It’s a sign of economic stability when the country’s economic managers and monetary authorities join together in a virtual pool statement of confidence in the current state of the economy.
Their figures may not always jibe with one another, but this time around they appear to be singing in unison.
In a major effort last week, our economic managers and monetary authorities joined together in assuring investors that the country’s macroeconomic fundamentals remain solid despite the tirades of President Duterte against US President Barack Obama, UN Secretary General Ban Ki-moon, and the European Union over their criticism of his all-out war against illegal drugs.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. led the way with a gung-ho speech before bankers, traders, brokers, fund managers, and underwriters on Thursday.
Tetangco’s message was straightforward and clear. The Philippines is in a relatively strong position compared with many advanced, as well as emerging, market economies.
Tellingly, he pointed out that the Philippines has had 70 consecutive quarters of positive gross domestic product (GDP) growth since 2009.
The country’s GDP expansion accelerated to 7 percent in the second quarter of the year from 6.8 percent in the first quarter on the back of a strong boost from election-related spending.
This brought the average GDP growth to 6.9 percent in the first half of the year or closer to the higher end of the 6 – 7 percent target set by economic managers.
On the other hand, inflation remained manageable, averaging 1.5 percent in the first eight months of the year – well within the 2 – 4 percent target set by the BSP.
“The strengths of the Philippine economy are plentiful, in contrast to other key emerging economies elsewhere. Domestic demand conditions are supported by solid private household consumption and investment; buoyant business and consumer sentiment; and adequate credit and domestic liquidity,” Tetangco said.
Finance Secretary Carlos Dominguez 3rd, for his part, contended that the Duterte administration’s economic pronouncements anchored on its 10-point socioeconomic agenda have been clear and consistent from the very beginning.
“The Duterte administration is loud and clear in its message. If one is able to see through the noise created by negative headlines, he may have better and comprehensive understanding of the exciting, positive changes that are ahead in the Philippines,” Dominguez said
Not everyone sees things the same way. S&P Global Ratings earlier said there would be no higher rating for the Philippines over its next two-year review period amid the country’s lower middle-income economy, as well as rising uncertainty surrounding stability, predictability, and accountability under the Duterte administration.
The debt watcher kept the Philippines’ credit rating at ‘BBB,’ with a stable outlook. The rating is one notch above investment grade.
S&P noted that President Duterte has a strong focus on improving “law and order,” which has allegedly resulted in numerous instances of extrajudicial killings since he came to power.
“We believe this could undermine respect for the rule of law and human rights, through the direct challenges it presents to the legitimacy of the judiciary, media, and other democratic institutions,” the rating agency said.
In our view, the whole question boils down to international and national confidence in the program and policies of President Duterte.
More than any Filipino President in recent years, Mr. Duterte has the exceptional opportunity to preside over an economy that is surging, that has solid fundamentals, and a nation that enthusiastically supports him.
If the President can make all the facts mesh together, he could lead in building a truly strong and inclusive economy.
He could preside over the creation of the greatest number of jobs in the span of one presidential term.
This cannot happen of course, if the President steps on his own message of change with hyperbolic and angry statements that alarm rather than inspire support.
The better and effective way is to keep our eye always on the ball. We are today the best performing economy in Asean. We can mobilize the capital for the full modernization of the nation’s infrastructure. With a recovery of dynamism in our manufacturing and agriculture sectors, the continued expansion of the economy is assured.