The island nation of the Philippines is at a crossroads. The Presidential election scheduled for May 2022 holds the key to a complete economic recovery of the country that has been impacted by the coronavirus pandemic.
Running for elections this time are candidates with niche supporters. The front-runner is Ferdinand ‘Bongbong’ MarcosJr., son of former president Ferdinand Marcos. The other contenders are current vice president Leni Robredo, Manilamayor Francisco ‘Isko’ Moreno Domagoso and retired boxing icon Manny Pacquiao.
With the effects of the pandemic still raging in the form of slowing growth, election-related spending is expected to boost growth. Beating its own forecast, the 2021 GDP growth for the Philippines stood at 5.6% as against the government’s 5-5.5% estimate. For 2022, the country is looking to clock GDP growth of 7-9% on the back of the election momentum and higher vaccination rates aiding full reopening.
Following the election results, the new government is expected to announce whether the policies of outgoing president Rodrigo Duterte will be continued.
WHAT’S AT STAKE?
Investors are watching these elections for the recovery signals. The poll promises of Ferdinand Marcos Jr. are also beings crutinised closely considering that his father is the late Philippines dictator Ferdinand Marcos.
Recent opinion polls showed that Ferdinand Marcos Jr. garnered a 44-point lead over Vice President Leni Robredo. This is an 11-point increase compared with the previous poll in early December conducted by independent pollster Pulse Asia.
The inflow data released on February 10 showed that the Philippines’ FDI net inflows in November surged by 96% to $1.095 billion. On a quarterly basis, it grew by 28% compared to $855 million in October. This was the highest in absolute terms since December 2019.
Within the first four to six weeks after swearing-in, the president-elect will announce the policy plans and investment outlay for the near future.
THE BIG PROMISES
Typhoon Rai wreaked havoc in the Philippines in December 2021, making it the second-deadliest natural disaster of 2021 globally. President hopeful Ferdinand Marcos Jr. and his vice-president candidate Sara Duterte have said that unity is the only way to get out of the pandemic-typhoon crisis.
Meanwhile, Isko Moreno has urged voters to not give old-timers a chance and give him a chance instead. Affordable housing, employment, and accessible education, with a special focus on Manila, were his poll promises.
At the other end, former boxing champion Manny Pacquiao is doubling down on his anti-corruption stance, stating that he will jail all corrupt officials once elected. He has also promised a reduction in corporate taxes despite limited fiscal room to do so.
The Philippines is currently in a phase of cautious optimism. In just three months, the country could potentially witness a sea-change in the way policies are framed and businesses are run.
As an ING report points out, election-related spending may indeed support economic activity in the first half of the year as the campaign season peaks in April 2022. A status quo on the current bank interest rates coupled with stable policies to reinvigorate the economy is what will hold the key to the country’s future.
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