Little over three weeks ago, boffins at BMI Research calculated that six emerging markets have what it takes to outperform in the decade ahead. Now, they’re having serious doubts about one of their picks: the Philippines.
After calling Barack Obama the son of a whore, President Rodrigo Duterte raised his middle finger to Brussels. “I read the condemnation of the European Union against me,” he told officials in his government, according to the Philippine Daily Inquirer. “I will tell them, f*** you.”
Human rights groups say Duterte’s bloody assault on drug pushers and addicts has left up to 3,000 dead. In the process, he’s alienated the same Western allies that earlier this year defended the Philippines’ claims against Beijing in the South China Sea. Foreign investors and economists appear shell-shocked.
While Duterte has long been known as a loud mouth firebrand politician, he’d helped soothe the nerves of investors by delegating all matters of economic policy to his respected finance minister, Carlos Dominguez. In this respect, so far at least, Duterte has kept to his promise, Capital Economics wrote in a Sept. 21 report.
However, the recent string of inflammatory rants “have raised major questions about his judgment,” said the report’s authors, led by senior Asia economist Gareth Leather.
Duterte’s bitter tirades are also leaving the Philippines looking increasingly out of place in BMI Research’s “sweet spot.”
BMI had lauded the Philippines for ticking three key boxes to lead global GDP growth: positive demographic trends, economic reform momentum and being a net importer of cheapened commodities. The country would be among those “making the most substantial gains” in the world’s economic rankings, BMI wrote on Aug. 30.
“We have got some structural factors which are quite supportive for the Philippines,” Lisa Lewin, BMI’s emerging markets economist said in an interview this week. “It’s got a large population of over a hundred million, it benefits from strong remittance flows from expatriate workers, and it’s got a booming domestic services and construction sector.” The economy has been benefiting from a “whole raft of business-friendly reforms” implemented over the past six years.
“But, we have this new president whose remarks have really soured investment sentiment,” said Lewin. “I think we probably will be revising downward our forecast for the Philippines shortly.”
Want to hear about the other five “sweet spot” nations? Listen the Emerging Opportunities podcast with my guest, BMI Research’s Lisa Lewin here.