Marcos: There’s room for optimism despite economic challenges

MANILA, Philippines — President-elect Ferdinand Marcos Jr. said that his economic team, led by finance secretary-designate Benjamin Diokno, assured him that “there’s room for optimism” amid the financial challenges that the new administration will be facing come June 30.

“We have all heard encouraging statements from the incoming economic managers led by outgoing Bangko Sentral governor and incoming finance chief, Benjamin Diokno, that our new administration will be taking off from sound economic fundamentals,” Marcos was quoted in a statement issued by press secretary-designate Trixie Cruz-Angeles yesterday.

“It will not be an easy road ahead, but we are not without the necessary wherewithal and elbow room to manage the challenges,” he added.

Marcos said that based on a briefer provided to him by his economic managers, “strong fundamentals and bright macroeconomic prospects” give his administration “room for optimism” amid the challenges such as crafting a COVID-19 exit strategy, soaring oil prices, accelerating inflation rate, effects of the war in Ukraine and a looming worldwide food crisis.

Diokno had earlier said that despite COVID-19 stalling the Philippines’ growth momentum, the country is quickly bouncing back and has already “returned to [its] robust growth path.”

Diokno pointed out that the Philippine economy is outperforming its Southeast Asian neighbors, growing by 8.3 percent in the first quarter of 2022, exceeding Malaysia, Indonesia, Vietnam, Singapore and Thailand.

Marcos said that his economic team projected that the Philippines will continue to attract foreign investments with the Duterte administration’s enactment of the amended Retail Trade Liberalization Act, Foreign Investments Act and Public Services Act.

Marcos said that according to Diokno, his administration will be inheriting a “much better” tax system, as the Duterte administration reformed personal income tax and corporate income tax, increased taxes on cigarettes three times, increased tax on petroleum products and imposed tax for the first time on sugar products.

Diokno also supposedly cited a “better state of infrastructure” because of the Duterte administration’s “Build, Build, Build” program.

“During the last six years, the Duterte administration invested heavily in infrastructure under its ‘Build, Build, Build’ program. I call the period 2016-2021 as the Philippines’ Golden Age of Infrastructure, with infrastructure spending as percent of GDP hitting an average of 5.0 percent. In contrast, infra spending as a percent of GDP averaged 1.5 percent from 2001 to 2009 and 2.5 from 2010 to 2015,” Diokno was quoted in the press statement.

“A total of 88 infrastructure flagship projects for completion in 2023 and beyond will be up for the next administration to continue… I am confident that the transition in administration in the Philippines will pave the way for more economic gains for the Filipino people,” Diokno added.

Marcos’ camp said that he intends to continue the economic gains of the outgoing administration.

“Incoming President Marcos has stressed earlier that the present momentum and gains as a result of the efforts of the current administration must be unimpeded, and should be made stronger through the adoption of more creative and innovative ways to further stimulate infrastructure development and create jobs,” the statement released by Angeles yesterday read.

Meanwhile, Albay Rep. Joey Salceda said efforts by the US government to reduce rising inflation amid the prolonged Russia-Ukraine war will take a serious toll on the Philippine economy, especially now that it is slowly recovering from the two-year global pandemic.

“My point is, this is going to be a global storm. Our house is very strong due to comprehensive fiscal reforms and investment and trade liberalization reforms. First quarter growth levels prove that,” Salceda pointed out.

The resident-economist of the House of Representatives also cautioned, though, that “an economic super typhoon like this will still hit us,” and “that will have implications on growth, investment, borrowing costs for the economy.”

“No matter how strong the house is, or how clean the living room is, or how good the cooks are. We will still be flooded outside,” Salceda, who heads the House committee on ways and means, added.

He warned that the country’s economic recovery could be undermined by Washington’s “massive disinflationary effort” to curb the rise in prices of goods and to bring its liquidity levels to its pre-pandemic trajectory.

Salceda is still optimistic though that it is not yet too late for Manila to act decisively.

“We can still fortify the house better, and we can still make sure we have food for everyone when the storm hits. Agriculture is the most important sector in this regard. It will help ensure that, at least, when the crisis hits, everyone has something to eat,” he said.

“It will also help keep prices down while we are still in this inflation stage, and it is a potential economic growth buffer once the disinflation stage begins,” the senior administration legislator added. – Delon Porcalla