LONDON-BASED RESEARCH CONSULTANCY:

‘Duterte presidency to erode PH economic success story’

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London-based research consultancy firm Capital Economics warned in a study the Philippines’ economic success story would be put in jeopardy by a Duterte presidency.

In a research note, Capital Economics Asia economist Gareth Leather said the country had been one of the region’s few economic success stories over the past few years, but with the highly controversial Mayor Rodrigo Duterte of Davao City riding high in the polls ahead of Monday’s presidential elections, the country could be forced to take a step back.

“Monday’s presidential elections will have a key bearing on the prospects for the Philippine economy,” Leather added.

Early this year, Capital Economics said President Benigno Aquino 3rd was leaving the economy in much better shape than he found it, and that there were reasons to think his achievements could outlast his presidency.


It added that Aquino deserves much of the credit for turning the country’s fortunes around since his election in 2010, with his clean image and reformist stance winning over investors.

Philippine gross domestic product growth over the past five years has averaged 6.3 percent a year, which is 1.8 percentage points higher than in the previous five years–a bigger improvement than in any other country in the region.

The think tank, however, also warned that the wrong leader could quickly cause sentiments to sour.

Installing, for example, another Ferdinand Marcos, whose disastrous presidency from 1965 to 1986 saw the economy lurch from one crisis to another, could quickly see economic prospects unravel.

“We now have concerns that the electorate may be about to make exactly that kind of mistake. The latest opinion polls show Rodrigo Duterte, a highly controversial seven-term mayor of Davao is pulling clear of his rivals,” Leather said.

He noted that after Aquino’s surprise election victory in 2010, few analysts were predicting that the Philippine economy was about to take off in such spectacular fashion.

“In the same way that people underestimated Aquino, it may be too soon to be ringing alarm bells over Duterte,” Leather, nevertheless, said.

The economist said it is well worth noting that during Duterte’s time as mayor of Davao City, crime rates plummeted and Duterte gained a reputation as a politician capable of getting things done.

This more hands-on approach could see him having more success than Aquino in pushing through key reforms and driving improvements in infrastructure, Leather added.

In terms of Duterte’s economic policies, he pointed out, the mayor appears to have recognized the progressthat the country has made over the past six years, and it is unlikely that he would deliberately attempt to rock the boat by, for example, embarking on an unaffordable spending splurge.

“However, there is only so much benefit of the doubt he deserves. Given how little Duterte has talked about economic reform during the campaign, it is hard to imagine it being one of his main priorities if he comes into office,” Leather said.

It was noted that the sharp fall in the crime rate during his time as mayor of Davao City was largely achieved on the back of a spate of extra-judicial killings in his constituency, calling into question his commitment to the rule of law.

Leather underscored that Duterte’s presidential campaign has also been marred by a string of highly controversial comments, including threats to kill criminals in the streets, jokes about raping a missionary and threats to sever ties with Australia and the US.

On the campaign trail, he praised Ferdinand Marcos for his ability to “change the system,” and has threatened to declare a “revolutionary government” if he doesn’t get his way, the economist noted.

Duterte has also found himself mired in a corruption scandal amid allegations that he failed to declare tens of millions of US dollars worth of assets, Leather said.

Consequences
“In the increasingly likely event that Duterte wins Monday’s presidential elections, financial markets, which have sold off as his victory has looked more likely, would probably fall further,” the economist said.

A healthy fiscal position, low levels of external debt and a current account surplus make the Philippines well-placed to cope with sudden short- term changes in sentiment, he added.

“However, the longer-term consequences of a Duterte victory are unlikely to be so benign and there is a real risk that Aquino’s most important achievements could quickly start to unravel,” the economist said.

One of the key features of the past six years, he added, has been a return to political stability and an absence of coup attempts.

“The military might not be as tolerant of someone who wants to ‘change the system.’ Corruption, which has fallen back during Aquino’s presidency, could quickly reescalate,” Leather pointed out.

“The Philippines’ own history shows how bad leadership and political uncertainty can suck the life out of an economy. If the politics in the Philippines did take a turn for the worse, growth would almost certainly suffer, with investment likely to be hit first,” he also warned.

A decline in sentiment could see the country struggle to attract funds it needs to plug its infrastructure deficit, Leather said.

“Investment in the fast-growing business process outsourcing and manufacturing sectors could also start to slow. In short, the Philippines could quickly see itself going from growth star to regional also-ran,” he added.

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27 Comments

  1. I won’t call myself an expert in economics, but the road for prosperity for the Philippines would be investing in infrastructure. This would include a modern shipping dock, rail system, trucking system (better roads) an other ways to transport goods.

    All of this would facilitate a global manufacturing base that could provide jobs for unskilled labor and eventually start pulling the whole economy forward.

    It’s a tall order that requires years if not decades of investment.

  2. yeah, what else? the philippines is going to go bankrupt, or be wiped off the map… blah blah. so BS and company holds the supreme right to carry the country into glory. get it over with, and now sow unity among our fellow men. let us be a disciplined, country loving, fellow Filipinos loving, and democracy loving citizens. let’s do our part in the next coming chapter.

  3. PAID ADS!! This is what this article is all about. ECONOMIC SUCCESS STORY OF THIS DNP (DO NOTHING PRESIDENT)!! MY GULAY. HOW can you call it an economic success when this administration failed to establish a strong industrial base? Where are the big industries that employ people? NONE! Philippines biggest exports are OFWs (from DHs to professionals) and BANANAS!! RAPACITY, GREED and CORRUPTION are the legacy of this presidency!!

  4. Why in Aquino administration there are many debts as in trillion so how to cope up with it….that is impossible! If you say economic growth the lessen of debts are expected so why it increases….there’s secret loan, how’s that! PUKANAN!

