Sickest man of Asia

Sickest man of Asia And there it goes – the Philippines under Marcos 2.0 is again facing one of its most challenging periods, just a few nightmares away from the crisis that hounded the first Marcos regime or the pandemic era.

It seems we aren’t just back to being the Sick Man of Asia. We are even sicker than before, afflicted by a malaise that has crippled this nation of 117 million, no thanks to corruption, the incompetence of our leaders and dirty politics.

Just last year, observers were labeling Thailand as the Sick Man of Asia, but the situation here makes us feel that we are even sicker than our neighbor.

Our third quarter growth says it all: the economy grew by just 2.1 percent, even slower than the revised 2.4 percent in the second quarter and the four percent recorded a year earlier. This brought growth for the first nine months to 2.5 percent.

And yet the numbers only confirm what our people have long been grappling with – an extremely difficult economic tide. Ask around and everyone’s feeling the hard times. This is because of skyrocketing prices of food and transportation, as seen in the latest scorching hot inflation numbers – 7.8 percent in October from 7.2 percent in September; the lack of jobs for millions of Filipinos and among our latest batch of graduates and the crippling corruption that has stalled big-ticket infrastructure projects.

This massive corruption in flood-control projects has dampened infrastructure spending, which in turn meant fewer jobs are being created, leaving the economy crawling at a snail’s pace.

Stagflation

The warning signs are everywhere.

Citi said the Philippines can no longer deny it is in stagflation: a situation of high inflation, slow growth and high unemployment. Small businesses have closed shop. People are staying home instead of traveling locally – the latest horrendous Undas traffic in Metro Manila is a testament to this. Bankers have warned of slowing credit growth as interest rates remain elevated.

The Marcos administration insists that this is due to the US-Israel war on Iran, which has squeezed oil supply, translating to higher local pump prices which have made just about everything more expensive.

This is true, but the difference perhaps is the lack of an adequate government response.

Our neighbors in ASEAN obviously handled the crisis better.

Their third-quarter numbers say it all:

Vietnam’s economy grew by 9.95 percent; Indonesia, 5.47 percent; Singapore, 5.4 percent and Malaysia, 5.3 percent.

Their response, of course, did not happen overnight.

Vietnam had long prepared to become a major manufacturing and export hub, benefiting from foreign investments. It has made the environment more attractive for investors and in the process, diversified its production base. This has become a major growth driver.

Malaysia, again beating us by miles and miles, has a well-established semiconductor and electrical and electronics industry, benefiting from the global technology and artificial intelligence investment cycle.

Of course, Singapore has a very efficient and responsive government.

As for us, we are dependent on imported fuel, so when supply is problematic, we get badly hit. Investors shy away because of corruption and our politics continues to dampen overall confidence.

Economic Secretary Arsenio Balisacan said three factors explain our weak growth:

First, high food and energy prices constrained household spending, which grew by 2.4 percent compared with 2.9 percent in the previous quarter.

Second, agriculture contracted by 4.8 percent as tropical cyclones and the enhanced southwest monsoon disrupted production. Palay and corn output fell by more than 17 percent, reducing rural incomes and adding to food supply pressures, Balisacan said.

Third, investment remained subdued, he said.

Public construction declined for the sixth consecutive quarter, although its contraction eased to 15.1 percent from 33.4 percent.

And with an anemic economy, private construction also barely expanded. Investment in durable equipment fell by 7.8 percent.

Urgent action

The latest figures should be a wake-up call to the Marcos government, especially to the country’s economic team.

The people need to see that the economic team is on top of the situation and that this government is doing everything it can to improve our situation.

Balisacan himself recognized that the 2.1 percent third quarter growth calls for urgent action to address the bottlenecks holding back investment and implementation, and restore stronger growth.

“First, we must get investments moving again,” he said.

That won’t happen unless we rid the bureaucracy of all the cobwebs. Investors are still having a hard time securing permits for projects, especially in the provinces.

He also said the government must accelerate infrastructure implementation while strengthening accountability.

“Infrastructure creates employment today and raises productivity tomorrow,” he said.

It is therefore critical to pass the budget on time, but we cannot afford another corrupt budget. The Senate must make sure that the final version excludes the questionable provisions flagged by budget experts.

Third, Balisacan said we must strengthen food and energy security. Early identification of supply gaps should guide targeted trade measures, he said.

On the energy emergency, Balisacan said the Department of Energy has identified its priorities as accelerating planned power projects, ensuring reserve capacity and working with international partners to safeguard fuel supplies.

Clearly, the situation is bad and the economic team must race against time to arrest it. The Sick Man of Asia is back, InsiderPH said.

Unless things change, we might be the Sickest Man of Asia for a long time.

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