Inclusive

The opening of Congress, highlighted by the delivery of the Chief Executive’s State of the Nation Address, has always been a highly politicized event. This is mainly because the leftwing groups habitually organize large marches to protest a speech they have not even heard.

The rituals of protest have a long tradition. In 1970, student radicals assembled before the old Congress building to express their disagreement with then President Ferdinand E. Marcos. A riot broke out as Marcos was leaving the building and as demonstrators pressed toward the presidential car, shoving a mock coffin at Marcos.

That was the start of a wave of violent protest actions in the streets of Manila subsequently called the First Quarter Storm. Student Power was a global wave during this time, animated primarily by objections to the Vietnam War.

When martial law was imposed in 1972, resulting in the closure of Congress and the banning of radical student organizations, the violent protests accompanying the Chief Executive’s appearance before the joint session of Congress ended. The traditional confrontation between the President and the radical groups promptly resumed when democracy was restored and elections for Congress were held in 1987.

Since the restoration of the traditional State of the Nation Address over three decades ago, the leftwing groups never let the opportunity pass to mount a huge demonstration to air their own version of what ails our society. Much of that alternative version rests on discredited nationalist views about how the economy should be developed.

The debate between the mainstream market-oriented approach to development and the old-line nationalism that offered an autarkic alternative has become a stale one. Notwithstanding, the leftwing groups observe the traditional day of protest with a certain religiosity.

On Monday, we expect the same slogans chanted in the streets. They will largely ignore the massive gains our economy has achieved over the past few years. Those real achievements explain the massive public support for the present leadership.

More and more, those who insist on rehabilitating obsolete economic orthodoxies will find little resonance among our people.

Growth strategy

There is much President Duterte may crow about the nation’s economic performance during the past three years.

Despite the setback caused by the delayed approval of this year’s budget, causing our growth rate to drop to 5.7% in the first quarter, our economic growth is expected to bounce back in the succeeding quarters. BSP Governor Benjamin Diokno raised the possibility the economy could even achieve a 7% growth rate by yearend. A lower inflation forecast and accelerated public investments in the infra program makes a recovery in growth highly likely.

Even if the Philippine economy grows at just over 6%, we will continue to be a growth center in the region. We could match China’s growth rate as the economic superpower struggles with the effects of its trade war with the US.

In the last few months, we were treated to a steady stream of good economic news.

At the start of the year, S&P upgraded our sovereign credit rating to BBB+. That is the best rating we have ever achieved. It is just a notch below A-grade rating. This is testament to the excellent fiscal discipline exercised by Duterte’s economic team.

The improved credit rating will make borrowing cheaper for both government and the private sector. This should improve prospects for even more quality jobs in the next few years.

Later this year or early 2020, the Philippine economy will graduate to upper middle-income country status. This will happen years ahead of the original schedule. While this will exclude us from some official development assistance, it will deliver a comforting signal to the global investment community.

Both official figures and the self-rated poverty reported by polling organizations show a significant reduction in poverty incidence. This should soon reflect in improved consumer and business confidence.

The centerpiece of this administration’s economic strategy is the ambitious infrastructure modernization program. After years of investing only half of what our neighbors invested in infra, we have matched the regional average last year with economic investments running at 5.2% of GDP. The administration commits to raising this to 7% of GDP by 2022.

The investments made in infra are not only highly visible, they are also strong stimulants to expanding the domestic economy. Whatever vagaries there may be in a global economy expected to head to a slowdown this year, the economic investments our government is making will continue domestic expansion. It is the best antidote to a possible global recession.

A stronger peso and lower inflation rates will keep the domestic economy humming. In turn, this will make our people more optimistic. That is key to political stability.

Efficiency

The President may cuss all he wants as long as his economic team expertly delivers on the economic program that seeks inclusive growth and lower poverty.

When Duterte assumed the presidency, poverty incidence stood at 22.5%. His explicitly stated goal is to bring this down to only 14% by 2022. His legacy will rest on how close he gets to that vital measure.

The infra program will make our economy more efficient and therefore more competitive. Over the medium term, we should be able to hold our own in this most dynamic region.

Better infra will mean our producers can deliver their produce to market at lower costs. It means consumers will pay less for logistics than they did previously.

There can be no better way to lift our people from poverty that an efficient domestic economy. On this aspect, the Duterte presidency delivers best.