Several issues preoccupy President Rodrigo Duterte’s mind
and mouth: the violent anti-drug campaign and murders, his anti-US, anti-EU,
and anti-UN expletives and polemics (but later reversing his earlier attacks
against these countries and/or multilateral bodies).
After his anti-Obama, anti-US tantrums before and during
the ASEAN and related summit meetings, he repeated the same vitriol in his
China visit last week, citing his “separation from the US” and that the
Philippines is united with China and Russia against the world. As expected, he
took back these assertions almost immediately, clarifying that the country
cannot afford to be separated from the US the minute he arrived in Manila.
Spouting off these incendiary remarks then taking them
back -- characterized as “sugod-atras” in Filipino -- should not be taken
literally as advised by the President’s cabinet officials.
However, these unnecessary assertions have real, negative
impact on business confidence in the country, especially for massive investment
plans and pledges that remain on the “wait and see” mode since the campaign
period (February 2016) until today.
Will these outbursts by the President ultimately derail
the economic momentum of the Philippines as started by the previous Aquino
administration?
The Economist magazine regularly pools some of the
world’s biggest investment banks and ratings companies about their global
economic forecast and GDP growth projections. The numbers are shown on the
table.
This piece made these country groupings in
re-constructing the table. Group A are traditional, developed economy allies of
the Philippines; B are President Duterte’s “pivot new friends”; C are the major
Asian friends and trade partners; and D are miscellaneous. Venezuela is
included in D to show how socialism and heavy statism can lead to economic and
business decline (see table).
These numbers show us the following:
One, group A remains to have sclerotic growth, they seem
to be very lucky to grow 2% or higher. Unemployment rate is high, 5% and up,
except Japan. Not shown on this table are the four EU countries which have
incurred double-digit unemployment rates in July or August 2016: France 10.5%,
Italy 11.4%, Spain 19.5%, and Greece 23.2%.
These figures show that the developed countries cannot be
expected to provide more impetus to lead and drive faster global growth. Their
capacity to provide more foreign aid, more loans and grants, is also
compromised.
Group B has mixed results. China can be expected to lead
regional growth and help pull upwards global demand, but not Russia. The latter
remains limping due to low global oil prices, petroleum being one of its major
export products, among the important factors.
Groups C and D continue to show fast growth potentials
except the developed Asians like South Korea, Taiwan, Hong Kong, Singapore, and
socialist Venezuela. The Philippines is expected to retain fast growth, third
highest after India and China this year, also third highest next year after
India and Vietnam, among emerging and developed Asians.
An important ingredient for faster growth is high and
young population. Notice above that countries with 90+ million people --
Vietnam, Philippines, Indonesia, Pakistan, India and China -- are growing fast.
The US, Japan, and Russia should belong to this category but they are growing
slow, partly because they have an old and aging population.
Going back to our earlier question, will President
Duterte’s emotional outbursts ultimately derail the Philippines’ economic
momentum?
The answer seems to be no for two important reasons.
One, growth momentum is retained as various macroeconomic
and infrastructure reforms laid by the previous administration are bearing
fruit.
Two, our high and young population of 103 million people
as of 2016 has become a potent force to provide the necessary market demand and
labor force supply for more investments and entrepreneurial advancement.
So, despite the President’s incendiary remarks plus
thousands of murders in the anti-drugs campaign that can potentially disappoint
if not threaten big foreign investments planning to come to the Philippines,
growth momentum is well in place.
Moreover, if this economic momentum is coupled with
presidential sobriety and an anti-drugs campaign that is guided by due process,
the country’s growth rate of 7%, or perhaps even higher, is very much possible.
See also:
BWorld 87, Economic, fiscal and energy policies of the Duterte administration, October 17, 2016
BWorld 88, Economic freedom and human rights, October 31, 2016
BWorld 88, Economic freedom and human rights, October 31, 2016
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