Philippines Waiting in the Wings
Isn’t it always the way when you go to your some kid’s party that’s a friend of your son‘s and you watch the magician? The kids are in awe over pulling some stupid flower out from behind an ear and you sit back and think that they’re young and naïve. You can see how the magician does it. He diverts their attention!
At the moment, it seems like the US is that naïve kid sitting in front of the Chinese magician watching China pull economic growth out from behind their ears and rabbits to chase after (that disappear down holes usually). But while their attention is focused on the Chinese magician, they are missing the assistant! She’s doing far more than they could ever imagine. And, nobody is taking the blindest bit of notice. The Philippines! You’d better watch out! She’s behind you!
The Philippines is the up-and-coming star of Southeast Asia that absolutely nobody, least of all the US, is worrying about. But, hasn’t that been the problem of the US all along? Thinking that they are top of the roost and that they will stay there, just because! The Philippines has been growing faster than China, quietly, down there in the bottom right hand corner all on her own. Gently, gently.
The Philippines is not like Thailand and not like Malaysia. Ferdinand has gone, long gone. The Philippines may still have progress to make (notably in terms of freedom of the press, as it ranks 147 out of 178 countries in the world this year), but it’s a parliamentary democracy. That’s a big difference with China already. Its economy is booming. It grew by nearly 8% (7.8% exactly and that’s 0.1% over China’s) in the first quarter of this year compared with last year’s growth figure! That’s way over the expectation of 6% that had been previously forecast. 2012 saw an increase of 6.6%. Their aim is to reach 8.5% before President Benigno Aquino steps down from office (2016). He may be getting there! Interest rates are low at 3.5% and inflation stands at between 3% and 5%.
The Philippines has increased private consumption and government spending. They are spending while we are cutting back. Or rather, while we are spending what we don’t actually have, just by printing more. God Save Quantitative Easing! Capital formation took a huge leap of 47.7% in the first quarter 2013 as a result of that heavy expansion of domestic consumption. Unemployment still stands high at 7.1%, but that’s probably good news as they will be able to use those unemployed people to expand further in the growing economic climate. Although, they have a fast-expanding population adding 1 million a year on to the 97-million population, which may be a cause for worry.
In March, Fitch Ratings increased their credit rating, while others are losing theirs. The country has been moved from BB to BBB. The only way is up! They have reached investment grade! What’s more, they are little affected by the global economic climate and slowdown at the moment. At least, the impact is minimal on manufacturing in the Philippines, which showed a growth of 9.7% in the first quarter (household appliances, chemicals, communication, transport).
So, the US and the rest of the world, you had better watch out. It’s not a pantomime production for kids, this is real life. You can’t scream she’s behind you this time, turn round and hold your arms out and catch her. It doesn’t work like that except at Christmas for the kids.
The Philippines will be there and China will be there too. We’ll be the ones standing behind them…very soon. And, while we’re watching China, we are forgetting about the assistant waiting in the wings, ready to jump on the stage and take up her rightful position as an economic power that we hadn’t even seen coming into play. It’s that which will hit us all the harder in the future: not being able to see who’s in the wings, because we’re blinded by the Chinese and focusing on just one thing.
Originally posted http://www.tothetick.com/philippines