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Politics overshadows growth in the Philippines
Updated: 2003-12-29 06:59
MANILA:
As the Philippine na-tional elections set for May draw closer, political uncer-
tainty is expected to overshadow better economic growth.
Higher
consumption linked to election spending should help boost economic growth from
4.9 per cent to 5.8 per cent in 2004, compared to an estimated 4.2 per cent this
year, the government said.
"It will be one big fiesta for the first few
months" as candidates essentially try to buy the support of 40 million Filipino
voters, Economic Planning Secretary Romulo Neri said.
If the huge sums
were instead used for investment or to create jobs, "it would mean a more
progressive country," according to Neri.
However, political uncertainty
will dominate the next few months as the upcoming national elections draw nearer
and investor fears have been heightened by surveys indicating the apparent
front-runner in the presidential race is movie star Fernando Poe Jr, a
highschool dropout with no experience in public service.
"The major
factors that have been dampening sentiment are non-economic - basically
political (concerns), peace and order," said Cecilia Tanchoco, an economist with
the Bank of the Philippine Islands.
Without such political concerns, the
outlook would appear to be improving for the Philippines, which is expected to
benefit from an upturn in the developed countries, particularly its main export
markets, the United States and Japan, economic experts here
said.
Recently resigned Philippine Finance Secretary Jose Camacho warned
the nation must undertake massive reforms if it wants to take advantage of
opportunities offered by the worldwide economic recovery.
Camacho said
the country was in a fiscal crisis, its level of debt could become unsustainable
and the current political system is not equipped to solve the
problem.
Likewise, the International Monetary Fund maintains much needed
reforms have to be enacted by the Philippine Congress to allow the country to
reach a comfortable level of debt to gross domestic product (GDP) ratio and
attain its target of a balanced budget by 2009.
The government said its
budget deficit this year is likely to be under the 202 billion peso (US$3.65
billion) target, equivalent to 4.7 per cent of the projected GDP and an
improvement from the 5.2 per cent in 2002.
The Philippine central bank
expects a modest growth of 4.5 per cent in 2004 based on considered factors like
the prevailing political uncertainty, relatively high oil prices, and a possible
wage increase.
With the heavy debt burden, about one third of the 82
million Filipinos living in poverty, an unemployment rate in double-digits and a
high birth rate of 2.36 per cent, the country has been lagging behind its
neighbours such as Malaysia, Thailand and Viet Nam in economic
growth.
The Philippines, like many other countries in the region, was hit
hard by overseas developments in early 2003, such as the Iraq War and the
outbreak of SARS, said Ernesto Pernia, a senior economist of the Asian
Development Bank.
Local problems also affected the economy in the second
half of the year, among them a failed mutiny in July by some 300 disgruntled
soldiers to topple President Gloria Macapagal-Arroyo which was ended peacefully
within 24 hours. Fears of another mutiny have continued to
fester.
Congress, meanwhile, became absorbed in corruption allegations
against Arroyo and an opposition-led attempt to oust the Supreme Court chief
justice, ignoring vital and much-needed reforms.
The Philippines is
indeed faced with great opportunities to turn its economy around in 2004, while
politics remains the top priority among other challenges to the
economy.
(Xinhua)
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