Investor sentiment unaffected by war on drugs

President Duterte’s controversial policies, including the bloody war on drugs he waged at the start of his administration, barely made a dent on foreign investor sentiment and the economy as a whole prepandemic, according to debt watcher Fitch Ratings.

“When this government came to power in 2016, there were always concerns about the President’s war on drugs and how that will affect FDI (foreign direct investment) and domestic investment as well in the Philippines. But we didn’t really see much of that,” Fitch associate director for Asia-Pacific sovereign ratings Sagarika Chandra told a webinar on Tuesday.

Chandra said FDI in recent years sustained a gradual year-on-year increase, although inflows to the Philippines still lagged behind most of its neighbors.

“We didn’t see the economy being affected in any significant way—growth continued to be strong. So I think that that issue is not showing up in the numbers, it’s not affecting the economy,” Chandra said.

On the upside, Chandra noted that the government was committed to passing the remaining packages of the comprehensive tax reform program while also rolling out the ambitious “Build, Build, Build” infrastructure program.

Unlike other countries that canceled big-ticket projects amid the COVID-19 pandemic, the Philippines is pushing through with infrastructure development, according to Chandra.

However, the health and socioeconomic crises inflicted by the pandemic would shrink the Philippines’ gross domestic product (GDP) by 8 percent this year, Fitch’s projections showed.

The Philippine economy is expected to recover beginning the second half of 2020 such that it will rebound with 9-percent growth next year, Chandra said.

The projected economic growth of the Philippines in 2021 will outpace the GDP expansion of its Asean neighbors, Fitch’s forecasts showed.. —Ben O. de Vera INQ