‘Investments to take a while under new administration’

MANILA, Philippines — Investments into the Philippines may take some time to come in even with Ferdinand “Bongbong” Marcos Jr.’s historic majority win, as the presumptive president has yet to provide a clear economic policy direction for the country.

In its latest economic monitor, international think tank Pantheon Macroeconomics maintained that uncertainty remains over Marcos’ win even after securing a landslide victory in the presidential race.

Pantheon’s Emerging Asia chief economist Miguel Chanco said the inherent short-term political risks tied to any transition in government would subside quickly especially as the election has produced a clear outcome in favor of Marcos.

The Commission on Elections also dismissed the remaining disqualification cases against Marcos that would have stopped him from entering Malacañang.

“The dust from the election should settle fairly quickly, but we reckon that it will still take some time before investment gets going again,” Chanco said.

“Uncertainty over the election is all but over, but ambiguity over Marcos’ economic policy positions is still there,” he said.

Marcos and his camp have yet to lay out their full economic plan for the Philippines. Even during the campaign period, there was no mention of any solid policy direction.

Such a plan is crucial especially as the country continues to deal with the pandemic and the incoming government will face mounting challenges of ballooning debt, still elevated unemployment, and rising commodity prices.

Chanco argued that Marcos’ campaign was devoid of specific proposals and that he offered primarily vague aspirations to create jobs by supporting small and medium-sized enterprises and the agriculture and tourism sectors.

“We are unlikely to get any inkling of the potential policy trajectory until the third quarter, at the earliest, when Marcos’ administration will start to take shape,” Chanco said.

“We maintain, though, that this will be too late to salvage this year’s economic growth prospects, assuming we’re proven right about the temporary – but harsh – brakes likely applied in the current quarter to government spending and investment,” he said.

In another research brief, Oxford Economics noted that Marcos is facing a “tricky balancing act” between supporting economic recovery and containing the country’s swelling fiscal deficit.

Unfortunately, Oxford economists Makoto Tsuchiya and Sian Fenner said Marcos’ fiscal agenda is unclear and that he may lean toward further fiscal expansion, which could lead to credit ratings downgrades and increased risk aversion for the country’s assets.

The economists are expecting some policy continuity including the flagship Build Build Build infrastructure program which they said will bode well for the investment and construction outlook.

“Beyond this, and some emphasis on digital infrastructure, the fiscal agenda is unclear. This is likely to leave some businesses and investors sitting on the fence until the new cabinet is formed and a statement on fiscal policy is delivered, which could take up to seven weeks,” they said.