The health of the Philippine economy under Duterte

ECONOMIC BOOM. Despite his rude remarks, President Rodrigo Duterte's economy remains healthy. Photo of Malacañang

MANILA, Philippines – We have never seen or heard of a president like Rodrigo Duterte. We may think that we have seen his worst, but he continues to surprise and raise a notch higher each time.

We thought cursing the priests was the worst. He continued to call God stupid. We thought we got used to his sexist remarks. He continued to seal that with a kiss. The list goes on and reporters have even more to write and the public to look out for.

Yet, despite all his ramblings, it seems that the economy can ignore them.

"The economy is in a slump," he said. Most trends and numbers say the opposite.

Is life better because of its rude leadership style? The jury is always on the economy.

How much political noise can companies and investors take? Signs of distress are clearly on the horizon

Economics in full swing

The Philippine economy is far from sick

Starting in the first quarter by 2018, the country's gross domestic product (GDP) was 6.8%. It's one of the fastest growing rates in the Asia-Pacific region.

But the UP economics professor, Emmanuel de Dios, said economic managers should not rejoice so quickly, as this is still far from the government's target range of 7% at 8%

. violated 7% years ago.

Duterte's Build Build Build (BBB) ​​program also raises several sectors

During the first quarter of 2018, construction activities public sector increased almost 25%. Private sector construction also grew by 7%

According to the National Authority for Economic and Development (NEDA), the government has maintained its spending targets for the infrastructure development.

Economic managers committed to accelerate public infrastructure spending from 5.1% of the country's GDP in 2016 to 5.4% in 2017, with an increase in funding of P 101.76 billion on the basis of general credits Act (GAA).

The government has slightly raised the deficit ceiling of the country to support the momentum of the BBB.

However, getting the rest of the funds for the P8-billion infrastructure push continues to be a challenge.

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The Tax Reform Act for Acceleration and Inclusion (TRAIN) boosted government revenue by 19% over the last five years. first months of 2018.

tax recoveries for 2018 continued to exceed those of 2017.

The government also ran after tax cheats like Mighty Corporation. Duterte was able to pick up more than 40 billion P of the cigarette machine.

The amount of foreign direct investment (FDI) flowing into the country also reached $ 8.7 billion in the first 11 months of 2017, exceeding the annual target of $ 8 billion of dollars set by the Bangko Sentral ng Pilipinas (BSP). The highest level ever recorded under the Duterte administration was observed in October 2017, where FDI climbed to $ 1.92 billion.

BSP data show that the bulk of gross capital investment comes from Singapore, Hong Kong, Luxembourg, China and the United States

The central bank attributes the good FDI figures to investor confidence, given the strong macroeconomic fundamentals and growth prospects of the economy.

Feeling the pinch

Although the economy is clearly not in the doldrums, that does not mean that it will never be .

Other indicators show that the poor takes a boost from high commodity prices. Inflation began to increase in 2018 due to the implementation of the TRAIN law, rising oil prices in the global market and the dearth of cheap rice on the market.

Inflation in June climbed to 5.2%, inflating market expectations and government estimates

Despite the acceleration of inflation, economic leaders remain firm on the fact that the TRAIN law should not be stopped. Budget Minister Benjamin Diokno even said that "we should be less whiny".

Meanwhile, analysts seem to be unanimous in saying that the BSP was actually behind the rising interest rate curve. Some even described the central bank's decision to reduce banks' reserve requirement ratio (RRR) from 20% to 19%, which is "confusing".

So far, FDI remains strong, but pledges of support have fallen sharply

Total pledges of foreign investment in the first quarter of 2018 has declined sharply 37.9% compared to the same period. Total foreign investment pledges approved by the 7 investment promotion agencies amounted to 14.2 billion pesos

In addition, foreign investment pledges fell from 51.8% to 105.5 billion in 2016.

It is important to look at the figures of the pledges as they give an insight into the amount of FDI that the government will wait in the years to come.

The peso was also badly hit. 2018 and fell to its lowest level in 12 years. Some companies even predicted to go down to P54 for a dollar

"We do not want a strong peso, we want a competitive peso," said Diokno ]

While economic managers and some analysts have insisted that it is a victory for an economy backed by Filipino Overseas Workers (OFW), high prices goods here seem to cancel the benefits.

In addition, the weakness of the peso led foreign investors to withdraw $ 1.22 billion of stock so far this year, surpassing the combined inflows in 2016 and 2017.

Foreign investors have withdrawn more than $ 613 million since Duterte took over the presidency in 2016.

The country's intricate red registrations also continue to annoy foreign investors.

The Philippines' business case ranking slipped to the 113th position in 2018 of the 99th year a World Bank study.

The numbers are worse when we look at some of the sub-indicators. The Philippines ranks 173rd in business creation, ranked 101st in building permits, ranked 114th in property registration, ranked 142nd in credit, 146th in property protection minority investors and ranked 149th in the execution of contracts.

Economic officials insisted that despite the decline, the country has actually improved its processes and provided a better environment for businesses. Indeed, but most of our Asian neighbors have climbed the scale. It's the competition after all.

In terms of competitiveness, the Philippines continue their series by failing to dazzle.

The Philippines dropped 9 notches to the 50th place out of 63 economies in this year's World Competitiveness Yearbook (EJT) rankings from the International Institute of Management (IMD).

This is the largest decline from one year to the next over the last decade and the largest decline among peers in the Asia Pacific region. From 2014 to last year, the Filipino ranking fluctuated to a low of 40.

The Ministry of Finance has already criticized the judging criteria of the IMD in an economic newsletter.

The DOF has called the IMD study "the worst study ever done on competitiveness", but the best brains in economics and governance in the world continue to be the "worst-ever" study on competitiveness. anticipate its results

More Threats

The business world has kept its headphones and has distanced itself from all the political noise and rudeness of Duterte

But until when does the economic kingdom protect itself from politics?

If Filipino society was a game of chess, politicians could be horses. Trojans, to be more precise.

Duterte and his allies are now pushing for charter change and federalism, despite the majority of Filipinos opposing the movement. Politicians seem to close their eyes and even insist that there is a public clamor for the radical reorganization of the government structure.

Filipinos may have to withdraw up to 74 billion pesos for a move they've never asked for. At least two economic managers have already expressed concerns about this. The secretary of socio-economic planning, Ernesto Pernia, warned that federalism was going to "wreak havoc" in the economy. Chief Financial Officer Carlos Dominguez feared it would "become a nightmare".

Two senior economists have already described the worst case scenario: hyperinflation.

Should the business community continue to ignore the rhetoric? Or is it time for them to come out of their shy shells and finally treat the conversation as an action? – Rappler.com