It seems almost amazing that another year has gone by, just like that! I suppose for people like myself, the years seem to go by even faster the more deeply into senior citizenship we plunge. Our tribe has indeed progressed through our many decades, from excitedly reading the comic pages to apprehensively scanning the obituaries. And our animated, lowered-energy conversations are far less about parties and dating and much more about health issues, surgical procedures, and who among our contemporaries has recently found eternal happiness.
But then life goes on and for the legions of basketball fanatics in our basketball-crazed country, the highlight of this exiting year may have been the recent face-off between Ateneo and UP for the UAAP crown. Lest we forget, however, the year was really filled with many more compelling events including, among others, the ouster of Chief Justice Maria Lourdes Sereno, the closure and eventual rehabilitation of Boracay, the arrest of Sen. Antonio Trillanes IV, the House coup before the State of the Nation Address that led to the unprecedented ascendancy as speaker of former president Gloria Arroyo, the visit of China’s President Xi Jinping, and the return of the Balangiga bells.
From the perspective, though, of the country’s economic aspirations, the latter half of this Year of the Dog was hounded by the onset of the highest inflation rate in recent years and the threat of its persistence. For an administration riding high on its accomplishment of an economy with the highest growth rate in the Asean region, this could have represented a staggering, self-inflicted wound resulting primarily from the incompetence of the National Food Authority leadership exacerbated by the major external factors of spiking fuel prices and strengthening of the US dollar.
But it appears that the administration has weathered the storm for now with a combination of food imports and the passage of a rice tariffication measure accompanied by the fortuitous fall in fuel prices and a moderation of the dollar’s strength. Thus, forecasts of the economy’s overall health for the forthcoming Year of the Pig appear uniformly sanguine, with the World Bank, Asian Development Bank, International Monetary Fund and Standard and Poor’s projecting lower inflation rates from about 5 to 4 percent and relatively robust GDP growth rates of between 6.5 and 7 percent.
With the usual healthy dose of guarded optimism, I would tend to agree with those forecasts for a number of reasons. The government’s infrastructure push should begin to demonstrate more visible and realizable projects. Infrastructure, by its very nature, takes a substantial time between startup and completion, which partly accounts for the perceived laggard implementation of the “Build, build, build” program. Still, President Duterte is absolutely right in asking to meet with the Commission on Audit in an effort to unravel nitpicking regulatory bottlenecks. It would do well for him to also crack the whip on some of his foot-dragging Cabinet departments with the same zeal he seems to reserve for the clergy. Also, election spending will boost consumption as a growth driver while the beneficial aspects of TRAIN 1 (lower personal income tax rates) would finally be more felt.
I believe fuel prices may stay well below $80 per barrel, remittance inflow will remain reliable, and our gross international reserves—which are at the level of about seven months worth of imports of goods and payments of services—still represent enough of an external liquidity buffer to allow the Bangko Sentral sufficient room to manage the value of the peso within reasonable parameters.
Finally, unlike US President Donald Trump, I foresee Mr. Duterte gaining majority control of both chambers of Congress after the 2019 midterm elections. This would conceivably allow him more political space to move his administration’s platform forward. Hopefully, it doesn’t provide an irresistible temptation to ram unbridled federalism down our throats, or all bets are off.
Roberto F. de Ocampo, OBE, is a former finance secretary and was Finance Minister of the Year in 1995, 1996 and 1997.
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Business Matters is a project of Makati Business Club.
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