Business-news agency, Bloomberg, has just released the results of a survey which will boost confidence in the Philippine Government’s handling of the economy and leave critics scratching their heads. At a stroke, Bloomberg’s headline – “Philippines Posts Strongest Economic Growth in Asia at 7.1%” – should silence, at least temporarily, the opponents of Philippine President Rodrigo Duterte who, along with his economics team, has kept steadfast to his plans to open up this emerging market and make it more competitive.
GDP growth over the past 12 months – the last three quarters saw the fastest pace in three years – make the Philippines one of the world’s top performers. According to the survey the Philippine economy is on track to expand by more that 6% through to 2018. From July to September, the Philippines 7.1% growth rate stood above China, 6.7% and Vietnam, 6.4%.
Adding to the buoyancy, investments soared by 20%, government spending put on 3%, households – which contribute 70% to GDP – splashed out an additional 7.3%, and stocks also gained.
Behind this figures are a number of bullish factors. First there’s the US$160 billion which Duterte has earmarked for new infrastructure projects – such as a US$1 billion makeover of a former US military facility by the Bases Conversion and Development Authority. This project will create a new commercial hub served by an airport and railway. Under the government’s plan, infrastructure spending will take up 5% of GDP.
Then there’s Duterte’s firm commitment to pick up the pace of Public Private Partnership builds. The war chest, containing some US$50 billion – overseas workers’ remittances and revenue from the business outsourcing industry – is another factor.
He has stuck to his socio-economic agenda, continuing the successful macroeconomic policies of his predecessor. His finance team is in the process of indexing taxes to inflation and instituting tax reforms that should result in more-effective tax collection. Meanwhile, competitiveness is improving as is the ease of doing business. Despite the best efforts of anti-Duterte campaigners at home and abroad, most sectors of the economy are now showing signs of improvement.
But there’s something else – less easy to quantify, but indisputably present. In the Philippines right now there’s a new spirit of hope and a real belief that the country can finally throw of its “Sick Man of Asia” rags. This is not just coming from the great and the good of Makati which has proved to be a very imprecise barometer of the true health of the economy; this is coming from street level nationwide. And Duterte can take much of the credit for that.
He deserves to; he’s certainly taken plenty of flak since he assumed the presidency some four months ago. Western governments and their battalions of tame media and equally tame NGOs were falling over themselves explaining how this ‘reckless maverick’ was going to undo all the economic gains made by his predecessor; how investors were going to race away like a stampede of horses from a forest fire; how Duterte’s ‘blood lust’ would see coffin-futures soaring against the backdrop of a barren Philippine wasteland.
A couple of days ago in one of our articles – Politicisation on an industrial scale – The Volatilian™ quoted a recent statement put out by the American Chamber of Commerce of the Philippines (AmCham-P). Here’s part of that press release. “[AmCham-P] voices growing concern over developments that could harm the long-standing optimism of American business to invest in the Philippines”.
Well, with investments up by a whopping 20%, AmCham-P has little to worry about on that score. However, we’re fairly sure that the voices AmCham-P is hearing can only belong to a very narrow portion of the businesses whose interests it’s there to represent. Interestingly, the European Chambers – Dutch, British, French etc – have not received negative feedback from their members; at least not to the extent that they feel compelled to put out a health warning. In fact, they’re actively encouraging more of their nationals to come to the Philippines and set up – the Brits and the Dutch in particular.
Anyway, all this is good news. It doesn’t just sound a ringing endorsement for Duterte’s domestic policies – like his war on drugs which the powers-that-be in America have such a problem with – it also shows tremendous support for his foreign policies; and not least by the local business community.
The 15 economists who pooled their knowledge of the Philippine economy, giving it a collective thumbs-up via the Bloomberg survey, should also be commended for not allowing politics to colour their view – a rarity in that profession. By maintaining their discipline they were able to provide objective analysis that should encourage further overseas investment and finally give the lie to the constant slew of misinformation being produced about the Philippine economy by forces that have anything but the best interests of the Philippines at heart.