Ferdinand Marcos Jr.

[ANALYSIS] Marcos has nothing to show at Davos

JC Punongbayan
[ANALYSIS] Marcos has nothing to show at Davos
Our growth this year won't be too hot. In one way or another, the impending global recession will drag us down.

Junket-addicted President Ferdinand Marcos Jr. is headed to Davos, Switzerland this month for the annual World Economic Forum (WEF). And he’ll likely be embarrassing the country there.

In a press conference, Foreign Affairs Undersecretary Carlos Sorreta said that Marcos “will be leading our economic team…and we will present the country’s economic performance, which tops growth in the region, before an audience of international CEOs…”

Unlike most Western economies, the Philippines – and in fact emerging East Asia – will likely dodge a recession in 2023. We’re far from experiencing negative growth anytime soon.

However, our growth this year won’t be too hot either. The Marcos government is expecting a 6-7% growth rate this 2023, but analysts are expecting growth to slow down and settle at a rate lower than that: 5.4% according to the World Bank, 4.4% according to HSBC. In one way or another, the impending global recession will drag us down.

Apart from slower growth, another major headwind for the Philippine economy this year will be elevated inflation.

Although government expects inflation to go down to 2.5-4.5% this year, that doesn’t mean prices will be going down in general. It just means prices will still go up, but at a slower pace. Seeing how fast prices rose over the past year, many commodities will remain out of the ordinary Filipino’s reach.

This year, at the WEF, talks will most likely center on the cost of living crisis worldwide, what with global inflation rising to record highs in 2022. In the UK, Sweden, Italy, Russia, and Poland, inflation has exceeded 10% over the past year, whereas it’s a lot worse in Turkey (64%), Argentina (62%), and Venezuela (156%).

In a survey conducted by the WEF among analysts and experts, the top short-run concern is the cost of living crisis (beating natural disasters and extreme weather events, as well as geoeconomic confrontation).

In the Philippines, inflation sizzled at 8.1% in December, a 14-year high. A large part of that was “imported,” that is, due to international factors like the skyrocketing of global oil prices in the middle of 2022, the weakening of the peso vis-à-vis the dollar (nearly reaching P60 per USD at one point), and the spike in fertilizer prices due to the Russian invasion of Ukraine.

But high Philippine inflation is also a reflection of how the President – who’s concurrently acting as agriculture secretary – failed to rein in agricultural prices nationwide.

Most glaringly, he failed to rein in red onion prices, and his mishandling of that has since become the butt of jokes and memes.

Now, egg prices are also being monitored closely: an egg can now cost P8.7, 45% higher than in the past year. Cooking breakfast staples, like omelet or tapsilog, is fast becoming a luxury for some.

So when asked at Davos what he has done to fight inflation and abate the cost of living crisis, Marcos will likely end up embarrassing himself.

‘Soft launch’

Another potential source of embarrassment would be the planned “soft launch” of Marcos’ pretend sovereign wealth fund, the Maharlika Investment Fund.

Undersecretary Sorreta said, “My understanding is that it will be broad strokes. We have to leave the specifics to the legislation…. It’s going to be the President himself bringing it to the world, the idea that we will be having this [fund].”

Sure, it’s possible to soft-launch something that’s not even done. But Maharlika isn’t even half-baked. There’s no law yet creating the Maharlika fund, and the Senate has yet to come up with its own version, which will be merged with the bill railroaded by the Lower House last December.

Sorreta added, “The WEF is a great venue to do a sort of soft launch for our sovereign wealth fund, given the prominence of the forum itself and the global and business leaders who will be there, and they will hear directly from the President the fundamentals that we have that led us to decide that we should have a sovereign wealth fund.”

What fundamentals are there to brag about? That the government is planning a “sovereign wealth fund” even if we can’t afford it? Despite the fact that the government’s expenses exceeded revenues by P1.23 trillion from January to November 2022? Despite the fact that the country’s debt already reached P13.64 trillion in November, and the debt-to-GDP ratio reaching a 17-year high of 63.7% in September?

Then again, who really cares at Davos?

Some may see the World Economic Forum as a prestigious event (Sorreta called it a “premiere forum” for world leaders in business and government).

But others have criticized the WEF as a highly elitist event that’s well-attended by Western leaders but certainly not representative of the concerns of the majority of people in the world.

Maybe that’s precisely why it’s being attended by Marcos, who’s a member of the Philippine political elite and – based on his (non)performance in his first six months in office – has also been dubbed a “detached” president, prioritizing parties and trips abroad instead of attending to the needs of his people. – Rappler.com

JC Punongbayan, PhD is an assistant professor at the UP School of Economics. His views are independent of his affiliations. Follow JC on Twitter (@jcpunongbayan) and Usapang Econ Podcast.

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JC Punongbayan

Jan Carlo “JC” Punongbayan, PhD is an assistant professor at the University of the Philippines School of Economics (UPSE). His professional experience includes the Securities and Exchange Commission, the World Bank Office in Manila, the Far Eastern University Public Policy Center, and the National Economic and Development Authority. JC writes a weekly economics column for Rappler.com. He is also co-founder of UsapangEcon.com and co-host of Usapang Econ Podcast.