THE economic outlook for the rest of this year is the focus of The Manila Times’ third business forum, happening today.
As I sit and listen to the insights of our august panel of speakers, the one thematic thought I will be having is that this sort of conference is certainly more enjoyable here than it would be in a lot of other countries right now; despite my chronic skepticism, the Philippines is a comparatively good place to be. What we are trying to learn today is whether or not it is going to stay that way.
My outlook is, I suspect, considerably less upbeat than those of our expert guests. But I also suspect my view is probably a great deal more outward-looking than most. Since one of the several hats I wear is that of world news editor, this is unavoidable; and, although I don’t want to sound conceited, I think it is also the most useful perspective. The Philippine economy, in spite of its size, is still relatively immature, and more susceptible than most to external stimuli.
The Philippine economy, to describe it in the simplest possible terms, is still a third-world economy. Not an “emerging” economy, not a “rising tiger,” but one that, albeit relatively robust, is still very much dependent on the global economy rather than being one of its drivers.
If we disregard the consumer spending component, (because that tends to be the biggest part) the other prime movers of the economy and the ones that are still regarded as having the biggest potential are, in no particular order, the BPO sector, overseas workers’ remittances, tourism, and, assuming a future administration can get its act together and undo the damage from the Aquino regime’s six-year-long Amateur Hour, mining. Except for the last one, the last two administrations have done a good job of making the most of those strengths, but no matter what the government does, those things are and always will be driven by inevitably volatile short-term external demand.
The Achilles’ heel of Philippine economic policy is not the way these key inputs have been managed (again, except for mining, which has been idiotically mismanaged), nor the way monetary policy has been handled, but its shortsightedness in not recognizing that remittances, tourism, and BPO have a life cycle, and giving some serious thought to life after they’ve outlived their usefulness.
That shortcoming is what puts our otherwise safe economy on edge in this unusual and rather alarming year. If conditions stay just as they are now, the prognoses offered by the IMF, World Bank, and numerous other analysts will probably hold, and we can look forward to a reasonably productive year.
The problem is, there is virtually no chance conditions will stay as they are now. Central banks, as I pointed out in a column last week, seem to have run out of ideas, and are resorting to ludicrous moves like negative interest rates. Extending that observation in an op-ed piece over the weekend, The Economist suggested that more interventionist government policies are probably the only way to get the stagnating first world back on track.
Whether that’s the right call or not is actually irrelevant, because it’s being suggested just at the time where the places where it needs to be tried are in no shape to do so. Not the US, caught up as it is in election-year turmoil, and certainly not the EU, whose days are numbered thanks to the refugee crisis and the upcoming UK referendum, which will be a death blow to the great supranational experiment no matter what the result of the vote.
Beyond that, the Philippines is still at risk from a range of other threats: The growing possibility of a wider war in the Middle East, the risk of spreading extremist violence, regional political instability, and the constant possibility of the unexpected—a major natural disaster, a political breakdown here, an epidemic.
The safest way to look at the Philippine economy in 2016, it would seem, is not to get too attached to particular expectations. It could be a good year, and there are legitimate reasons to hope it will be. But the distance from where we are to the edge of disaster is growing shorter; perhaps realizing that will better help us avoid it.