Everybody, save for some multilateral institutions, is bullish on the yearend report from the country’s economic managers, though that would be several months away. Barring an Intensity 7 earthquake, or Yolanda-scale winds savaging the economic centers, a 6.8 percent GDP growth appears to be a very conservative target. It could be 7 percent or higher. Across all economic sectors, enthusiasm and energy are the operative words.
The projection of the multilaterals of a 6.4 percent growth for this year appears pessimistic.
Even laymen can rattle off the reasons why.
The two-stop shop of the Philippine economy, the acronyms OFW and BPO, have been holding steady, which means consistently growing and defying all the premature prognostications of their entry into regression territory.
Mr Duterte’s big words on a manufacturing renaissance are music to blue collar ears like mine. The “renaissance” is good rhetoric but will not happen in the real world. The drivers are the two acronyms.
The BPO sector is unaffected by Mr. Trump’s nativist and protectionist rhetoric. All his tweets on rescinding trade agreements and bringing offshore jobs back to the US are as faulty as his doomed Trumpcare. The scary part on the BPO issue is India’s efforts to grab the network engineering and tech support jobs from the locals by bidding low. But the hopeful sign is this. After a BPO giant laid off more than 100 network engineers and support staff after an offer from an Indian tech company, all the more than 100 got better jobs, with pay increases of anywhere from P30,000 to P50,000 a month in their new jobs. The room for growth and the advancement opportunities for those with desired skill sets are amazing.
There is no reason to doubt the uber optimistic scenario written by the BPO people.
When the price of crude dropped to $30 per barrel or so several months ago, the scenario laid down by the naysayers was the collapse of the OFW remittances. Our OFWs answered back with steady, if not higher, remittances. Remittances this year will not only be better than last year. Even the hard currency sent via the informal channels not monitored by the BSP are expected to buy anywhere from $1 billion to $2.5 billion higher.
Talk about the indomitable spirit of the Filipino diasporas.
Playing their roles as the gifts that keep on giving to the hilt, the two acronyms boost every sector across the board: retail, real estate, finance, tourism, education and the automotive industry. The predisposition of OFW and BPO families to spend (splurge is the term) is the infectious force that is behind the high level and sustained consumer spending. When the market is vibrant and there are no foolish policies that curb the enthusiasm, sustained GDP growth is the net result.
What truly astounds the outside world is that scoring high on GDP growth (we may be the best performer in Asia this year) has never been the agenda of Mr. Duterte. He is focused on his war on drugs, a bloody, determined resolution to wipe out every drug dealer in his country, and, if the drug addicts got in his way, so be it. Mr. Duterte, in the pursuit of his war, has been scornful of every person and entity that has been critical of his war.
Mr. Obama, Mr. Goldberg and Mr. Ban Ki Moon got the first salvo of Mr. Duterte’s cussing. When they were gone from the scene, it was the bishops and multilateral institutions (UN) and the foreign political entities, (the European Union, for example). In theory, such defiance of the world’s influential political and multilateral institutions is drag on the economy. Yet, the economy is unaffected, as if the Duterte administration were a master of compartmentalization – the tough words of the president are separate from the engine of the economy.
Something along this line is, indeed, what is happening. The economic policies are left to the economic team and Mr. Duterte, other than paying nominal paean to growth, is unconcerned about growth. Mr. Duterte has the fortune of having an economic team that is more orthodox, more conservative than Mr. Aquino’s.
The robust economy, in many ways, is Mr. Duterte’s way of exposing Mr. Aquino’s long play-acting as a so-called “technocrat-wonk.” Mr. Aquino’s leadership, it turned out, had nothing to do with six long years of growth. The combative Mr. Duterte, whose favorite sentence is “I will kill you,” is poised to achieve better growth charts than Mr. Aquino despite his lack of attention to achieving growth.
It turned out that a president can even theoretically do things to harm growth but the theoretical side will still be trumped by fundamentals such as the good showing of the two acronyms, OFW and BPO, the true economic drivers.
It is still premature to assume that, on the issue of growth, Mr. Duterte will score better than Mr. Aquino. But the overall bullishness — amid EJK and Mr. Duterte’s bombastic rhetoric and his lack of attention on economic issues — suggests that it was not Mr. Aquino’s policies and mantra of “GDP, GDP” that drove the growth during his six years in office.
Mr. Aquino just rode on the indomitable spirit of our global diasporas and the inexorable march of the BPO sector into a hard currency – generating tsunami.
Mr. Aquino, as DU30 has clearly demonstrated, was just playacting as a leader. The label “technocrat-wonk” was undeserved.