2011 poor year: economist

By Mia A. Aznar

Sunday, August 28, 2011

COMPARED with last year, an economist said 2011 is a “poor year” for consumer sales.

Dr. Bernardo Villegas, a professor at the University of Asia and the Pacific and a visiting professor from IESE Business School in Barcelona, said the Philippines will have difficulty duplicating the past year’s performance and urged businessmen who will start their strategic planning for 2012 not to use 2010 standards for their budgeting plans.

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He said 2010 was a different year, with politicians spending millions for the elections and the cash going to the consumers.

This year, politicians have stopped spending. The government is also “tightening its belt” to reduce its level of deficit.

And while the US economy has suffered in recent years, he said exports grew 30 percent when there was a temporary improvement in their gross domestic product by seven percent in 2010.

Exports

Villegas, however, said the US is no longer doing well and another important market, Japan, is also slowing down, which means exports are suffering.

Despite these bleak conditions, Villegas said the good news for the Philippines is that it will grow with a number of investments in power plants, mining companies and other big ticket items like airports and mass transport systems.

While the government’s public-private partnerships were delayed, Villegas said it was only because the government was making sure these projects are not tainted with corruption.

“This time, they really did their homework. PPP will not just be PowerPoint presentations. These will be really big projects,” Villegas told participants of a 2012 economic prospects forum.

When these projects start, Villegas said these will account for the country’s sustainable source of growth, aside from consumption.

Villegas added that with these investments on the way, the country can expect more infrastucture, hotels for more touriste and office buildings for business and knowledge process outsourcing companies.

He said there should be no fears of creating a real estate bubble in Cebu, as long as developers are building for a rising middle class.

Bubble

Villegas said that as long as builders are constructing units for the segment between P800,000 to P2.5 million, which are still not charged with value added tax, they should be safe. The segment he worries about is those condominium units that range from P15 million to P30 million, saying he feels they have overbuilt units of this type in Metro Manila.

He said the cheaper priced units are being used by buyers.

“A bubble is created if you are speculating,” he said.

But for Cebu, Villegas said it will continue to boom in real estate, tourism, and business and knowledge process outsourcing, saying these three are among sunrise industries.

For the export sector, he has a more grim outlook.

“Be ready to shift to real estate,” he said, pointing out that the country’s major markets abroad are experiencing a double dip recession or very slow growth.

Published in the Sun.Star Cebu newspaper on August 29, 2011.