On 12 April 2016, the Foreign Service Institutehosteda Mabini Dialogueentitled “The Philippines After the 2016 Elections: Assessing Political and Economic Change and Prospects” at the Benedicto Room of the Carlos P. Romulo Library. Professor David Timberman, Visiting Professor at De La Salle University-Manila, and Mr. Zeno Ronald Abenoja, Director of the Department of Economic Research of the Bangko Sentral ng Pilipinas(BSP), gave their respectiveinsightson change and continuity in the economic and political landscape pre- and beyond theMay 2016 elections.
Professor Timberman talked about developments in the Philippines from the 1990s until the present and the prospects of transformational change from a political perspective. He mentioned that economic growth has been evident in the past 25 years in terms of gross domestic product (GDP), remittances and business process outsourcing (BPO). However, the per capita GDP remains stagnant and the agricultural sector has weakened, hence the persistence of poverty. The country has also seen a relative decline in the influence of traditional elites in areas such as sugar production and logging, and a growing and more diversified business conglomerates. 2012 figures show that only 0.4 percent of all businesses in the country are considered large-scale, making up 64 percent of total value added.Professor Timberman also explained that part of the major socio-economic changes in the county has been the rising number of smaller middle class families who are better educated and are living in urban areas.
On political changes, the government has improved its fiscal and budget management, and has gained some policy victories over elite interests. However, revenue generation is still subpar; and limited change has been achieved on implementing regulatory authority and autonomy of some government agencies. Moreover, no significant change has been apparent on issues such as political dynasties, political parties and quality of election.
For the next administration, he recommended continued and greater efforts on transparency, accountability, and combating corruption. He envisioned the Philippines as a more autonomous and capable state with a higher quality of democracy, and working toward socio-economic transformation.
Deputy Director General Julio Amador III (left) with Professor Timberman and Director Abenoja (right).
On economic conditions, Director Abenoja discussed the current status of the Philippine economy and some key challenges ahead. He stressed that the Philippine economy is in a position of strength to weather global headwinds.The country has seen positive economic growth for 68 consecutive quarters propped up by high domestic demand,robust remittance inflows, strong consumer confidence, and low oil prices.These factors allowed the consistent alignment of economic growth and low inflation.Moreover, the quality of banks’ assets and loans continues to improve, and Philippine banks remain adequately capitalized. To achieve stronger institutions and greater transparency and accountability, the BSP is sustaining its efforts on achieving structural and policy reforms. The following are its policy priorities: (a) maintaining price stability; (b) promoting financial sector soundness; (c) strengthening resilience against external shocks; and (d) advocating inclusive growth.
Despite positive developments in the economy, some key challenges lie ahead. For one, a modest and uneven recovery is expected in advanced economies, while growth in emerging and developing economies will continue to slow down. Volatility in capital flows is also seen as part of the global realignment process as investors take advantage of interest rate differential. Likewise, falling oil prices is a bane for the country since many Filipinos are working in oil-exporting countries in the Middle East. To overcome these challenges, Director Abenoja noted the importance of having an ample monetary policy space to keep inflation within target and a sufficient fiscal space for stimulus spending. For the Department of Foreign Affairs, he suggested that the Philippines can reap huge benefits from promoting economic diplomacy.