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INTERNATIONAL > East Asia & Pacific

Editorial: Philippine President Marcos needs to learn from father’s mistakes

  • June 29, 2022
  • , Nikkei Asia , 1:33 p.m.
  • English Press

Ferdinand “Bongbong” Marcos Jr., the 64-year-old son of the late Philippine dictator Ferdinand Marcos, takes his oath as the country’s 17th president on Thursday.

 

His desk will be stacked with pressing issues. He needs to decide how to address the South China Sea, amid the U.S.-China tug of war over the region. The Ukraine conflict has pushed up food and energy prices, squeezing the economy. A weak currency adds to the sting.

 

The Philippine economy enjoyed growth of 6% to 7% under his predecessors Benigno Aquino and Rodrigo Duterte. While COVID-19 led to negative growth in 2020, the economy is poised for a 6.5% expansion in 2022, according to the International Monetary Fund, the highest in Southeast Asia.

 

But clouds lie ahead. The peso hovers at the cheapest levels in 17 years against the U.S. dollar. Rising interest rates in the U.S. have narrowed the rate gap with the Philippines, causing money to flow to the greenback. Manila’s expanding fiscal deficit — the result of aggressive infrastructure investment and the need for COVID-19 measures — has also encouraged investors to sell the peso.

 

The Philippines imports most of its energy and much of its food. A cheaper peso fuels the rise in prices. Yet, a substantial interest rate hike risks hampering the economy. Marcos has vowed to continue with infrastructure investment, but the new leader needs to carefully balance expenditures and fiscal health.

 

Earlier in the presidential campaign, Marcos was seen as being friendly to China. But more recently, he has made clear that he will not compromise on territorial issues. For the country to be less dependent on Chinese investment, Marcos first needs a stable economy.

 

Manila should also quickly ratify the Regional Comprehensive Economic Partnership free trade agreement. Congress has been dragging its feet due to opposition from agricultural lobby groups. The new president doubles as the agricultural minister and has been cautious about ratifying the pact. If the country blinks under political pressure and is left behind in the regional trend toward free trade, the Philippines risks losing out on attracting foreign direct investment.

 

Toward the end of Marcos Sr.’s rule, the economy stalled so much that the Philippines was called the “sick man of Asia.” But the country of 100 million has a young average age — just 24 — and is brimming with potential. For Bongbong to tap that potential, he needs to ditch his father’s economic playbook, which saw corruption and special interests drive decisions.

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