South China Sea: Philippines says ‘not turning against’ Beijing, economy doing well despite maritime feud

Economic Planning Secretary Balisacan said there was no attempt to sideline Chinese investors even as the two nations increasingly engaged in diplomatic stand-offs
His remarks came as GDP in the three months through March grew 5.7 per cent from a year earlier

South China Sea

Bloomberg

Published: 3:28pm, 9 May 2024

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The Philippines said geopolitical tensions with Beijing have not affected the Southeast Asian nation’s economy and the government is still willing to work with Chinese investors.

“There doesn’t seem to be any indication at all that these issues have remarkable adverse effects on the economy,” Economic Planning Secretary Arsenio Balisacan said on Thursday, shortly after the government reported first-quarter growth of 5.7 per cent, below a 5.9 per cent expansion seen in a Bloomberg survey.

Tensions between the Philippines and China over their competing claims in the South China Sea have escalated in recent months. The Philippines last year dropped Chinese financing for three railway projects because funding was not provided, Balisacan said.

“We are not turning against China,” Balisacan said. “I don’t think there is any attempt at all to disadvantage Chinese investors in the Philippines, particularly the private investors, just because we have these issues in the West Philippine Sea,” he added, using Manila’s term for the South China Sea.

Gross domestic product in the three months through March grew 5.7 per cent from a year earlier, the Philippine Statistics Authority said on Thursday.

While the latest data point to the resilience of the Philippine economy, which posted the fastest expansion in Southeast Asia last year, more signs have emerged that interest rates at a 17-year high and sticky inflation are taking their toll on domestic activity. Consumption, which accounts for more than 70 per cent of output, rose 4.6 per cen last quarter, the slowest growth post-pandemic.

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Chinese floating barrier blocks entrance to Philippine ships at South China Sea flashpoint

Last quarter’s GDP would likely convince the Bangko Sentral ng Pilipinas, which delivered the most-aggressive monetary tightening in two decades to tame inflation, to keep the key rate steady at 6.5 per cent at its meeting next week.

Government spending increased by a mere 1.7 per cent in the first quarter, while investment climbed by 1.3 per cent versus 11.6 per cent in the fourth quarter. Elevated prices of major food items and the heatwave caused the slowdown in consumption, Balisacan told a briefing in Manila.

Still, Balisacan was sanguine over growth prospects, forecasting a faster expansion in the current quarter that will enable the Philippines to meet its growth target in 2024, unless the government’s gains in fighting inflation are reversed.