AS quickly as we want to move on to 2021, we have been traumatized by 2020. It is like wanting to go swimming, but you have no idea how cold the water is going to be. Twenty twenty-one is the dark street where you really don’t want to walk down late at night.
At the beginning of 2020 it was, “The rat is the first zodiac sign in the Chinese calendar. It is not an adorable animal, but it is smart, cautious, and adaptable, and can survive under the most hazardous conditions.” Now it is, “While we welcome the New Year, we cannot survive another horrible year.”
In truth, we can and will survive. Part of the dilemma we face is that forecasts for the future shape both our attitude and behavior. From our BusinessMirror editorial just as we were preparing for the 2020 New Year:
“Peso seen to strengthen further to 50:$1 in 2020, ANZ said in a report.” “PNB sees peso correcting to 53 to $1 in 2020.” “London-based Capital Economics sees the peso weakening to 56:$1 next year.” “Analysts surveyed by Bloomberg see the currency falling to 51 by end-December 2020.” “In a note to reporters on December 12th, ING Bank said pressures could drag the peso back to the P52-per-dollar level.”
The December 29, 2020 Bangko Sentral Ng Pilipinas “Reference Exchange Rate Bulletin” shows that the Peso/US Dollar exchange rate ended 2020 at 48.036.
So, before we start hearing from all the “crystal ball experts” for 2021, this was 2020:
The WHO designated Covid-19 a global pandemic on March 10th. Global credit and equity prices had fallen sharply in February and early-March and then went into free-fall. In less than one month $30 trillion had been wiped off the value of global stock markets, one of the greatest crashes of all time in both speed and magnitude.
The local stock market index ended 2019 at 7,815 and reached its intra-day low on March 19 at 4,039, down 48 percent for the year. We ended 2020 off 8.7 percent, which is not bad all things considered.
The virus, crash, lockdown, and recession triggered an unprecedented monetary and fiscal policy panic with $22 trillion of stimulus around the world. Global debt now stands at a record $277 trillion against a total 2019 global economic output (GDP) of $142 trillion. The total global stock market value has soared from $60 trillion to over $100 trillion since the March lows.
One major local bank also predicted: “PSEi at 8,900 by end-2019.” The PSE Composite Index closed 2019 at 7,815. Crystal ball gazing is a difficult business. The reality is that forecasts for the future by necessity must change as situations and conditions develop. Why make 12-month predictions when the probability of being accurate is somewhere between “zero” and “none”?
The answer is simple. We want to feel confident that we know what will happen in the future even if the forecast is negative. Having a “bad attitude” about 2021 is not good. Feeling clueless about the next 12 months is dangerous. It is uncertainty that freezes our brains and keeps us from acting and reacting as conditions change.
We must take almost everything one day at a time, at least for now. This we know for certain though: As each day passes there will be more clarity about what the future holds.