PARDON that cliché but I can’t help it, and it is fearless in the sense of being very preliminary ideas on what to expect of the presidency of Ferdinand “Bongbong” Marcos Jr.
The superstitious part of me says that the stars are in alignment, as I will try to prove so here, for an economic boom on the scale of the first six years of his father’s presidency under martial law during which GDP averaged 6.3 percent — the golden age of the Marcos era.
That forecast may sound preposterous, what with the surge of oil prices globally in the past months and the resulting inflation worsened by the disruption of the global supply chain, and Russia’s war against Ukraine that appears to be torpedoing a post-pandemic boom.
But we can’t dismiss the likelihood of a post-pandemic economic boom, as history — the “Roaring 1920s” after the global 1918 to 1919 Spanish Flu epidemic — had proven that the release of consumer pent-up demand has powerful positive implications.
Also, the economy performed well during President Benigno Simeon “Noynoy” Aquino 3rd’s regime because his predecessor Gloria Macapagal-Arroyo steered the economy out of what has been called the “The Great Recession” or the global financial crisis of 2008 to 2009.
Macapagal-Arroyo’s success created so much business confidence in the Philippines, giving it high marks as an investment destination as its strengths were highlighted. Aquino didn’t really have to do anything but watch foreign and local businesses ramp up the economy.
The version of the 2008-2009 Great Recession is of course the 2020-2022 Covid-19 pandemic that forced businesses around the world to shut down to prevent its spread and slowed down nearly to a halt international trade and travel.
And as happened in 2010 after that global financial crisis ebbed, with the end of lockdowns and restrictions on travel, and ironically — a more efficient logistics systems, the boom in courier service prompted by the pandemic for instance — we could very well see a “Roaring 2020s” here.
Already, the Asian Development Bank forecasts a GDP growth this year of 6 percent (from a negative 9.6 percent in 2020 to the 5.6 percent recovery this year), to rise to 6.3 percent in 2023
BBM actually would owe President Rodrigo Duterte, as much as Aquino owed Macapagal-Arroyo, for the economic growth under his term.
Understated has been Duterte’s excellent handling of the Covid-19 pandemic.
The Virginia-based internet publication The Diplomat more often than not had before been churning out pieces critical of Duterte and pessimistic about the Philippine economy. However, a May 22 article in it by one James Guild, who holds a PhD in international political economy from the S. Rajaratnam School of International Studies in Singapore, was so positive, and reported:
“After Duterte took office in 2016, in every year until the pandemic, the economy grew at a rate of 6 percent or higher. Per capita national income increased by 30 percent from 2015 to 2019, and gross capital formation jumped from 21.3 percent of GDP to 26.4 percent over the same period. That generally indicates more investment activity is taking place, and under Duterte investment conditions have broadly improved, particularly for foreign capital. According to the Central Bank of the Philippines, net foreign direct investment increased dramatically in recent years, from around $100 million in 2015 to $5.3 billion by 2019.”
The article linked his success in handling the economy to his effective management of the pandemic:
“Duterte’s government also responded to the pandemic reasonably well, at least from a macroeconomic point of view, running large fiscal deficits to shore up the health care system, inject stimulus and provide social assistance via a pair of big rescue packages. This prevented the economy from imploding and by the fourth quarter of 2021, gross national income at constant prices had bounced back to $103 billion, only slightly below where it was in the fourth quarter of 2019. Marcos in all likelihood would like to see this momentum consolidated and carried forward, with annual growth returning to a steady 6 percent or above, anchored by capital formation and FDI.”
The Diplomat article wasn’t at all naïve and didn’t see a totally stormless environment:
“Marcos will take office during a time of overall high levels of inflation and monetary tightening in the global financial system. This will likely weaken the currency and make imports more expensive, especially commodities which the Philippines imports a lot of, such as crude and coal, driving up energy prices for consumers. There may also be some shifts in the way foreign capital in the global financial system is distributed, potentially making FDI scarcer than it was during Duterte’s presidency.”
However, the piece emphasized: “Despite some fiscal constraints, there are ways to deal with these issues. All of them, however, will involve competent governance, sound policy-making, and the ability to understand and weigh trade-offs. Whether the Marcos Jr. administration is up to that task will be one of the first big questions of his presidency.”
What makes me optimistic is that BBM’s moves so far shows that we will have that “competent governance and sound policy-making” in the economic management department.
The core of BBM’s economic team — Bangko Sentral ng Pilipinas Governor Felipe Medalla, Finance Secretary Benjamin Diokno, Budget Secretary Amenah Pangandaman — are accomplished academicians, and therefore would be guided by sound economic theory. More importantly perhaps, they occupied key economic-management positions in past administrations, and therefore have that crucial qualification of knowing how the bureaucracy works, how past administrations managed well or managed badly the economy. They are buddies, and therefore would work as a team. There were reportedly strong pressures for BBM to choose other people than these. He preferred those with better qualifications and experience.
BBM has another ace up his sleeve to help him in handling the economy. The big businessman the Yellows had vilified as “cronies” of his father have proven wrong the accusations against them that they are dependent on government favors: They have created the country’s biggest conglomerates since Marcos fell in 1986, among them the late Eduardo Cojuangco’s San Miguel Corp., now mainly owned by his protégé Ramon Ang, the Lucio Tan group, the J.Y. Campos, the Tantocos, Antonio Floirendo.
While certainly not accused of being cronies, include there the families of taipans whose conglomerates grew during martial law, and who do not share the Yellows’ vilification of Marcos, among them, those of the late Henry Sy and George Ty — and of course the defense secretary of BBM’s father, Juan Ponce Enrile, and his trade and industry head, Roberto Ongpin, both on top of huge business groups. Duterte, I think, will ask his Davao tycoons to support BBM.
These powerful magnates will be supporting BBM in a way they have never supported previous presidents before. The heads of these conglomerates now are in BBM’s age cohort, and it seems several of them, like the super billionaire Iñigo Zobel, Kevin Tan of Megaworld and Sabin Aboitiz have been his close friends for a long time. Even the once politically powerful Araneta-Roxas clan — two scions of whom were imprisoned by his father — will likely be BBM supporters, with his wife Louise and sister Irene’s husband Gregorio being Aranetas after all.
BBM can call on these deep benches of tycoons to seek their advice on the course of the economy, or get their support — financial or otherwise — to steer the economy in the way he and his economic managers want.
Come to think of it, there hasn’t been a post-EDSA president as close to such a large group of magnates as BBM. That of course is a huge strength. But it could also be a weakness if they dominate his ears: He should exert efforts to talk to and be with the masses.
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