"The economy is not about to sink as the critics would have us think."
Those who have taken to criticizing the Duterte administration for our “underperforming” economy and have gone on a rampage over the past few months citing “soaring prices”and “runaway inflation” as tell-tale signs of an upcoming slowdown better take a breather and review their figures.
There is reason to believe that prices of basic goods and services, as well as inflation, will abate soon and the economy will remain buoyant even as the global economic outlook leaves much to be desired. Indeed, as the Duterte administration enters its third year in office, the economy is not about to sink as the doomsayers and Duterte critics are half wishing.
In fact, we may just be one of a select few countries which will sustain its growth path and “defy global economic headwinds” as the prestigious daily Business Mirror noted. This is not an empty boast from die hard Duterte supporters but from such prestigious institutions such as the Asian Development Band and international credit watcher Standard and Poor’s.
In a supplement to its 2016 Asian Development Outlook, the regional multilateral funding institution has kept its gross domestic product growth forecast this year and 2019 at 6.4 percent and 6.7 percent, respectively—a pronouncement which cannot be taken lightly by even the most strident Duterte critic. As the ADB report noted, while the growth estimates are lower than the earlier government predictions of 6.5-6.9 percent for 2018 and 7.6-8.0 percent for 2019, “GDP growth will remain accelerating fueled by government and private sector spending under the Build, Build, Build program as the country plays catch up specially in infrastructure works with its ASEAN neighbors. Household consumption will also play a significant role in sustaining the growth momentum.”
Said the multilateral lending institution: “While the GDP growth rate is running below target and the inflation rate rising to 6.3 percent in September, and 6.7 percent in October it has since eased to 6 percent in November for an 11-month average of 5.2 percent. Thus inflation pressures will moderate by next year to possibly an average of 4 percent, paving the way for a respectable growth rate of 6.7 percent by 2019.”
Comparing the Philippine economy with its neighbors in Southeast Asia and even China the ADB demurred that it continues to be ahead of the pack. “For Southeast Asia,” ADB noted, “the average growth outlook remains at 5.1 percent this year lower than the earlier prediction of 5.7 percent.” The good thing about the region is that inflation will ase up and, better still, it will not be significantly affected by the ongoing trade war between the US and China, the two biggest economies in the world.
As for China, while everybody hope that with the “good conversation” between Presidents Trump and Xi Jinping at the G-20 summit in Buenos Aires will ease the trade war between these two countries, the ADB sees China’s growth outlook to remain moderate in 2019. “China’s growth is still expected to be at 6.6 percent in 2018 moderating to 6.3 percent in 2019, “the ADB Outlook Report said, “depending on the rebound of its export trade and higher industrial and agricultural output.”
On the other hand, the Standard and Poor’s Global Ratings assessment report on the global economic situation noted that “global growth in 2019 is expected to be slower due to the anemic performance of the two economic powerhouses, United States and China.. but the Philippines is expected to buck this trend.”
Noted the S &P report: “In broad terms we see the slowing of global growth as both necessary and healthy. We expect the process to be reasonably orderly with recent bouts of economic turbulence that slowdowns are not always smooth. It need not be the case that winter is coming but the global economic upturn in 2017 has clearly passed and we are entering the autumn of the long expansion that followed the global financial crisis, with global economic growth to average 3.9 percent next year.”
In the midst of slowing global economic growth the S &P forecasts that the Philippines will see strong growth numbers compared with most countries. In particular, the credit watcher said Philippine growth will be at 6.4 percent (similar to ADB’s) and will continue to accelerate and may reach 6.6 percent in 2020 and 2021. On the other hand, inflation will ease to 4 percent even as pressures such as the US Fed movements and that of global oil prices may impact on our performance in the new year.
Even with these caveats, it is worth noting that despite all the negativism and fears induced no doubt by Duterte critics, the economy remains on the mend and into an upswing projection. This should give the public reason to calm down and focused on the work to be done.
With the elections coming up we should expect more bouyancy in people’s outlook which may translate for a solid vote for the Duterte candidates—a prospect no doubt which the critics wish will not materialize at all. Good luck to them.