Economic effects of Marawi and martial law
There is an ongoing battle in Marawi that started last week between the government forces and the ISIS wannabe, Maute Group. There are already casualties on both sides and some civilian casualties. Evacuation of civilians to Iligan continues as social and economic life in Marawi and the nearby areas have stopped. President DU30 has declared martial law in the whole of Mindanao and lockdowns and checkpoints are in place in four provinces. He also threatened to declare martial law in the rest of the country if the Marawi situation is not contained and resolved.
There are already many opposing views for the necessity of declaring martial law, most prominently by former president Ramos. He believes that the problem can be addressed by the military without the declaration and threat of martial law. Chief Supreme Court Justice Sereno, Vice President Robredo, opposition senators and congressmen, cause-oriented groups, and the NDF/communist parties are also warning of the potential abuses of martial law and do not subscribe to the idea of nationwide martial law. These are the current socio-political situations/conditions in a little over a week and the medium and long-term effects on the economy will be the big problem.
Government economic managers issued statements that this Marawi incident will have little effect on the Philippine economy especially if resolved in a short time. The stock market is holding at its present level and there have been no massive sell downs. They also said that because of the strong macro-economic fundamentals, the country's credit rating will not be affected. Finance Sec. Dominguez opined that Marawi and the whole Autonomous Region of Muslim Mindanao (ARMM), accounts only for .6 of 1 percent of the Philippine Gross Domestic Product, (GDP); and the whole of Mindanao 14 percent of GDP. These support arguments that economic realities do not warrant martial law beyond Marawi, and it would be difficult to convince Congress and the Supreme Court to support martial law nationwide.
Due to the short period of this incident and the hope for early resolution, there are undiscussed economic effects that will be significant as the conflict lengthens and prolongs. Foreign and domestic tourism in Mindanao are already affected as foreign travel advisories have been issued. Domestic travel to Mindanao from other provinces has been curtailed. Airlines already have cancelled and reduced flights to Mindanao areas, as have all passenger vessels by boat or bus. Travel and Tourism accounts for 20 percent of our economy/GDP, and Mindanao takes 5 percent or P150 billion of the P3 trillion contribution of Travel and Tourism. The whole of Mindanao also accounts for 10 percent of our economy, with agricultural production and exports of agri products taking prominence. This is a P1.4 trillion component to our annual GDP which may be at risk if the war in Marawi is not contained and resolved soon enough. The 6.5 percent to 7.5 percent government projection for the growth of the Philippine economy for 2017 will be trimmed to 5 percent if the war will extend beyond 30 days, and this is only medium-term. If this war escalates and stretches beyond 60 days, and martial law is declared nationwide, there will be greater economic repercussions as it will start to affect the domestic and foreign investment components of our GDP. Perception of socio-political instability will defer and discourage investments that we need to increase the investment component of our GDP that have been largely consumer-driven.
As a Filipino living in this country, we hope for the best and will help the government in all its efforts to resolve and end this incident at the shortest possible time. It is however very important that the government makes the right moves and initiatives to gain the people's trust and confidence. It is not the time to make divisive and polarizing actions for the sake of political gains. It is the time to say the right words that inspire and unify the people.
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