Ten trends in inflation, PPP, employment, cancer treatment and energy

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* BusinessWorld Feb. 13, 2023.
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Last week, several important pieces of news and events came out. I am summarizing them here.

1. The Philippines inflation rate was 8.7%. The Philippine Statistics Authority (PSA) released the January inflation data last week, and the number is indeed bad. But last year, Thailand and Singapore also experienced inflation at 14-year highs, South Korea hit a 24-years high, Japan has a 41-year high.

The main contributors of the 8.7% inflation rate (the highest since November 2008) are from housing, water, electricity, gas, other fuels, transport, and food. These are basic necessities so even if the Bangko Sentral ng Pilipinas (BSP) interest rates further rise from the current 5.5% (only 2% last April) to 10%, people will still spend for them. The appropriate policies are to encourage more supply of those goods — cement, steel, electricity, water, etc. — both through domestic production and trade liberalization.

2. Low unemployment rate despite high labor force participation rate (LFPR). The PSA also released last week employment data for December 2022. LFPR is an indicator of people’s optimism or pessimism about the jobs market. They enter the labor force if they think they can find a good job, they don’t join if they think good paying jobs are not available anyway. The two highest LFPR in 2022 were recorded in November at 67.5% and December at 66.4%.

The two lowest unemployment rates in 2022 were also in November at 4.2% and December at 4.3%. That is a three-year low and it is the best situation that one can hope for in the jobs market. People are optimistic they can find good jobs or they can employ themselves via entrepreneurship. And when they do enter the labor force, very few are unemployed.

Last year among the ASEAN-6, the Philippines had the third highest inflation rate next to Thailand and Singapore. And when it came to the unemployment rate, the Philippines had the second highest as of September 2022 next to Indonesia. But the good thing is that Philippines unemployment shows a consistent decline (see Table 1).

3. Lecture on public-private partnership (PPP). On Feb. 8, the inaugural Ruperto P. Alonzo lecture series was held at the UP School of Economics. The speaker was Cynthia Hernandez, Executive Director of the PPP Center. She discussed the big PPP projects since the time of former President Cory Aquino under RA 6957 or build-operate-transfer (BOT) law of 1990, then RA 7718 or Amended BOT law of 1994 under former President Fidel Ramos, and so on. The main reason why I support more PPP in big infrastructure projects is that it relies on user-pay principle, not all taxpayers-pay principle. So the North Luzon Expressway (NLEX) will be paid only by those who use it and not by people who hardly or never use it, like taxpayers and businesses in Bicol, the Visayas, and Mindanao.

4. The Philippine Business Opportunities Forum (PBOF) in Japan. Last Friday, President Ferdinand Marcos, Jr. and the economic team plus infrastructure team held the PBOF in front of many Japanese and foreign investors. Among the important outcome of the Japan trip was the signing of 35 Letters of Intent (LOIs) between the Philippines and Japan that cover business opportunities in energy, manufacturing, transportation, healthcare, and other sectors....

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