Philippines economic growth a bubble?
So I've been wondering since 2008 why there's a property boom. I thought we were headed for trouble but that was still probably at least five years from now. Well, I didn't really know what I was talking about because there was a lot of healthy growth in the property sector. However, I may, and I stress the word may, have been on to something.
Here's a link to an interesting article:
http://iamkoream.com/miss-koreas-plastic-surgery-scandal-after-photos-surface/
Jesse Columbo, a contributor to forbes magazine believes there is a bubble forming in emerging markets. What has piqued my interest is that he believes the Phippines is part of that.
I dispute his predictions about the Philippine economy, in general. I agree with him that there are signs of a bubble for property and stock but there are characteristics of the Philippine economy that make me believe this bubble will leave much of our population unaffected. My position is that the Philippines will fare much better than any other country part of this "emerging market bubble."
I think his mistakes are:
1. Not appreciating the multiplier effect of BPO and remittances. He says its only 14.4% of GDP, implying it's too small to count on.
2. Predicting demand for housing on local data. Most new housing projects are bought out by overseas foreign workers.
3. Relying on Makati data. First, Makati super-prime properties are owned by a very small portion of the population. Second, conodminium ownership is also the only way for foreigners to own property, hence the high demand.
4. BPO and remittances will grow even in a bubble.
5. BPO profits and comparative advantage will increase as property prices fall.
That's all for now. Thanks for reading. Cheers!
Here's a link to an interesting article:
http://iamkoream.com/miss-koreas-plastic-surgery-scandal-after-photos-surface/
Jesse Columbo, a contributor to forbes magazine believes there is a bubble forming in emerging markets. What has piqued my interest is that he believes the Phippines is part of that.
I dispute his predictions about the Philippine economy, in general. I agree with him that there are signs of a bubble for property and stock but there are characteristics of the Philippine economy that make me believe this bubble will leave much of our population unaffected. My position is that the Philippines will fare much better than any other country part of this "emerging market bubble."
I think his mistakes are:
1. Not appreciating the multiplier effect of BPO and remittances. He says its only 14.4% of GDP, implying it's too small to count on.
2. Predicting demand for housing on local data. Most new housing projects are bought out by overseas foreign workers.
3. Relying on Makati data. First, Makati super-prime properties are owned by a very small portion of the population. Second, conodminium ownership is also the only way for foreigners to own property, hence the high demand.
4. BPO and remittances will grow even in a bubble.
5. BPO profits and comparative advantage will increase as property prices fall.
That's all for now. Thanks for reading. Cheers!
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