Economy seen slowing next year

Heads up! Economic growth is likely to slow down next year and inflation is expected to rise from three to four percent, according to Mark Angeles, head of research at First Metro Securities.

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Angeles notes that “there are risks coming next year, but are manageable. But if there is no confidence, it will be exacerbated. It’s a confidence issue.”

In a breakfast briefing at the Westin Manila in Ortigas for members of the Monday Circle, Angeles pointed out that there are two economic drivers of the Philippine economy - overseas Filipino workers (OFWs) and business process outsourcing (BPOs).

Export earnings, unfortunately, Angeles admitted are “very small” and so is manufacturing. Even the much vaunted semiconductor sector, Angeles pointed out, is not expected to be a big contributor to the Philippine economy since the Philippines does not have the ability to manufacture the more high value wafers.

The Philippine semiconductor manufacturing sector, he said, only makes intermediary products that require Filipino semiconductor firms to import foreign-made chips to which we add some value and then export at a higher price.

What is more concerning, according to Angeles, is the recent shutdown of two big BPOs in the country due to the advent of Artificial Intelligence.

Furthermore, he warns, revenues and salaries of existing BPO firms and workers may decrease as the BPOs experience a slow process of decline and face further threats from the move in the US to push for a bill that would force American firms to onshore or return business processing activities back to America.