GOING by that existentialist creed of what is is, as in a rose is a rose is a rose, speaks a ton of truth in recognizing that problems do exist in the political and economic areas of a nation, two distinct and separate constructs of reality devised by humans but nevertheless hopelessly inseparable and intertwined as conjoined twins.
Rather than sweeping it under the rug, recognition sets off a significant spark to start the process of solving a problem.
“Recognizing that there’s a major problem is the first essential step in coming up with solutions and reforms.” Steve Forbes, chairman and editor in chief of Forbes magazine, said that in his Fact & Comment article published in the December 2016 swansong edition of Forbes Philippines. He was criticizing—blaming is more appropriate though—the monetary policies of the Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England for the lackluster recovery of the United States and global economies from the 2008-2009 economic crisis.
At this point, the Philippine economy is facing a credible threat from the isolationist policy of US President Donald J. Trump, a stand he clearly defined in two words and repeated twice for emphasis when he delivered his inaugural address on a drizzly Friday, January 20, in Washington D.C.: “America First, America First.”
In its latest analysis released over the weekend, the London-based research company Capital Economics (CE) clearly stated that the Philippines would bear the fallout from Mr. Trump’s protectionist measures, even if China and Mexico are his main objects of economic scorn, and even if the value of Philippine exports to the US could be written off as statistically insignificant at 3 percent of total Philippine output.
Because Mr. Trump is also in the mood to redevelop America’s infrastructure and stimulate the US economy like never before, he intends to keep jobs and those precious Benjamin Franklins churning the US financial system by imposing horrendous cross-border taxes to discourage US companies from outsourcing jobs overseas and make sure manufacturing facilities, particularly car factories, stay on US soil.
Such moves are expected to hit hard the business process outsourcing (BPO) industry which counts China, India and the Philippines as major global players. BPO revenues have been a boon to the Philippine economy to the tune of nearly $30 billion a year over the past several years and contributing as much as 8 percent to the gross domestic product (GDP). US companies account for an estimated two-thirds of the BPO revenue stream, according to CE.
On top of that, CE flagged the 4 million or so Filipinos who live and work in the US and whose money transfers back to the Philippines account for about another 3 percent of GDP.
Those numbers clearly show that isolating the trade figures does not give an accurate account of how significant the US is in economic terms to the Philippines, CE emphasized when it pencilled in how vulnerable the Philippines actually is to Washington’s isolationist moves.
What makes the situation alarming really is when those numbers are taken together as the vulnerability factor for the Philippines, considering that 14 percent of the economy stands to be sideswiped once Washington starts revving up its economic protectionist measures.
Some problems cannot be simply swept under the rug, and US isolationism must be approached wisely to stave off its impact on the Philippine economy. A wise thing to do for Philippine officials, both on the economic and political fronts, is not to take lightly such cautionary insights from CE. It would not only be wise but prudent and appropriate as well to come up with counter-measures as early as possible without waiting for the export, BPO and remittance numbers to start falling down. That way the country would not be running around like a headless chicken when reality espoused by Uncle Sam starts to bite.