Here is my modest list of the major economic events of the year.
1. The deep global contraction of gross domestic product (GDP). In the first three quarters of 2020, GDP in the Philippines in particular had contracted by -9.7%, the worst-performing economy in ASEAN and among the worst in the world.
2. World exports have also contracted. Restrictions on the mobility of people and goods negatively affected manufacturing, the transportation of raw materials and finished products, and ultimately trade in goods. The Philippines, with meager exports of $ 70 billion in 2019, saw weak new exports of just $ 46 billion in the first three quarters of 2020.
3. Strict foreclosure policies in many countries. Google’s COVID-19 Community Mobility Reports (GCCMR) show how visitors (or time spent in) ranked places change compared to benchmark days, with the median being from January 3 to February 3. 6, 2020. When it comes to mobility at transit stations in particular, the Philippines appears to have had the strictest lockdown policy in the world with -84 mobility in April and -53 in November.
4. Chinese data turns out to be dishonest again. Consider these: a.) His COVID-19 deaths per million population (CDPMP) were only three, given that the virus started and exploded from there, while Belgium in has 1,650 and the UK 1,090; b.) he says he has growth when many countries are in deep contraction – he cannot hide the contraction of his exports; and, c.) it does not allow GCCMR to collect data because it will show the extent of its strict lockdown and contraction of its activity (see table 1).
5. Excessive spending and excessive borrowing by governments. As tax revenues declined due to business closures, many governments did not cut spending but instead increased spending and subsidies through huge borrowing and printing of money by their central banks. Philippine central government debt (debts by LGU not included) was 37% of GDP in 2019 and is expected to reach 48.9% in 2020 and 52.5% in 2021 (see table 2).
6. The CREATE bill is refined and retroactive to 2020. The Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill in Congress aims to reduce the Philippines’ high corporate tax (CIT) rate from 30% to 25% when the law is signed, probably in beginning of 2021, to be implemented retroactively to July 2020. The bill also aims to reduce the CIT to 20% by 2027.
7. Threat of expropriation of the president’s telecoms. During President Rodrigo R. Duterte’s State of the Nation Address (SONA) in July, he warned Smart Telecom and Globe that “kukunin ko ‘yan, I-expropriate ko sa gobyerno (I will get it, I will ask the government to expropriate it). It was a strong and the first major threat of expropriation of companies by the administration. Fortunately, he realized that many LGUs and some agencies are the reason telecom companies cannot quickly expand their cell sites and towers.
8. The IPRI report on the protection of property rights. Expropriation by the government of private companies, real or threatened, is a flagrant violation of the protection of private property enshrined in the Constitution. The International Property Rights Index (IPRI) annual report for 2020, a draft of the Property Rights Alliance (PRA), was released last November. The Philippines maintained its low global rank of 67 to 69 out of 129 countries (see table 2).
9. Large infra completed and legislated. Some of the big projects that were completed this year include the Skyway Stage 3 that connects SLEX to NLEX, so vehicles from southern Luzon can travel directly to northern Luzon without going down any streets in Metro Manila. Next, legislation was passed to allow San Miguel Aerocity in Bulacan, a 10-year 736 billion peso construction project, to start in early 2021.
ten. Uncertainties of rehabilitation of the NAIA. The expansion and modernization of Ninoy Aquino International Airport (NAIA) suffered a double setback this year. First, the end of the status of initial promoter (OPS) of the “super consortium” of seven conglomerates (Ayala, Aboitiz, Gokongwei, Andrew Tan, Lucio Tan, Gotianun, Pangilinan) last July, then the end of the OPS from Megawide- GMR in December.
2020 has not been a good year. The so-called “new normal” simply masked the new dictatorship with strict and undefined blockages. May 2021 bring the realization that it is madness so that human prosperity can resume.
Bienvenido S. Oplas, Jr. is the President of Minimal Government Thinkers
minimal government@ gmail.com