Scourge

As the nation welcomed a new year, the terrorists made sure we are reminded they are still there ready to cause mayhem and take innocent lives.

Last Monday, a bomb was set off at the South Seas Mall in Cotabato City. It was not meant to just scare. The improvised explosive device was packed with cut nails and ball bearings. Two shoppers were killed.

Military spokesmen tell us the device had the signature of Daulah Islamiyah, a militant armed faction believed allied with the Maute Group. During the bloody Marawi siege, the Daulah tried to send in reinforcements to help the Maute fighters. Nearly a thousand fighters were wiped out in that destructive battle.

Since the Marawi siege, the entire island of Mindanao has been placed under martial law. Last month, Congress voted to allow another 12-month extension for martial rule.

Martial law enabled our security forces to set up a wide net of checkpoints throughout the troubled island. But that has obviously not been enough to completely stop determined terrorists. The scourge of terrorism is something we will have to deal with for a much longer time.

Apart from the Islamist factions, government forces have had to deal with communist insurgents. Pushed far from the cities, the communist guerrillas have found a convenient base in the hinterland tribal communities.

For decades, these tribal communities managed to avoid the insurgencies raging in the lowlands. Over the past, however, they have been drawn into the bloody struggle between the communist guerrillas and government forces. Once closely bound by their unique cultures, these tribal groups have been split apart and forced to commit violence against their like.

The communist insurgency that tries to establish a base among the indigenous communities robbed them of their innocence and the peace they enjoyed for centuries won simply by being inaccessible. That can no longer be returned now.

Communist guerrillas force tribal warriors to join their ranks. The military, for its part, organized militias to combat communist influence. The indigenous communities have become battlegrounds.

Our security forces were ordered to bring the fight to the enemy. That is easier said than done.

Bringing the fight to the enemy means militarizing the indigenous communities. Without that, the communist guerrilla forces will continue entrenching themselves in the inaccessible villages like they once did among the Cordillera tribes.

There are no perfect choices in fighting militant armed groups driven by bizarre ideologies. They use communities as shields. They take civilian lives when they need to make a point such as we saw in Cotabato City earlier this week.

War is a calamity. Protracted war is a protracted calamity.

Headwinds

Our economic managers seem confident the Philippine economy will maintain a growth rate of over 6% through 2019 despite some “headwinds.”

“Headwinds” refer to the factors that will tend to push back our efforts to grow at a fast clip. These include: an elevated domestic inflation rate; slower global growth; the “normalization” of interest rates as governments move away from the period of quantitative easing; a possible recession in the mature economies; the adverse consequences of a trade war; and an abundance of uncertainty in the international stage.

The biggest uncertainty is the US, under the erratic leadership of Trump. Through the month of December, the New York Stock Exchange swung wildly from meager gains to spectacular losses. The net result was the worst bear market since the Great Depression.

Analysts are forecasting a slide to recession later in the year. A US contraction will be a major contributor to the global economic slowdown.

The trade war between the US and China, despite some hopeful statements made the last few days, has significantly eroded China’s growth and hurt US agricultural exports to the second largest economy in the world. Both the US and China are major export markets for the Philippines. As things stand, our exports are already sluggish.

If the slowdown in China’s growth continues, the Philippines could actually grow faster than our newfound ally. That does not say very much, however. Vietnam is expected to set the pace for the region.

Trump’s tax cuts will likely inflate US debt. In order to keep its trillions in debt manageable, the US must maintain its strong dollar policy. As the US borrows more by floating bonds, they will attract investments that otherwise would have gone to equities in the emerging market.

Ironically, China is America’s biggest lender. Notwithstanding its heavy international lending, China remains vulnerable to a property bubble that could wipe out a few trillion in assets off the board.

Brexit remains a peril for the world economy however it finally turns out to be. Leaving the European Union will almost certainly bring recession to the UK economy. It will hamper trade with the continent and dislocate the financial market that is traditionally London-based. Some of the large financial firms have moved their headquarters to the continent in anticipation of a chaotic Brexit.

The strong headwinds facing our own economic expansion means we will have to grow largely under our own steam. Fortunately, we have embarked on an ambitious infrastructure modernization program that opens a large window for investment flows. This program enables our economic managers to undertake counter-cyclical measures to push growth even in hostile global conditions.

It should be reassuring that our growth prospect remains robust despite the global headwinds.  The real challenge lies in translating plans into actual spadework.