A Strong Economy – Manila Standard

“A lot is expected of the next leader.”

Ferdinand “Bongbong” Marcos Jr. (BBM, for short) if he wins the presidency on May 9, 2022, will be one lucky GM.

BBM seems to me a safe bet for 2022.

An average of 16 major surveys, from October 2021 (SWS, BBM 47%; Leni 18%) to April 20-22, 2022 (Manila Bulletin-Tangere: BBM 51.54%; Leni 18.25%) yields 56.41 % for Marcos and only 18.14 percent for Robredo after seven months. That’s a margin of 38.27 points, or 22.96 million votes assuming 60 million voters. No presidential candidate in history has racked up such a huge advantage – around 23 million votes. BBM will collect 33.84 million votes; Leni will be miserable with less than 11 million votes.

Even if BBM donates half of their 23 million vote advantage, or 11.5 million votes, and those are added to Leni’s, the widow will only get 22.5 million votes, or 11 .34 million less than those of Marcos Jr.

President BBM inherits from President Duterte a robust economy with strong fundamentals. Some of these fundamentals:

• A historically high investment rating retained amid the pandemic (PH peers downgraded);

• Record foreign investment which amounted to $10.5 billion in 2021, up 54.2% and surpassing the previous record of $10.3 billion in 2017, Duterte’s first full year;

• A vast growing market of 110 million people belonging to the middle class with a per capita income of $3,300 per year;

• Modern infrastructure, thanks to “Build, Build, Build” which has increased investment in infrastructure to 5% of GDP (2.7 times the average of 1.8% of the previous 24 years) and created at least six million new jobs;

• Strong dollar revenues, driven by remittances which amounted to $31.5 billion in 2021, up 5.1%;

– Fall in unemployment, which reached 6.4% in 2021, after reaching an unprecedented level of 17.6% in April 2020, at the height of the pandemic.

With an expected GDP growth of 6% for 2022, Duterte will register an average economic growth of 4.53% in six years: 6.9% in 2017, 6.3 in 2018, 6.1 in 2019, -9.6 in 2020 and 5.6% in 2021.

Excluding the pandemic-induced economic crisis of -9.6% in 2020, a post-war record. Duterte was to record an average GDP growth of 6.2% over six years. Wonderful for someone who doesn’t understand economics.

Assessing recent risks, Bangko Sentral Governor Ben Diokno said, “With its robust external sector and strong and steady dollar inflows, the country is well equipped to manage risks. Armed with recent structural reforms and strong macroeconomic fundamentals, the Philippines is more than poised to be the world’s premier investment destination.

For his part, Carlos “Sonny” Dominguez is the most fulfilled economic czar and finance secretary in history.

sony says:

“The election season will not be a problem. We have a long history of orderly and peaceful transfers of power.

“The next administration will inherit many hard-won reforms. They will enter the office with the foundations for rapid growth already in place.

“Together, we must create an economy that can provide enough taxes for the government to provide the public goods needed for the continued prosperity of the Filipino people.

“Our fiscal consolidation plan will help us achieve this.

“We will continue to work hard until the last hour of our mandate to contribute whatever we can to our economic recovery.

“We sailed in good weather and in bad weather. But President Duterte proved to be a strong and stable captain of the ship.

“The waves may be high, but the ship of state has been masterfully steered.”

Meanwhile, the Manila-based Asian Development Bank has this risk assessment for 2022:

• The Russian invasion of Ukraine has increased uncertainty and destabilized commodity markets.

• The pandemic persists, fueled by the Omicron variant. Lower health impacts and advances in vaccination have allowed economies to remain more open than in previous waves.

• GDP in Asia will grow by 5.2% in 2022 and 5.3% in 2023, thanks to the continued recovery of domestic demand and strong exports. Inflation will reach 3.7% in 2022 and 3.1% in 2023.

• The AfDB projects the Philippines’ GDP growth of 6% in 2022 and 6.3% in 2023, the second highest growth rate in Asia, after Vietnam’s 6.5% in 2022 and 6.7 % in 2023.

• Risks include escalating Russia’s invasion of Ukraine, financial instability triggered by aggressive Fed tightening, emergence of more deadly variants of COVID-19, and disruptions associated with current outbreaks of the People’s Republic of China (PRC).

The AfDB sees several downside risks clouding the horizon:

• The escalation of global geopolitical tensions stemming from the Russian invasion of Ukraine could affect the region through stronger than expected increases in energy and other commodity prices.

• Aggressive tightening by the US Federal Reserve could trigger financial market volatility, capital outflows and currency depreciations. increasing risks to financial stability in the region.

• The emergence of more deadly variants of COVID-19 and the current outbreak of Omicron in the PRC could jeopardize regional growth and supply chains.

• Learning losses from continued school closures threaten to further exacerbate economic inequality.

The fed funds rate is expected to rise faster than the baseline scenario:

• 1.9% by December 2022 compared to 1.1% in the reference scenario.

• Up to 2.8% in 2023 compared to 2.1% in the reference scenario.

This Fed rate hike, according to the AfDB, could imply a weaker global economic recovery and slower growth in developing Asia. “Political choices will become more complex in the region,” worries the regional lender.

• Inflation could pick up, as exchange rates depreciate alongside capital outflows.

• Raising interest rates to stem capital outflows is an option, but could stifle domestic demand and slow the recovery.

Basically, with a huge and unprecedented term in office, a President Marcos Jr will have plenty of political capital and the goodwill of his people to weather all storms – economic, political and security. Much is expected of President Bongbong. The Philippines are his failure.

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