Elections, politics to hinder economic recovery in 2010

CEBU, Philippines - Despite the perceived growth in the country’s gross domestic product (GDP) this year, the Philippine Institute for Developmental Studies (PIDS) sees the coming elections to hinder a possible upturn in the economy.

“With the elections this 2010, everyone will focus on politicking and no one will mind policies that can sustain economic growth,” said PIDS president Josef T. Yap.

Yap earlier projected a 4.3 percent growth for the country’s gross domestic product (GDP) this year anchored on the lower inflation rate projection that will be at five to six percent this year.

He said that the country has good chances to continue the momentum of its GDP growth from last year due to factors such as the continued growth of our overseas Filipino workers remittances, which remains to be the economy’s growth driver.

He stressed that the slowdown of our export sector this year will not have a direct effect to the country’s economy because we are not as reliant on exports and foreign direct investments (FDIs).

Yap said that the key to our recovery from the global crisis is the strengthening of our fiscal policies that could help rebalance the economy.

“But our problem will lie ahead on 2010 because if the global financial crisis prolongs, and we have not done something about it then we will not have enough fiscal revenue to maintain our fiscal resiliency plan. The decrease in our export sector may permeate the whole economy and this will happen because everyone will focus on the coming elections and will no longer mind policies that can sustain growth,” said Yap.

The government on the contrary, is counting on the coming 2010 elections as a pump priming activity for the economy, which could help it recover from the slowdown experienced this year.

In a news report, Finance Undersecretary Gil Beltran is expecting the upcoming national elections in 2010 to boost the country’s economic growth by 0.5 percent as consumers are expected to spend more during these times.

Beltran said that certain industries such as the printing and publishing, media and the advertising industries will be boosted by next year’s elections which will in turn fuel a possible consumer spending in 2010.

At this early, politicians aiming for the presidential post are already flagging televisions, newspapers and radios and spending millions of pesos on advertisements. 

Meanwhile, opposed from this year’s revised economic growth projection of 3.1 percent to 4.1 percent, the Development Budget Coordination Committee (DBCC) expects the economy to grow anywhere between 4.3 percent to 4.7 percent in 2010.

Beltran said that the country’s exports are also expected to recover by 2010 growing by 4.9 percent from an expected drop of eight to 10 percent for this year while the peso is expected to hit P46 against the dollar next year.

However, Beltran said that the government’s budget deficit in 2010 is expected to hit two percent of GDP or P173.7 billion.

Yap on the other hand also said that at these times of financial turmoil; the government should invest enough on infrastructure and other public welfare programs to avoid possible problematic conditions of the economy especially in 2010.

“The country should invest to have economic growth. The programs and investments should be well targeted towards employing the most people, alleviate supply constraints and must be focused in areas that are likely to be hardest hit by the slowdown,” said Yap.