‘Gathering Storm’ Awaits Arroyo in Last Months in Office and Beyond

A troubled economy, widespread joblessness, human-rights violations, corruption, and political maneuverings are whipping public discontent against the Arroyo regime, warns the Ibon Foundation.


MANILA — Days away from delivering her final State of the Nation Address (Sona) and less than a year from finishing her term, the graceful exit President Gloria Macapagal-Arroyo craves appears to be a tall order for her.

Socio-economic think-tank Ibon Foundation has warned of an “economic and political tumult” occurring this year and beyond, as the country’s economic decline stirs popular discontent.

“The Philippine economy has been especially troubled in the last eight years with historic joblessness, falling incomes and rising poverty despite spurts of economic growth,” said Sonny Africa, Ibon’s research head, during Ibon’s Midyear Economic and Political Briefing last July 15 in Quezon City. “Domestic manufacturing has shriveled to a smaller share of the economy than in the 1950s while agriculture is the smallest in the country’s history.”

“The situation has started to become even worse in the first semester of 2009 with the economy already feeling the adverse effects of the world capitalist system’s descent into crisis in 2008,” Africa continued. “Production, exports and investments are falling, while remittances are slowing despite reportedly higher deployments. Decent jobs are growing scarcer while household incomes and consumption have begun to fall. Meanwhile the government’s measures to deal with the crisis are grossly exaggerated but greatly inadequate. A renewed episode of fiscal crisis is looming, and it promises greater debt burdens, social service cutbacks and pressure for even more taxes.”

Ibon’s research shows that under the Arroyo administration, the Philippines experienced its lowest and only negative growth in the last two decades. Citing data from the National Statistical Coordination Board (NSCB) and estimates by the International Monetary Fund (IMF), Ibon said the country’s gross domestic product (GDP) shrunk 2.3 percent from last year’s fourth quarter to this year’s first quarter. Exports also declined by 18 percent in this year’s first three months – the country’s worst first-quarter performance in at least 30 years, according to Ibon – while the 7.3-percent decline in manufacturing is the worst since 1985 and the 16.5-percent decline in capital formation is the worst since 2002.

Falling foreign and domestic investments have also dragged down growth, Ibon’s research further shows. The foundation cited data from the Bangko Sentral ng Pilipinas (BSP or Central Bank of the Philippines) that shows that net foreign direct investment (FDI) fell by 47.9 percent in the period 2007-2008.

Meanwhile, overseas remittances – the only thing keeping the economy afloat – slowed in the first part of 2009.

There is also an unabated jobs crisis with 4.2 million Filipinos unemployed and 6.6 million more underemployed. Part-time work, Ibon’s research shows, comprises 40 percent of what the government claims as employment.

Arroyo’s Costly Staying Power

Despite increasing public dissatisfaction with the economy, widespread corruption and human-rights violations under her watch, Arroyo has managed to cling to power and “fend off ouster and impeachment campaigns by a very broad united front of opposition,” said Rosario Bella Guzman, Ibon’s executive editor.

“She accomplished this through the standard fare of patronage – pork barrel, kickbacks, government contracts and key appointments – and through authoritarianism rivaling that of the Marcos dictatorship, although still very much calibrated,” Guzman said. “The vast powers of the state were used for quasi-legal maneuvers, political attacks on opposition politicians and big business, and violent repression of the democratic mass movement.”

“President Arroyo’s survival has been the administration’s greatest ‘success’ even as its inability to push charter change (cha-cha) before the end of her term has been its biggest failure,” Guzman added. “The final stretch in its natural term ending in June 2010 is its last chance to push cha-cha while Arroyo is still wielding the powers of the presidency – but even the current pre-2010 cha-cha offensive will likely be thwarted as public opposition mounts. The failure to do this will, at the very least, force it into a rear-guard action of trying to retain a still sufficiently dominant influence in the next administration for a renewed campaign. But the Arroyo clique could also become desperate enough for self-preservation to take more drastic ‘contingency’ measures of emergency rule or some kind of martial law before or upon the scheduled May 2010 elections.”

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