As discussed in the first part of this series of articles, fortune is smiling at the Philippines in this Year of the Wooden Snake. Because of a boom in consumer spending (partly stimulated by the coming May elections); very low rate of unemployment; muted inflation below 3%; lower rates of interest and a depreciating peso, Philippine GDP can expand at 6.5 to 7.0%. The Philippines will be largely exempt from the harmful effects of the protectionist policies of the Trump Administration because of our  rather low export-to-GDP ratio; our being considered a close U.S. ally by two of the most influential economic advisers of President Trump, i.e. Secretary of State Marco Rubio and billionaire Elon Musk; and a very timely campaign of the private business sector to promote Enterprise-based  upskilling, reskilling and retooling of workers which can lead to even a lower unemployment rate.  With all these favorable factors, we can retain our reputation as among the three fastest growing economies in the Indo-Pacific region, together with India and Vietnam.

            As I have often reiterated, a 6 to 7 % growth, however, is not sufficient for us to bring down our poverty incidence to single-digit level from its high of 16 % today.  We have to grow at the upper limit of the Government’s target of 6 to 8 %.  Only a  8% or higher growth will give us the resources to combat mass poverty by spending more  in rural and agricultural development, urban infrastructures and public education (at least 6% of GDP). This present Government has only three years left to build the foundations for accelerating growth towards 8 % or higher.  Thus 2025 is a critical year, half way in the BBM Administration.  It is also a year when we can convert some global threats posed by the MAGA-inspired policies of the Trump Administration into opportunities to grow our manufacturing sector and our exports. The pity is we already could be growing at close to 8% if were able to prevent the massive corruption going on at both the national and especially the local government level (where most of the bribes and rigged public work contracts occur). 

            That is why we have to significantly increase our rate of investment, especially Foreign Direct Investments, if we are to attain an 8% or more GDP growth.  As mentioned in the first article of this series, Japan and the U.S. have expressed their interest in helping to develop the Luzon Economic Corridor (extending from Batangas to Manila to Clark and Subic) as an alternative site for the numerous high-value semi-conductor devices and electronic components factories that their companies have built in China.  Now that President Trump has intensified the US-China trade war, this plan could be accelerated, making possible massive investments in infrastructures like railways, toll roads, power plants and water facilities that could make the Philippines sufficiently competitive with Vietnam that has practically monopolized these relocation moves in the past.  Indeed, as reported in this paper by Justine Table and Aubrey Inosante, there are very concrete recommendations from leading Filipino economists to present the Philippines as an alternative destination for export-oriented firms (especially high-value chips) amid the ongoing trade war between the U.S. and China.  A 10% tariff has already been imposed by the U.S. on imports from China.  Expect other countries with large exports to the U.S. like Singapore, South Korea, Thailand and Malaysia to also suffer from tariff imposition from the Trump Administration.  There will be pressure for some of their exporting firms to relocate their operations to the Philippines because there is very little probability that President Trump will include the Philippines in his protectionist policies since we have very minimal exports to the U. S. and as mentioned above, we are considered a very strategic partner of the U. S. in the Asia Pacific region.

            This year 2025 could be an important watershed in our efforts to dramatically increase the inflow of Foreign Direct Investments.  As I have mentioned many times, we should target anywhere from $15 to $20 billion dollars of FDIs for the rest of the BBM Administration.  This figure is what Vietnam, the most comparable ASEAN economy to the Philippines, has been able to generate in the last 10 to 15 years.   In fact, In 2024, Vietnam attracted close to  $ 30 billion in FDIs.  It is not unrealistic for the Philippines to target half of that amount if we are able to put our act together.  Indonesia’s FDIs are even more impressive at $50 billion last year.    Unfortunately, in 2024 our FDIs, as reported by BSP, totaled only $9 billion, a very disappointing performance.  Now that the global economy is undergoing another major discontinuity as a result of the MAGA policies of President Trump, with a subsequent shaking up of the world economy that favors the Philippines in a major way, we should be confident that our FDIs can experience a  very dramatic jump as the major investing countries all over the world look at the Philippines as an exceptionally attractive country because of our being largely exempt from the tariff war, our young and growing population, our rich mineral resources which are indispensable to the so-called Industrial Revolution 4.0 happening in all the First World economies.  To be continued.