PhilStar 69, Japan visit and Phl economic challenges

Japan visit and Phl economic challenges

ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star

November 27, 2025 | 12:00am

https://www.philstar.com/business/2025/11/27/2490052/japan-visit-and-phl-economic-challenges

 

NAGOYA  – This is my first time to set foot in Japan’s fourth largest city by population, and I was impressed — modern and nice.

 

Our flight was Manila–Narita–Nagoya, and among the things I noticed at the Narita International Airport was the seemingly fewer-than-usual passengers; the immigration line was also short. This could be related to the substantial reduction in visitors from China after recent diplomatic tension with Japan and the new Prime Minister’s statement about Taiwan.

 

Japan’s GDP growth in the first three quarters of 2025 is 1.6 percent, an improvement from the same period in 2024’s -0.5 percent. Japan’s growth is closely tied to the growth of the other G7 member countries for the same period this year: US 2.1 percent, Canada 1.8 percent, UK 1.5 percent, France 0.7 percent, Italy 0.5 percent and Germany 0.3 percent.

 

The fastest-growing economies in the world remain Asians, with GDP growth in the first three quarters of 2025 as follows: Vietnam 7.8 percent, Taiwan 7.0 percent, China 5.1 percent, the Philippines and Indonesia 5.0 percent. India has not reported its third quarter data yet, but its first two quarters showed a growth of 7.6 percent already.

 

Japan this year has become the “inflation capital” of East Asia, with inflation from January to September 2025 at 3.4 percent, followed by Vietnam at 3.3 percent, South Korea two percent, Taiwan 1.8 percent, the Philippines 1.7 percent, Indonesia 1.6 percent, Hong Kong 1.5 percent, Malaysia 1.4 percent, Singapore 0.8 percent, Thailand zero and China -0.1 percent.

 

The Philippines’ top trade partners based on total merchandise trade (exports plus imports) from January to September 2025 are: China with $35.6 billion, Japan with $16.6 billion, the US with $16.0 billion, and South Korea with $10.1 billion. So I hope that Japan would go back to its old roaring-hot economy in the next few years.

 

Meanwhile, the Philippines continues to be hounded by mixed economic signals with the ongoing corruption scandals. See these recent reports in The STAR, from the optimistic view: “Growth to pick up next year as easing takes effect” (Nov. 23), “SM optimistic on Phl market despite risks, uncertainties” (Nov. 25), “Business groups back suspension of tax field audits” (Nov. 26) and “Strong spending to underpin Phl’s steady growth – Tetangco” (Nov. 26).

 

On the non-optimistic side: “Without reforms, Cabinet revamp may deepen uncertainty – economists” (Nov. 21), “Economy to slow down until 2026” (Nov. 25) and “Corruption scandal clouds FDI outlook” (Nov. 26).

 

The report on Tetangco refers to former Bangko Sentral governor Amando Tetangco Jr., who is now the chairman of SM Investments Corp. and was the keynote speaker at the recent BusinessWorld Forecast 2026 forum last Tuesday, Nov. 25.

 

The STAR president and CEO Miguel Belmonte also said in his welcome remarks that, “Every crisis is at its core a crucial opportunity, a turning point that can lead to something better.”

 

I agree with both Mr. Tetangco and Mr. Belmonte that we need to remain optimistic and hopeful about our economy and our people. We are in East Asia, the most economically dynamic region in the world, as shown in the GDP growth numbers above.

 

Such economic optimism is consistent with the governance optimism of the new Executive Secretary Ralph Recto. I saw his inspirational message to personnel of the Office of the Executive Secretary (OES) in Malacañang on Nov. 24.

 

He exhorted officials and employees: “My marching order is simple: Focus on governance. Monitor the performance of departments and maximize their outputs. For them not to be distracted by political noise. Make sure that agencies are doing their job and delivering their promises to the people.”

 

I think that is pretty straightforward and frank. Decisions by the President should be guided by meticulous monitoring work by the “taong bahay,” the OES. That might be the reason why Secretary Recto is less visible in the news now, as he emphasized their work as “Deadlines, not headlines. Workhorses, not showhorses.”

 

While people’s attention is focused on political changes as the corruption scandal and charges are ongoing, the bigger issue remains the economy — how to sustain fast economic and job-creating activities, how to keep unemployment and inflation low and how to control our high annual budget deficit and high annual borrowings.

 

Our interest payment alone from our P37 trillion-plus outstanding public debt might reach P1 trillion by December 2025; it was already P868 billion last September. That is equivalent to P2.7 billion a day in interest payment alone, principal amortization not included. In 2024, our interest payment was P763 billion, or an average of P2.1 billion a day.

 

President Marcos needs to rein in public spending, including endless subsidies when revenues are not enough, or privatize more government assets, with new revenues used to retire some public debt to reduce the need for more borrowings.

 

I made a brief computation that even if we have zero deficit net of interest payment in 2026 or 2027 — meaning expenditures are at similar levels as revenues — our deficit will remain above P1 trillion a year. Why and how? From the interest payment alone. An approaching P18 trillion public debt multiplied by an average interest rate of six percent will produce P1.08 trillion in interest payment.

 

Controlling the seemingly uncontrollable rise of public debt — that is one of the most important achievements that the President can proudly announce when his term ends in 2028.