Clear election outcome more vital for market

MANILA, Philippines — Financial markets will be looking at clear election results as Filipinos voted yesterday in what could be the most crucial polls yet as the country tries to recover from the pandemic.

In a report, international think tank Pantheon Macroeconomics said investors and markets would be on the lookout for a clear and smooth result of the 2022 presidential race.

About 65 million registered voters in the Philippines picked their next president.

It is a battle between survey frontrunner Ferdinand “Bongbong” Marcos Jr. and Vice President Leni Robredo who has changed the campaign landscape in the country in the past months.

While a Robredo presidency is more favored by investors and analysts, as polled by Bloomberg, Pantheon chief Emerging Asia economist Miguel Chanco said a Marcos victory is unlikely to translate directly to a bad day for markets.

“What arguably matters more is that election day proceeds smoothly and that the transition in government takes place without a hitch,” Chanco said.

“A ‘bad’ market outcome is an election that doesn’t produce a clear winner, with the presumptive victor then likely to face allegations of electoral misconduct,” he said.

In the 2016 polls, it was a close race between Robredo and Marcos for the vice presidency.

The tight margin compelled Marcos to challenge Robredo’s win several times, but the protest was dismissed in 2021 by the Supreme Court, sitting as an electoral tribunal.

Chanco argued that a smooth transition matters most while a gridlock due to a contested result is the worst-case scenario for the Philippines.

Chanco emphasized that it is obvious why investors and analysts prefer Robredo over Marcos, with the latter carrying a lot of political baggage, a tax evasion case and continuing litigation over ill-gotten wealth that his family amassed for over two decades.

“Robredo’s campaign boasts a concrete set of specific policy proposals, whereas Marcos is running more on his prior record in the offices he has held,” Chanco said.

“A shock result this time can’t be ruled out, especially when considering the relatively small sample size of electoral surveys in the country, which typically poll just a few thousand people,” he said.

Nevertheless, Pantheon maintained that whoever takes the helm at Malacañang will have the hands tied by pandemic-era scars.

Chanco said the next administration would be preoccupied with repairing the economic damage caused by the pandemic for the past two years, with economic reforms likely to take a back seat.

This is especially true as the economic rebound in the country has been dismal as compared to other Emerging Asia nations.

Forecasts showed that real gross domestic product would remain some 15 percent below the pre-COVID trend by yearend. This compares to Asian peers that may reach up to 95 percent of their pre-pandemic rates.

“Fiscally, the Philippines is also more constrained than its counterparts. The country suffered one of the biggest budget blowouts at the height of the crisis and progress in closing the budget gap has essentially stalled,” Chanco said.

“The labor market also remains fundamentally weak while demand for workers still is very subdued. Consumption, the economy’s mainstay, is likely to stay under pressure, with the sluggish job market, the rebuilding of savings lost since 2020 and, more recently, fast-rising inflation, weighing heavily on spending decisions,” he said.