Worst may not be over yet

BAR NONE - Atty. Ian Vincent Manticajon - The Freeman

I’m talking about the economy. I have felt the pain since summer when share prices of my modest investments in the stock market dipped by more than 20%. As of yesterday, share prices in the four companies I have placed my money in have dropped by an average 37%. Of those four companies, three are blue chips (or considered stable and established companies) while one is an upstart.

There’s no actual loss on my part until I decide to sell those shares at their current prices. I’m expecting they would eventually bounce back up. But my doubts about where the economy is headed in the next couple of years persist.

Analysts have traced the crisis to inflation that is affecting most parts of the world that are just emerging from the two-year pandemic. It grew worse when Russian President Vladimir Putin launched an ego-driven war against Ukraine in February. More pain has been felt these days when the US Federal Reserve hiked interest rates to rein in inflation.

Interest rates are a complex subject in finance but if I were to describe it simply, it is like a lever that commands the amount of work required to keep up with society’s needs. A hike in interest rates means you need to work harder to pay off your debts or maintain production at the level of demand. It means reality is catching up with you, and you must face it to stave off a bigger crisis. But if interest rates increase too quickly, it could trigger a recession. So it’s really not that simple.

In any case, the hike in interest rates in the US are bound to hurt import-dependent and emerging market economies like ours as it increases our debt burden and triggers foreign capital outflows. Yet the pain is more harshly felt by workers who may stand to lose their jobs amid a climate of high inflation and economic slowdown.

In Cebu, 4,000 workers at the Mactan Exporting Processing Zone (MEPZ) were retrenched recently. Reports state that the retrenchment of some 4,000 workers happened across five factories of the Sports City Group of Companies. These are workers of garment firms Mactan Apparels, Inc., Metro Wear, Inc., Globalwear Manufacturing, Inc., Feeder Apparel Corp., and Vertex One Apparel Phils. Inc., all owned by Sports City.

Anyone who has experienced losing a job could attest to how devastating it is not only to one’s finances but also to one’s sense of personal dignity. And in the current economic climate, it could happen to anyone across all positions. There’s a movie titled “The Company Men” (2010) I recommend you watch that shows an up-close view of the effects of retrenchment to white-collar as well as blue-collar workers.

Social protection mechanisms like early retirement packages, unemployment benefits, or temporary public employment as suggested by well-meaning sectors, may alleviate the pain. But these cannot substitute for the availability of jobs that match a person’s education, experience, or skills set, and jobs that offer long-term career development. We should continue to strive for an economic system that allows for every person’s ability and potential to be expressed through work.

Analysts cannot predict how this crisis will play out in the next months. The worst may not be over yet. But there is some assurance that the Philippines can better handle the crisis compared to advanced economies in the US and Europe where financial markets are more deeply involved in sophisticated and complex transactions. As they say in Tagalog, “kapit lang.”


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