The Philippines is in a 'labor boom,' economist says

Summary

The speaker discusses the impact of rate hikes on investment and consumption, noting that personal spending is at its slowest since the 2012 financial crisis. Despite this, the strong labor market in the Philippines, with 3 million additional workers, may offer a soft landing. The country is expected to be the fastest-growing economy in Southeast Asia in 2023 and second-fastest in 2024. External challenges include deflationary pressures from a slower recovery in China, which could help manage inflation across Asia.

Takeaways

• 📈 The speaker anticipates that rate hikes will impact both investment and consumption, with personal spending growing at its slowest pace since the 2012 global financial crisis.
• 🏦 Bank lending has also slowed down to its slowest rate since the 2008 financial crisis, which will influence economic growth in the fourth quarter of 2023 and the first half of 2024.
• 💼 Despite economic challenges, the labor market in the Philippines is robust, with an employment boom that surpasses demographic trends, suggesting a strong workforce contributing to the economy.
• 🌟 The Philippines is expected to be the fastest-growing economy in Southeast Asia in 2023 and the second fastest in 2024, following Vietnam, even with aggressive monetary tightening.
• 🌐 External challenges such as deflationary pressures from a slower recovery in mainland China could affect Southeast Asia, potentially leading to increased competition and deflationary forces in the region.
• 🏭 Factories in mainland China are seeking new markets, which could introduce additional competition and have a deflationary impact on prices of goods across Asia.
• 🛑 The speaker highlights the need to monitor the labor market closely as a key factor in how the Philippines will navigate through the rate hikes and potential economic downturns.
• 📉 The speaker suggests that the deflationary forces could help manage inflation better, as the competition from mainland China may lead to lower prices for goods.
• 🔍 The speaker advises keeping an eye on the unfolding risks to seaborne oil flows from the Middle East, which could have broader implications for the region's economies.
• 🌱 The Philippines' economic resilience is attributed to its strong labor market, which is expected to provide a soft landing amidst economic challenges.

Q & A

What is the expected impact of rate hikes on investment and consumption?

Rate hikes are expected to take a toll on both investment and consumption, with personal spending growing at its slowest pace since the global financial crisis.

How has bank lending been affected by the economic conditions mentioned?

Bank lending has slowed down to its slowest pace since the global financial crisis.

What is the projected economic growth for the Philippines in the fourth quarter of 2023 and the first half of 2024?

Economic growth is expected to decrease in the fourth quarter of 2023 and throughout the first half of 2024 due to the mentioned factors.

What is the current state of the labor market in the Philippines?

The labor market in the Philippines is very strong, with the country experiencing a labor and employment boom.

How many people are currently working in the Philippines, according to the transcript?

There are 3 million people currently working in the Philippines, which is above the demographic trend.

What does the transcript suggest about the Philippines' economic growth despite rate hikes?

Despite the most aggressive tightening in Southeast Asia, the Philippines is expected to be the fastest-growing Asian economy in 2023 and the second fastest in 2024.

What external challenges are mentioned in the transcript that could affect Southeast Asia?

External challenges include risks to seaborne oil flows from the Middle East and deflationary pressures from a slower recovery in mainland China.

How might the competition from mainland China impact Southeast Asia?

The competition from mainland China, as factories look for markets beyond China, could introduce a deflationary force across Asia, potentially helping to manage inflation better.

What is the expected effect of deflationary pressures on the prices of goods in Asia?

Deflationary pressures could help manage inflation better, potentially leading to more stable or lower prices for goods in Asia.

What is the transcript's overall outlook for the Philippines' economy in the face of these economic challenges?

The transcript suggests that despite economic challenges, the Philippines' strong labor market and employment boom could provide a soft landing, and it is expected to maintain strong economic growth in the region.

Outlines

00:00

📉 Economic Impact of Rate Hikes and Labor Boom in the Philippines

The speaker discusses the potential negative effects of rate hikes on investment and consumption, referencing the slowest personal spending growth since the 2008 global financial crisis and the subsequent decline in bank lending. Despite these challenges, the labor market in the Philippines is experiencing a boom, with 3 million additional people working beyond demographic predictions. This employment surge is expected to cushion the economy during rate hikes, allowing the Philippines to remain the fastest-growing economy in Southeast Asia in 2023 and the second-fastest in 2024, after Vietnam. External challenges, such as deflationary pressures from a slower recovery in mainland China and potential risks to seaborne oil flows from the Middle East, are also considered. These factors could contribute to better inflation management across Asia, as competition from Chinese factories seeking new markets may lead to lower prices for goods.

Keywords

💡Rate hikes

Rate hikes refer to the increase in interest rates by a country's central bank. In the context of the video, rate hikes are expected to impact investment and consumption negatively. The speaker mentions that these hikes will slow down economic growth in the fourth quarter of 2023 and the first half of 2024, reflecting a broader concern about the economic implications of monetary policy adjustments.

