Another vote of confidence for the Philippine economy – this time from one of the world’s largest global financial institutions, the International Monetary Fund (IMF). Providing another major boost to investor confidence, the economic-failure argument of the government’s detractors is now looking beyond hopeless.
The Philippines, says the IMF, will notch up the fastest economic growth in both the East Asia region and across the states that make up the Association of Southeast Asian Nations (Asean) over the next two years. Here are the figures.
According to Shanaka Jayanath Peiris, the IMF’s resident representative to the Philippines: “Growth is projected to remain robust at 6.8% in 2017 and 6.9% in 2018, led by strong domestic demand and a recovery in exports (photo)”. For this year, that comes at the lower end of the government’s forecast range of 6.5% to 7.5%.
On the list of the institution’s regional growth projections, the archipelago comes ahead of China which it puts at 6.6% for this year and 6.2% for 2018. Elsewhere the IMF forecasts the current year’s growth as: Vietnam, 6.5%; Indonesia, 5.1%; Malaysia 4.5%; Thailand, 3.0%, South Korea, 2.7%; Japan 2.3%; Singapore, 2.2%; Taiwan, 1.7%.
What gives the IMF’s prognosis greater credence is that the figures have been assessed from within the region and won’t have been prejudiced by media reports and anecdotal accounts which constantly paint a gloomy picture of the Philippine economy’s future. They are reliable data which overseas investors can safely factor in when evaluating investment prospects.
Peiris, who’s stationed in Manila, covers Asean Macro Financial Surveillance for the IMF’s Asia Pacific Department. Prior to that he was a senior economist in the Asia and Pacific Monetary and Capital Market’s Department watching Asean and South Asia. In short, he knows and understands this region well. A former lecturer in Mathematical Economics and Econometrics at Sommerville College and Jesus College, Oxford, he’s been with the IMF since 2001.
Certainly far more store can be put by this analysis than the likes of the American Chamber of Commerce in the Philippines which repeatedly tells the world – and anyone else who’ll listen because they’re on a very different planet to the one the rest of us live on – that investors have reasons for concern over putting their money in the Philippines; that ‘they know’ or ‘have heard of’ companies that are putting investments for the Philippines on hold.
What the latest IMF figures show, however, is that the country’s economy is in safe hands under the administration of President Rodrigo Duterte – that the upward growth trend which the government took to new heights in 2016 is being consolidated.
Last year, GDP growth for the Philippines was 6.9% after hitting an historic high of 7.1% in the third quarter. For the 12 months, that put it ahead of China by 0.2%; up on Vietnam by 0.7%, while other countries in the region trailed badly. Indonesia recorded GDP growth of 5.0%; Malaysia, 4.2%; Thailand, 3.2%; Singapore, 2.0%; Taiwan. 1.4%.
The IMF numbers also come on the heels of leading ratings agency, Fitch Ratings’ release of their growth forecasts for the Philippines – 6.8% this year and 6.7% next year. Fitch also announced that it was maintaining its investment-grade BBB- status adding, “The rating Outlook is Positive. Hence Fitch does not anticipate a material probability of negative action over the forecast period”.
All this, then, is no flash in the pan; nor is it growth inherited from the previous government which the anti-Duterte movement would have us believe – though the present government has made the point that it will continue its predecessor’s successful policies.
And it has; but it’s also added to them. Furthermore, Duterte’s much maligned foreign-policy shift, away from the US and towards China – something the doomsayers claimed was virtually tantamount to economic suicide, relying as the Philippines supposedly did according to their argument, on US financial aid – has produced a massive boost to the economy.
What’s really happening on the ground is that investment levels by domestic players are at an all-time high. Confidence is booming. There’ a buzz around business that’s never been felt before on this scale. Much of this has been generated by Duterte’s bold vision for his “Golden Age of Infrastructure” – a PHP8.56 trillion spending package that will run throughout his presidential term and will be the biggest disbursement of cash-to-build in Philippine history.
Peiris briefly alluded to this in his remarks that explained his growth figures. “The authorities see more inclusive growth at the center of their policy challenges. Fiscal policy is correctly focused on more inclusive growth by increasing social and infrastructure expenditure, financed with additional borrowing and higher revenue,” he said.
A couple of weeks ago, the Makati Business Club – comprising CEOs from the country’s largest corporations – released the results of a ballot which showed that 74% of local companies polled would be making additional investments in the coming year, while 51% said they’d be increasing the size of their workforce.
So the real picture of the Philippine economy – both now and throughout the immediate term of this government – is very different indeed to the one regularly being shown by Duterte’s political opponents. The administration’s socio-economic agenda is working; business confidence is high; levels of inward and local investments are continuing to build; new-job creation is up; employment is rising.
On all metrics, the first nearly 10 months of Duterte’s presidency has supercharged the economy. And it’s done that while waging a contentious and difficult war on illegal drugs, while combating a violent Islamist insurgency in the south of the country, while pursuing a campaign to defeat widespread criminality and while redoubling efforts to bring half a century of communist rebellion to an end.
By any standards, that’s an amazing achievement. And while the previous administration of Benigno “Noynoy” Aquino certainly made some impressive gains in areas of the economy and rooted out at least some corrupt officials in the public sector, it never came close to addressing the problems of Abu Sayyaf Islamists, nor the communist New People’s Army. Much less did it tackle the country’s horrendous illegal narcotics industry or the rampant criminality that’s permeated every strata of society – two issues which, unless they’re dealt with effectively, makes the sound long-term economic health of the country unattainable.
And that’s the actual reason for these campaigns. It’s not as the Liberal media would have us believe, to satisfy Duterte’s blood lust; it’s to finally give the Philippines a chance of throwing off all those shackles and becoming a proud and prosperous and independent republic.
And so we believe the policies being conducted by the Duterte administration are the right ones for the times – though the scale of the challenges are the result of the lethargy and the corruption of previous administrations. They’re all exclusively legacy problems, and unless they’re solved now there can be no long-term future for the Philippines. It will simply do what it’s always done, lurch from crisis to crisis; from scandal to scandal.
The fact is, none of these issues are going to go away on their own. They have to be hit head on. It’s unfortunate that outside politically motivated forces refuse to support Duterte; it’s even more unfortunate that so-called opposition politicians within the country can’t put their ambitions to one side while the president attempts to cleanse society while keeping the economy on an upward trajectory. But that’s the ugly side of politics and it’s precisely why those members of the political class are not in power.