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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 80,574 77,076 71,400 43
         
GNI per capita
 US $ 1,080 1,020 1,050 135
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 071 - (29/01/10)


 "It’s the politics, stupid"!
The global economy is showing tentative signs of recovery and the business sector in the Philippines is becoming more optimistic about prospects for the coming year. But as has been the case so often in the past, the end result will depend on the political environment and the omens for a peaceful and orderly transfer of power are not good. With domestic consumption the prime driver of growth, the Philippines is a minor player in the global supply chain other than in a few niche market segments. As a consequence it was spared much of the turmoil evident in more open Asian societies such as Japan, Taiwan, Singapore and, to an extent, South Korea. The government has been quick to point out that this insulation prevented the country from sliding into recession last year. As far as it goes, that is a true statement, except that left unsaid was that the Philippines was performing more like Bangladesh than an emerging Asian tiger. Economic growth last year looks to have come in at around 1.1 per cent. But with the population growing at twice this rate, the implication is that the poor are becoming poorer. Local pollster, Social Weather Stations has reported that in its latest surveys more than 50 per cent of respondents rated themselves as “poor” and almost 40 per cent rated themselves as “food poor” which means that they had suffered involuntary hunger at least once during the survey period. The economy might have done better had it not been for two super-typhoons that ravaged the country and destroyed much of the crop as well as taking many lives. The farm and fisheries sector grew by only 0.37 per cent last year – missing both its original target of 3.8 per cent growth as well as the more modest revised target range of 0.5–1.5 per cent. While each typhoon was described by President Arroyo as a “once in a lifetime” event, the fact remained that two such events occurred within weeks of one another. The increased frequency of extreme weather events predicted to occur as a result of atmospheric warming is already a fact of life in the Philippines and will have to be factored into future projections Fortunately, other areas of the economy fared slightly better. Remittances held up despite early fears of a contraction and actually rose by four per cent to exceed US$17 billion for the first time ever. Net portfolio investment rose by US$388 million after falling in 2008 spurred by overseas investors taking advantage of low asset prices. Some 76 per cent of the total inflow went into traded securities, with another 21 per cent going into peso denominated government securities. Consumer price inflation last year was a relatively benign 3.2 per cent and although forecast to rise slightly as the economy rebounds it is expected to remain in a manageable range and below five per cent. Mercantile trade too appears to be picking up. After contracting for 13 straight months, exports have started to show signs of life. Exports began to shrink in October 2008 as the extent of the global malaise started to sink in. The biggest monthly decline was recorded in January 2009 with a year-on-year drop of more than 40 per cent. The tide began to turn in November 2009 when exports grew by 5.1 per cent from a year earlier to $3.69 billion. Whilst full-year results are not yet available, total exports for the first 11 months of 2009 had dropped by 24.6 per cent from the same period a year earlier. The end of year outcome will be slightly better. Manufactured goods represented 88.3 percent of export receipts and went up in aggregate value by 6.8 percent to $3.05 billion in November. Agro-based products earned $145.43 million – a decrease of 22.7percent. Receipts from mineral products reached $143 million, rising by 11.4percent. Electronics items accounted for 58 per cent of the total. Three countries – the United States, Japan and the Netherlands – accounted for 44 per cent of all exports. This is a little worrisome since consumer spending in both the United States and Japan remains sluggish and recovery in those economies is expected to be slow. Europe may fare a little better but if exports are to be given a real spurt, then the Philippines needs to do more in key emerging markets such as China and India. Minerals are the obvious growth area to watch. The sum of all this is that for 2010, the economy is expected to do better than in 2009 and recent growth estimates put expectations in the range of 3.5–4.5 per cent. This brings the country back in line with historic norms but remains well below the levels needed to make a significant impact on poverty reduction. With the country now in election mode and with suspicions over the intentions of President Gloria Macapagal-Arroyo, the country once again appears set for a period of instability until leadership questions are settled. There are disturbing signs that President Arroyo will not go quietly and indeed may be setting the stage for a failure of the elections and a clinging-on to power. The nationwide polls are scheduled for May 10 with a new president, vice president, senators and congressional representatives scheduled to takeover the reins of government from June 30. Technically speaking, the country should now be entering a period of caretaker governance, but President Arroyohas shown scant regard for precedent. The latest issue to surface surrounds the appointment of a new Chief Justice of the Supreme Court. The incumbent, Justice Puno, reaches the statutory retirement age in May of this year. Under the Constitution the president is barred from making any appointments within 60 days of leaving office – so-called “midnight appointments” – as will be the case when Justice Puno steps down. This means that the power to appoint a new Chief Justice should be left to her successor. Yet members of her own political party are now calling for this constitutional requirement to be waived “in the interest of peace and stability” so that the country is not left bereft of a Chief Justice. To all except those in government, this is seen as a further transparent political ploy to stack the Supreme Court. If she is able to do so (and flout both the law and history in the process) then she will have her own people in all 15 Supreme Court positions. With a friendly Supreme Court, it will be easier for her to stem the expected flow of law suits once her immunity from prosecution lapses, and indeed to obtain compliance on any other measures where she needs a friendly court. At the time of writing, this particular issue is still being played out. There are ten candidates in the running for the presidency and the favourite at this stage is opposition senator Beningno “Noynoy” Aquino. In number two position is another senator and property tycoon Manuel “Manny” Villar. Also running is Senator Richard Gordon, ruling party candidate Gilberto Tedoro and now – wait for it – former President Estrada. A condition of his pardon by President Arroyo was a solemn and publicly given undertaking not to ever again run for public office, but former President Estrada has broken his word. He applied to the Commission for Elections (COMELEC) for a ruling on whether he could run or not, and the COMELEC ruled in his favour on grounds that as he had not completed a four-year presidential term, the constitutional provision barring a former president from seeking re-election did not apply. With his entry into the race, he is already running as third favourite and this may be just what Malacañang Palace wants to happen. He will certainly siphon off many of the votes that otherwise would have gone to Aquino making the outcome of the election (assuming it is held), more difficult to predict. When asked why he had chosen to run rather than to throw his support behind another opposition candidate, his reported response was “Why just be a ‘kingmaker’ when you can be the ‘king’ yourself?”

