President Duterte decision to let a good economic team manage the country has so far allayed fears of a disastrous administration, but his personal leadership style “is undermining the Philippines’ prospects,” according to a London-based consultancy.

Capital Economics, in a research note penned by Gareth Leather and Alex Holmes, said that after a year in office, Duterte “has not been the disaster for the economy that some feared.”

ADVERTISEMENT

The economists noted that the President’s best decision was to stay out of the day-to-day running of the economy, delegating this “to his respected finance minister, Carlos Dominguez III, who in turn has pushed through some useful reforms.”

They said Dominguez had lived up to his reputation as a safe pair of hands, and had provided some reassurance to investors concerned about Duterte’s controversial policies

“Dominguez’s other main achievement has been to stick with the previous government’s plans of raising infrastructure spending,” Capital Economics said. “According to the latest budget, spending on infrastructure is set to reach 5.4 percent of gross domestic product this year, up from 4.7 product in 2016.”

“More of a concern, however, is Duterte’s abrasive rhetoric and dictatorial tendencies, which are showing early signs of putting off investors,” the research firm said.

Capital Economics added that the Duterte administration’s achievements so far face the risk of being overshadowed by a string of inflammatory comments and policy changes which “have raised concerns in the minds of investors over Duterte’s judgement and commitment to the rule of law.”

The company said the Philippines’ history showed how poor leadership and political uncertainty could hold back an economy.

“One of the key achievements of Duterte’s predecessor, Benigno Aquino, was the restoration of political stability,” which—helped by improvements in the business environment—helped rev up investment growth and a rise in the country’s low investment rate, Capital Economics said.

ADVERTISEMENT

Subscribe to Inquirer Business Newsletter

Read Next

EDITORS' PICK

MOST READ