Business bits (week ending September 7)

(Image is from finance.yahoo.com, showing a 2-year chart of the USD-PHP exchange rate. Currently, the peso is at a year low)

Inflation registered at 12.5% in August. Last year, it was merely in the 3-3.5% region. Likely results may be a further decrease in the purchasing power for our salaried workers. A further increase in the incidence of poverty naturally follows. For the business people, this may mean a continued brand-shifting because of price considerations.

Education sector was clearly hit by the economic slowdown. A few years ago, the trend for tertiary education is 60%-40% with private schools being favored over public schools. That means, parents chose private education 6 times out of 10. Now, it is the other way around.

For entrepreneurs, the hardest hit will be the small and cottage industries. Some of the lower-end medium industries will also collapse, if this trend continues. On the part of employment, the direct result is the increase in the unemployment rate, which is already at 8.0% in April 2008 (See attachment on unemployment data from 1999-2008, from the website of NSO) Together with this, an increase in the crime rate looms.

Employees belonging to the middle class might think twice to venture to start their own business, or to change employers at this time.

A salary below 15,000 a month escapes poverty only if the one receiving it is a single person. The poverty level should again be readjusted.

Hopefully, the trend will reverse when December comes. I think that even though times are hard because of the oil problem brought about by the Middle East Crisis, corporate Philippines is still doing well. Banks are resilient as ever, and manufacturing sector is still on top shape, increasing at 9.3% in value (June 2008 data) from last year. When the crisis abates in the Middle East, hopefully after the US election in November, things will start to turn positive at the turn of the year. December will probably be a better time for the market since the peso is at a year low now. We expect peso to strengthen a bit when the remittances from our OFWs peak in December.

Let us just hope that the Republicans lose, or if they win, that they still pull out the US soldiers in Iraq, for fuckin' chrissake. That will somehow pull the oil prices further down.