the investment missions that are coming in, according to the Department and Trade and Industry (DTI). The DTI said that a record number of foreign businessmen are looking at investment opportunities here, including potential investors from the US, Japan, South Korea, Taiwan and even from Europe, the Middle East and Africa.

As investments come in through the stock market, manufacturing and other industries, there will be a trickle-down effect to other sectors and other areas, like small and medium entrepreneurs in the rural areas. Foreign investors will see the still largely untapped economic potential, though raw, of rural communities. Anchored on the support of rural banks mainly through microfinance and mobile banking, rural families become micro-entrepreneurs with sustainable income that fuels the economic activity in their respective barangays.

Once investors come here, they will look around. They will maximize their presence and time. These businessmen will set up shop that will prop up employment opportunities in rural communities. In turn, this will further spark rural banking activities as poor families become empowered to make purchases and are eventually encouraged to save and even invest. This increased trust in rural banks will further be rewarded as banks further improve their products and services for the benefit of their clients.

Of course, OFW remittances remain as another source of fiscal strength for most rural families, as can be gleaned from latest figures. The US fiscal cliff conundrum and the sovereign debt crisis in Europe notwithstanding, remittance from abroad continue to provide stability to the local economy as a whole.

Tourism is also a big attraction to foreign investors, mainly because of the recent successful peace negotiations with the Moro Islamic Liberation Front in Mindanao and the open skies policy that provides access to more resorts across the country.

The local economy, as healthy as it is right now, provided the impetus for investors to come in and will also be the reason for these businessmen to stay. It does not matter if the impact is immediate or gradual for some industries. With all these good news, the Rural Bankers Association remains hopeful that the pending bill in Congress allowing foreign partnerships with rural banks would finally pass. Everybody wins under this scenario.