UK THINK TANK GIVES ‘COMPETENT’ ECONOMIC TEAM A CHANCE

After warning of a potentially disastrous presidency under Ferdinand Marcos Jr. for an economy still reeling from its pandemic-induced slump, London-based think tank Capital Economics made a turnaround, praising the President-elect largely for “picking competent economic managers.”

In a May 27 report where it noted that Marcos was taking the “right steps,” Capital Economics senior Asia economist Gareth Leather and Asia economist Alex Holmes cited Marcos’ nomination of current Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno as his finance secretary.

As finance chief, Diokno would be the new administration’s chief economic manager.

Diokno also served as President Duterte’s budget secretary, from 2016 to 2019, a position he also held under former President Joseph Estrada.

‘Same playbook’

Estrada’s socioeconomic planning secretary, Felipe Miranda, will take over Diokno’s unfinished term as BSP governor.

“The appointment of two technocrats who have spent most of their careers in government roles, suggest that the new president is following the same playbook as President Duterte, who delegated management of the economy to competent technocrats,” Capital Economics said.

The announcements “should help ease the concerns of investors” who were “unnerved” by the rise of the son and namesake of the late ousted dictator, it said.

Marcos also nominated former Socioeconomic Secretary Arsenio Balisacan to the same post he held as country’s chief economist under the late President Benigno Aquino III.

The incoming administration will have former University of the Philippines president Alfredo Pascual as trade and industry secretary.

Earlier doubts

Back in February, Capital Economics said the Philippines would have an underperforming economy under a Marcos presidency, citing the then presidential candidate’s lack of a detailed platform.

“He has refused to participate in the traditional preelection debates with the other candidates. We know nothing about his plans to help the economy recover from the pandemic, on fiscal policy or how to improve the business environment,” Capital Economics said in a Feb. 11 report.

A day after the May 9 elections when Marcos and his running mate, Sara Duterte, trounced their opponents with a landslide, the think tank gave an unsolicited advice to the incoming president.

To manage the economic recovering from its pandemic slump, it said that “Marcos would do well to follow in Duterte’s footsteps by delegating the management of the economy to competent bureaucrats.”

In its postelection report, Capital Economics said Marcos was expected to sustain the ambitious “Build, Build, Build” infrastructure program as well as closer ties with China, which Mr. Duterte initiated.

Infrastructure spending could provide an “important boost” to economic prospects for the country, the report said.

“There is little doubt that the Philippines would benefit from upgrading its infrastructure, which is rated as among the worst in Asia,” according to Capital Economics.

Infrastructure spending would likely increase public debt, but the country was “well-placed” to deal with that, it said.

Besides, Capital Economics said, despite the 37 percent share of government debt in the gross domestic product in 2019, which rose to 58 percent in 2021 due to the pandemic, the proportion was still “much lower” than for much of the 2000s and spending on debt interest also was “far lower” than in the past.

It added that closer ties with China were “likely to be quite small, especially given the risk that a pivot toward Beijing could jeopardize the country’s more important economic relationship with the US.”

Capital Economics said that his election victory “puts Marcos in a powerful position,” worrying potential investors.

“Given his family background and his chequered political career to date, there are concerns among investors that his election will fuel corruption, nepotism and poor governance,” it said.