The 2024 event with the greatest potential for disruption for near-term Philippine economic growth and development was the rupture of relations between the President and the Vice-President of the Philippines.
The time has come to look back on the year that is about to end and single out the events with the greatest significance for the future growth and development for the Philippine economy. 2024 has not been short of such events.
Without a doubt, the 2024 event with the greatest potential for disruption for near-term Philippine economic growth and development was the rupture of relations between the President and the Vice-President of the Philippines and the resulting breakup of the Uniteam political coalition that brought them to power in 2022.
Given the accusations and invectives that have been exchanged by the camps of the nation’s top two officials, the rupture appears to have become permanent. Because of the negative impression created internationally by the officials’ high-profile squabbling, the Philippines’ drive to obtain a higher international credit rating is bound to have been adversely affected. The terms of President Ferdinand Marcos Jr. and Vice-President Sara Duterte run until June 30, 2028.
2024 also saw the gradual dismantling by the Bangko Sentral ng Pilipinas (BSP) of the regime of comparatively high interest rates it initiated to counter the inflationary trend generated by the COVID-19 supply chain disruptions. Wanting to reduce the cost of consumer and corporate borrowing but anxious to keep the inflation rate within its 2-to-4 percent target, the BSP reduced its overnight borrowing rate (OBR) – the benchmark for commercial bank loan pricing – by 25 basis points (BP) in August.
It cut the OBR by another 25 BP in October and capped its monetary-easing exercise with a 25 BP reduction on Dec. 19. As 2024 draws to a close, the OBR stands at 5.75 percent. The year has seen BSP striving to do a good central-bank job of balancing between the maintenance of price stability and keeping the economy stimulated.
Realizing that the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act of 2018 had failed to generate the hoped-for surge in foreign direct investment (FDI), Congress in 2024 passed a law intended to strengthen and, where necessary, clarify CREATE. The new law—CREATE to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act—offers foreign investors an additional basket of tax benefits and other goodies. Will CREATE MORE be more successful that CREATE? The economy will know in due time.
The result of the Presidential election in the world’s No. 1 economy naturally is watched with great interest in this country, but the outcome of the candidacy of Donald Trump was watched with far greater interest than usual because the erratic personality and unorthodox mindset of the Republican Party’s candidate caused not a little apprehension among Philippines economic policymakers and businessmen regarding the impact of a Trump victory on Philippine-American economic relations.
After the Nov. 5, 2024 election, the apprehension has become a reality. At year’s end the consensus within the government and in the business community appeared to be that Mr. Trump’s victory would not result in a marked change in Philippine-American economic relations, given that business process outsourcing (BPO) and exports of semiconductors and other electronic products – items of high value to the U.S economy – account for the greater part of Philippine-American trade.
A signal achievement of the Executive Department and Congress in 2024 was the passage of two laws intended to delineate and protect this country’s maritime territory. The Maritime Zones Act (Republic Act. No. 12064) defines the Philippines’ maritime boundaries, which encompass this country’s exclusive economic zone (EEZ) and, beyond that, its continental shelf. The Archipelago Sea Lanes Act (R.A. No. 12065) defines the sea lanes and air routes that foreign-registered aircraft and vessels – military and civilian – may use within the boundaries established by the Maritime Zones Act. These pieces of legislation should have been enacted long ago – long before the start of China’s aggressive operations – but late is always better than never.
A roundup of the significant business stories of 2024 would not be complete without mention of an extraordinary climate-related phenomenon that occurred during this year’s typhoon season: four strong typhoons following one another within the span of one month. As usual, government funds that could have gone toward additional infrastructure went instead toward rehabilitation of destroyed structures.
A felicitous note upon which to close this round-up is the issuance of the Presidential ban on Philippine organized gambling operators (POGOs). Mr. Marcos announced the ban in July, with Dec. 31, 2024 as the deadline for the shutdown of the industry. With all of the POGOs illegal side activities, the deadline will have come not a day too soon.
llagasjessa@yahoo.com