This statement in itself sums up politics in the Philippines – enjoy the spoils of office and public good be damned! It is a depressing state of affairs. Estrada did much to debase the presidency with his “midnight cabinet” of drinking buddies and his not-so-private trysts with young movie starlets, and the country let out a collective sigh of relief when he was deemed to have “vacated the presidency” despite no letter of resignation. There were high hopes that then Vice President Arroyo, in assuming the presidential mantle would usher in a new era of prosperity and real growth for the country. Such was not to be. The cure proved to be much worse than the problem. President Arroyo has had nine years in office due probably to rigged election outcomes in the 2004 election, especially in the southern province of Maguindanao controlled by the warlord clan of the Ampatuans who delivered a decisive vote in favour of President Arroyo in an area where her main rival had much greater popularity. The clan elders are now in detention and facing trial for the worst ever massacre of a rival political group, which shocked a country largely inured to political violence. At least 57 people were ambushed and arbitrarily executed on November 23 (See December 2008 report). Mayor Andal Ampatuan Jr. has pleaded not guilty to 41 counts of murder filed against him. While the trial is proceeding under tight security, news that the Ampatuans were being detained in relative luxury in a special compound, with servants attending to them, catered meals and access to their cell phones instead of in a normal detention centre has led to fears that even with the overwhelming brazenness of their actions, they will at the end of the day receive no more than a slap on the wrist. The involvement of the Armed Forces of the Philippines as well as the Philippine National Police is under scrutiny for their complicity in the murders; they were at best enablers and at worst co-conspirators. It has been established already that members of the National Police and Armed Forces of the Philippines were present at the killing fields; what is uncertain still is their role. That the unthinkable happened, underscores the culture of impunity that has been the hallmark of the Arroyo presidency. As one newspaper editorial described the situation recently:“... under President Macapagal-Arroyo’s watch, corruption has risen to unprecedented heights (or lows, ethically speaking) in the scale of the amounts stolen, brazenness of the thievery and the shamelessness of the subsequent alibis, the sheer number of the people expecting bribes at every level, and the unearned swagger by which the loot is flaunted. At this stage, it is wrong to focus only on the economic costs of corruption, or to see it mainly as a moral issue. Corruption goes to the very heart of why Philippines democracy doesn’t work. Corruption’s hidden costs are just as deadly as its seen costs. Is it any wonder that scepticism is rampant? Until and unless the Philippines fixes its politics it will continue to fall behind the rest of Asia. But the elite all have their units in Sydney or Vancouver (or in the case of the Arroyos – Spain), so why should they care?

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