Philippines is at the center of the game for control of the South China Sea, a vast waterway with many riches beneath. And Philippines President Rodrigo Duterte is playing this game well, with flip-flops that have major players like China, Japan, and America guessing which side he is on.
Meanwhile, each of the three players are racing to provide Duterte with all the “goodies” he needs.
America with military support against a local rebel insurgency. Japan with investments, and China with both investments and diplomatic support — at the place he needs it the most, the UN.
While, Duterte has been very active on foreign policy, he has left domestic economic policy to the country’s central bank, which has engineered a stable macroeconomic environment of low inflation and low debt to GDP ratio.
The biggest beneficiary of Duterte’s “hands on” foreign policy and “hand off” domestic policy, so far, has been the Philippines economy, which is the world’s 10th fastest growing economy in the world in 2017.
That’s according to the World Bank’s latest edition of Global Economic Prospects. For 2017, the Philippines economy is expected to advance between 6.5 to 7.5%. That’s almost twice the country’s long-term growth of 3.68%.
And that’s good news for the country’s financial markets, which have underperformed the markets of the region.
Fund 12-Month Performance
iShares MSCI Philippines (EPHE) 8.69%
iShares MSCI Emerging Markets (EEM) 28.24
Market Vectors Vietnam ETF (VNM) 14.60
Source: Yahoo.Finance.com 11/2/2017
Still, Duterte’s Philippines is getting corrupt and less competitive, according to Transparency International and the Global Competitiveness reports, raising serious doubts as to whether the current robust economic growth rates will be sustained in the future.
Then there’s always the possibility of an “accident” in the region that can draw the Philippines into a situation, something Duterte has been trying to avoid