💡Personal spending

Personal spending, also known as consumer spending or household consumption expenditure, is the money spent by individuals or households on goods and services. The video script notes that personal spending is growing at its slowest pace since the global financial crisis, indicating a potential slowdown in economic activity due to reduced consumer demand.

💡Bank lending

Bank lending refers to the process by which banks provide loans to individuals or businesses. The script indicates that bank lending has slowed down to its slowest pace since the global financial crisis, which could limit the availability of credit and further affect investment and consumption.

💡Labor market

The labor market encompasses all individuals who are willing and able to work and the jobs available to them. The video highlights the strength of the labor market in the Philippines, with a labor boom and an employment boom, suggesting that a robust labor market could act as a buffer against economic downturns caused by rate hikes.

💡Demographic trend

A demographic trend refers to the patterns of population change in a region over time, including factors like birth rates, death rates, and migration. The script mentions that the number of people working in the Philippines is above what the demographic trend would suggest, indicating a stronger labor market than expected based on population dynamics.

💡Soft Landing

A soft landing in economics refers to a situation where an economy slows down after a period of growth without falling into a recession. The video suggests that despite rate hikes, the Philippines may experience a soft landing due to the strength of its labor market and increased workforce participation.

💡Southeast Asia

Southeast Asia is a region consisting of various countries in the southeastern part of Asia. The video discusses the economic outlook for Southeast Asia, particularly in relation to rate hikes and their potential impact on the region's economies.

💡Deflationary pressures

Deflationary pressures refer to economic conditions that lead to a general decline in prices, often due to reduced demand or increased supply. The script mentions deflationary pressures from a slower recovery in mainland China, which could impact the prices of goods and services in Southeast Asia.

💡Mainland China

Mainland China refers to the People's Republic of China, excluding its special administrative regions. The video discusses the economic recovery in mainland China and its potential impact on the Southeast Asian region, particularly in terms of competition and deflationary forces.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. The video suggests that the deflationary forces from mainland China could help manage inflation in Southeast Asia by putting downward pressure on prices.

💡Economic growth

Economic growth refers to the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. The video discusses the potential for economic growth in the Philippines despite rate hikes, with the country expected to be one of the fastest-growing economies in Asia.

Highlights

Rate hikes are expected to impact both investment and consumption.

Personal spending is growing at its slowest pace since the global financial crisis.

Bank lending has slowed to its slowest pace since the global financial crisis.

Growth is projected to decline in Q4 2023 and the first half of 2024 due to these factors.

The Philippine labor market is exceptionally strong, indicating a labor boom.

There are 3 million more people working than demographic trends would suggest.

The increased workforce is expected to provide a soft landing for the economy during rate hikes.

Despite aggressive tightening, the Philippines is predicted to be the fastest-growing economy in Southeast Asia in 2023.

The Philippines is expected to be the second-fastest growing economy in Asia in 2024, after Vietnam.

External challenges, such as risks to seaborne oil flows from the Middle East, need to be considered.

Deflationary pressures from a slower recovery in mainland China could impact Southeast Asia.

Factories in mainland China seeking new markets may introduce additional competition in Asia.

This competition could be deflationary and help manage inflation across Asia.

The transcript discusses the potential for a softer landing due to strong employment numbers.

The transcript also addresses the impact of external factors on Southeast Asia's economy.

The transcript suggests that competition from mainland China could have deflationary effects.

Transcripts

I do think that rate hikes will take a

toll not just on investment but also on

consumption um just to just two data

points to keep in mind

one con personal spending person

household consumption spending is this

growing the slowest um ever since 2012

ever since the global financial crisis

Bank lending too has slowed down um to

its again slowest Pace um since the

global financial crisis and both these

factors will drive growth down in the

fourth quarter of 2023 and in throughout

the first half of 2024 but one important

fact that I think need people need to

notice or people need to monitor is the

fact that the labor market in the

Philippines is just really so strong we

are in a labor boom we are in an

employment boom um there are 3 million

people working now of that that is above

what the demographic trend would suggest

so with more hands on Deck with more

people working hard contributing the e

to the economy this would provide the

Philippines some sort of a soft Landing

throughout its rate hikes and we do

think that even despite the most

aggressive tightening in Southeast Asia

the Philippines will be the fastest

growing Asia asan economy in 2023 and

the second fastest growing economy in

2024 next to Vietnam yes what about the

external challenges and any notion of

moderating in

this applies to the entirety of

Southeast Asia is that guaranteed given

the unfolding risks to Seaborn oil flows

from the Middle

East I think there's one thing that

needs to be considered is the

deflationary pressures from um a slower

recovery from mainland China of course

uh with factories in mainland China um

looking for markets not just in China

but all around um Asia and all around

Asia this additional competition is

southeast Asia will be able is a

deflationary for uh def deflationary

Force across Asia across asan and which

would um know help manage inflation

better when it comes to the prices of

goods