    • Chino Alvarez on

      Well even before the Aquino Administration the debt of the Philippines is on trillions of dollars. Bumababa pa nga ngayon. So before you say something please try to read the facts. Besides kahit ang pinaka mayamang bansa sa mundo (United States) ay mayroon din utang na higit na mas malaki kaysa sa atin.

  5. MAYVELIN U. CARABALLO, next time make a little research work to check your figures, OK? instead of cut and paste just to meet your deadline. what a waste of print space.

  6. LOL…A rose is a rose is a rose is a rose and the writer of this piece is an OBVIOUS YELLOW ROSE a.k.a yellow gangsters.

  7. Nobody and even the so called economic experts can correctly guess what the future is. What this London based research group conclude are speculations and will not be taken seriously. How can they be correct when Duterte have yet to present his economic programs. Baloney.

  8. pedro somoroy on

    hi mayvelin:

    u write good fiction. how will u explain the prosperity davao is enjoying? how will u explain the 2 big sm stores? the hotels that charges 7000 pesos a night? and lately the san miguel ecozone on a 2000 hectare property with a private airport and wharf?

    you are implying that if duterte wins, everything will be gone and we start again from zero.
    dont worry, we can always secede from the philippines if u dont like us. mindanao provides more than 50% of the gross domestic product the philippines has. we will not miss you.

    • Pedro when did you cross the border. Pinas needs foreign investors for your economy. are you blind.

  9. Juan T. Delacruz on

    President Aquino is leaving the economy in much better shape than he found it, and he was averaging 6.3 percent of gross domestic product growth over the past 5 years.
    This is a very true statement, and the economy only looks good on paper when someone is doing a statistical analysis on economy based on Gross Domestic Product (GDP) alone. This is not going to convince a fairly ignorant person like myself, that the Philippine economy have progressed during the Aquino Administration. GDP is only an indicators, such as finished goods and services produced in the last five years, and it does NOT tell the whole story.

    Can we also mention some of the areas that increased? First and foremost, is the population; it is getting out of control and it seems like we need a lot of external help to alleviate some of the pain and sufferings because of poverty. This area I would say cannot be blamed to the Aquino Administration, but rather to Roman Catholic Church, the Catholic Bishop Conference of the Philippines. Shame on these Bishops! We are no longer living in the Biblical Times, nor in the Roman Empire era.

    Criminalities, such as illegal drugs and political corruptions are rampant. So many lives have lost and families were broken because of drugs. Elected politicians, appointed cabinet members, justices, judges, governors, mayors, you name it, have their own “DISKARTE” to make extra income, and they don’t care whether the society or the government will suffer the consequences of their doings. My personal conclusion would be : The Aquino Administration is a total FAILURE.

  10. The Filipino people future and destiny are all in their hands and reach, if they fuck up, they’ll certainly pay for it dearly in chaos, poverty crimes and corruption will linger and continue to hard up their lives so be it.

  11. marx perfecto garcia on

    haka haka lang yan , just a figment of your imagination. give the man a chance to show his worth.

  12. Sonny Dungca on

    Let us pray hard for God to save the Philippines from this Satanic Duterte! He must NOT win !!!!!!

    • Duterte is winning the race and whether you like him or not he is going to lead this country. Change is coming and inevitable.

    • Sorry. It is God’s will for Filipinos to be led by Duterte.
      He is the leader that we need, the Unifying Leader.
      He might not be that righteous, but God qualifies him to be one.
      This is the mandate of the nation.
      It is the voice of God.

  13. Is there any success Philippine economy, what the heck this foreigner is talking about..!?We are still very far in terms of prosperity compared to wealthy nations, Philippines has distorted economic activities and system!!

    • you guys cannot fix your economy in 6 years. you are always complaining and why can’t you do something for your country and not your country will do for you.
      Filipino crab mentality. hahahah LOL

  14. Unfortunately, filipinos mired in poverty during Aquino’s presidency doesn’t give a hoot. The same cycle of elite dispensation failed to address their poverty through unequal distribution of wealth. Wealthy filipinos will shrug off a Duterte presidency if it will not threaten their economic stronghold of the country. But once their oligarchy is being decapitated by Duterte, a rebellion reminiscent of EDSA is not far fetched as they did to the dictator Marcos.

    • roland q. estrada, hwag ka ng tumingin pa sa 30 years ago. recent lang ang ginawa kay erap (btw i did not vote for him and will never vote for him). these oligarchs and their a & b class clique, the members of the 3 lettered business groups, some catholic priests with the aid of 3 lettered spy agencies of foreign gov’t who have stake here did erap in with cooperation from arroyo. they tried to do it with arroyo but then vp did not agree with their terms and conditions kaya nasilat ang hyatt10

  15. There are so many overseas economic consultancy or the like who buy’s the PNoy administration line of lying what is the truth about what is going on in the Philippines. Now amount of forecast will they know what really is happening on the ground here, in this country, if they want an accurate narrative. It is not because of PNoy why there is an improvement, as alleged, of the economy. It is Arroyo’s credit, not PNoy.

  16. There is really no such thing as economic miracle. It is just the OFW remittances and BPO revenues are steadily rising. Remove that two from the equation, the economy will be in a deep hole. The PH economy still remains a consumption driven economy care of the middle class. Aquino has to thank them for it, not the other way around.

    Second, Aquino is lucky that his entire term coincided with the bull market fueled by quantitative easing.

  17. Yes the economic success story only belongs to select few oligarch, corrupt politicians. Most of them got rich and the poor people of the Philippines got nothing but double talk from these government officials.

    • there is no silver bullet to fix your economy in 6 years. you should give credit to Pnoy and open your eyes and don’t be ignorant.. ok