Bernardo M. Villegas
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Unbiased View of Philippine Economy

           Now that campaigning is in full swing for the May 9 elections, it will increasingly be difficult to find local pundits who can have an unbiased view of the strengths and weaknesses of the Philippine economy.  Political opinions will, wittingly or unwittingly, color assessments of the performances of various sectors of the economy.  That is why I am glad I just received an independent view of prospects for the Philippine economy in 2016 from one of the most respected   analysts of Asian economies.  I am referring to Dr. Jim Walker who is the founder of the Hong Kong-based think tank ASIANOMICS.  He has been following the Philippine economy for at least the last twenty years.  His latest report (February 2016) is entitled “Philippines Cruise Control:  Good Management, Solid Record.”

          Looking beyond May 2016, Dr. Walker is of the opinion that “regardless of who wins in May, one of the main legacies of the current Aquino Administration will be its adoption of systems and processes that have cleaned up national Philippine politics in a way that was unimaginable just a decade ago.  That alone has been worth the market’s rerating.”  Dr. Walker has been “overweighting” the Philippine stock market now for at least the last two years. 

          As a very facts-based analyst, Dr. Walker comes out with hard evidence to support his bullish forecasts of the Philippine economy.  He compares the yearly increases in car sales among Indonesia, Thailand and the Philippines.  Since January 2014, the Philippines has outperformed the two other large car markets of the ASEAN.  Then he uses other metrics to support his sanguine views:  “There are other signs of Philippine domestic economic health:  internal tourism flows, low commercial property vacancy rates, consistent low consumer price inflation, fiscal deficit undershoots on the back of healthy tax receipts and strengthening investment spending.  These are strongly supported by two external success stories—overseas contract worker (OCW) remittance flows and the export-oriented business processing outsourcing (BPO) services sector (not all services are non-tradable).  In 2016 it is estimated that these two sectors will be worth US$25 billion each in money flows, the equivalent of 17% of GDP.”

          Having monitored the Philippine economy since at least the EDSA revolution, he  witnessed the massive corruption that tragically marred the post-Marcos Administrations to one degree or another.  That is why we have to assign a great significance to his observations of how the present Administration has improved governance:  “Moreover, there is no doubt that the country has benefitted greatly from a stable hand on the tiller since 2010.  While President Aquino’s economic achievements might be less than we would have hoped for—the private-public partnership (PPP) initiatives have been too slow in the awarding and there has been no attempt to reform the constitution to make foreign direct investment easier—there is no question that he has cleaned up the system and made it much harder for any successor government to repeat the corrupt excesses of the preceding Estrada and Arroyo administrations.”

          Being a consummate financial analyst, Dr. Jim Walker lavishes the highest praise for our macroeconomic managers:  “…despite our criticism about the pace of project awards, the government has proven itself to be fiscally prudent at a time when markets reward debt conservatism with lower interest rates and higher ratings.  The Philippines now has an abundance of both and is headed towards even more ratings upgrades.  In this respect, Bangko Sentral ng Pilipinas (BSP), probably the best central bank in Asia, has to take a bow.  As a side effect, government is also subject to increased external scrutiny—another reason to be confident that the next president will be held properly to account.”

          Let me add my two cents’ worth of reasons why I agree with Dr. Jim Walker that the next President—whoever he or she may be—will have very limited freedom of movement to perpetuate corrupt practices.  There are the Statement of Assets, Liabilities and Networth (SALN), which helped the Aquino Administration to impeach a Chief Justice of the Supreme Court; the very strict implementation of the Anti-Money Laundering Act (AMLA); the abolition of the pork barrel and the Disbursement Acceleration Program (DAP) of the Office of the President; and the instruments available especially to the millennials of exposing every move of our leaders through Facebook, Twitter and Instagram.  As long as both the business sector and civil society will be very proactive in using these anti-corruption instruments, a return to massive corruption can be prevented in subsequent Administrations.  The greatest challenge to the next Administration is to unleash the numerous infrastructure projects that have languished over the last four years for lack of political will and managerial competence on the part of key players in the Department of Transport and Communication. For comments, my email address is