No Free Lunch

Christmas all year round

/ 12:28 AM December 23, 2016

Christmas normally spells good times for the economy. It means a seasonal boost in production, jobs, and incomes. Months before, manufacturers would have cranked up production in anticipation of higher holiday demands. As the holiday season approaches, large retail establishments take in additional workers to handle the holiday crowds and the expected upsurge in sales volumes. Filipinos the world over come home in droves, and the international airports fill up with a sea of humanity, especially at the arrival area. If they can’t come home, they ramp up remittances to their families, and the stronger-than-usual inflow of foreign exchange leads the peso to get relatively stronger.

All these show up in the usual macroeconomic indicators. Quarter-on-quarter GDP growth speeds up (as production and incomes grow faster than usual); unemployment rate falls (with more jobs becoming available); inflation ticks up (as prices rise faster than usual); and the peso appreciates (that is, the surge in foreign exchange inflows via remittances pushes the peso-dollar exchange rate lower). At the stock market, prices tend to rally in the last week of the year, in what investors call the “Christmas rally” or “Santa Claus rally.” The upturn is usually attributed to window-dressing by fund managers and institutions, who typically engage in buying sprees to push up prices and make their end-year results look good to their investors. At the same time, much of the yearend bonuses find their way into additional stock market investments, thereby adding real demand in the market. The Santa Claus rally has been validated by historical data, and is seen not only in the Philippines but globally as well. All these positive end-year trends must make many among us wish that Christmas could last all year round.


This year, however, things appear to be somewhat different. While the output, jobs and price trends are consistent with historical experience, the peso, instead of appreciating, has in fact been at its weakest since the start of the year. The long-anticipated action of the US Federal Reserve Bank to raise interest rates has been the main impetus for this, attracting financial investments back into the US financial markets, and out of emerging markets like the Philippines. The same Fed-induced exodus is likely to negate any Santa Claus rally in our stock market this year, as already predicted by a number of stock market analysts. It doesn’t help that our President constantly spouts hostile anti-America language, which has reportedly led a number of weak-kneed institutional investors and foreign fund managers to opt back for the safer haven of the United States.

We must not lose sight of the fact that the Christmas season is also a time when the misery of millions of Filipinos with no means or livelihood seems further magnified in stark contrast to those for whom Christmas can truly be merry. Largely untouched by the positive economic numbers are over 2 million Filipinos who are still without a job, which means that many more millions comprising their family members continue to suffer from poverty and deprivation. Based on the most recent poverty data, about 21 million Filipinos, or one in every five, still live under the poverty line. Around 2.4 million families suffer involuntary hunger, according to the Social Weather Stations. And large numbers of Filipinos are spending a bleak Christmas deprived of their homes, possessions and loved ones, in the wake of Typhoon “Lawin” and other recent storms. For victims of such calamities, and for the families of thousands who have been killed in the government’s war on drugs, Christmas will be particularly bitter.


The already glaring gaps within our society thus get even more magnified at Christmas.  This is why the holiday season ought to be an occasion for the more fortunate among us to ponder on how the seasonal generosity we practice at this time of year can be made a year-round commitment, and how it can be made more meaningful and more lasting.

A blessed Christmas to us all—and may its spirit be with us all throughout the year!

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TAGS: Christmas, Consumer, economy, Holiday, opinion, remittance
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