The country has managed to stay on its feet through multiple global crises, and while the pace may be cooling.
SM Investments Corporation economist Robert Dan Roces worries that much of the national budget remains tied up in debt payments.
Photograph by Alvin Kasiban for DAILY TRIBUNE
Low inflation are among the bright spots that keep business confidence at a positive trajectory, according to SMIC economist Dan Roces.
Photograph courtesy of Makati Business Club
The Philippine economy is holding its ground, but Robert Dan Roces says that’s no reason to get comfortable. For the SM Investments Corporation economist, now is the time to keep our eyes open — not just on inflation or debt, but on a coming wave of disruption that includes artificial intelligence (AI), shifting global trade dynamics, and a geopolitical landscape that is anything but stable.
“The most important thing to watch out for is the opportunities from this new world. We don’t wanna be lulled,” Roces said in an interview on Straight Talk, Daily Tribune’s online show.
“The economy is in good shape, but the trajectory is slowing. It is still recovering and we are still in the recovery territory.”
The country has managed to stay on its feet through multiple global crises, and while the pace may be cooling, Roces noted that regional peers are experiencing the same. Still, he worries about complacency, especially in the absence of new economic reforms.
“The silence in terms of reforms in the economy is something very telling, in the sense that why fix something that is not broken,” he said. But that mindset, he warned, could be dangerous if short-term stability distracts from long-term vulnerabilities. One of those vulnerabilities is the country’s overreliance on imports.
Imports, not a solution
“Import dependence will not be perfect for us in the long run,” Roces said, framing it not as a crisis but a window of opportunity. “It’s also an opportunity for us to diversify… and reassess where our strategies are.”
He pointed to India, which, despite losing many foreign investors, managed to keep industries afloat through satellite manufacturing sites. He recalled how China’s ability to quickly develop its markets and attract production led to a global trade pivot that left many countries like the Philippines behind.
“We should develop other sectors to attract back what we had before.”
For Roces, it’s not just about bringing factories back, it’s about building the systems to support them. Infrastructure, particularly in logistics, has fallen behind.
“We have to connect and show the investors that we have a perfect port system. Right now, you see the traffic going to the port area.” These weak links in the supply chain discourage investment, even as the country’s location in Asia remains strategically promising.
That promise, however, needs support from government spending — and that’s where Roces sees another gap. Reflecting on this year’s State of the Nation Address, he noted that much of the national budget remains tied up in debt payments.
“Most of the budget is to pay off our debts,” he said. “We are not investing enough in infrastructure.” However, he credited improvements in governance — “We have a better education department and are more responsive.” Roces believes the government has pulled back too much from big-ticket investments that could boost growth.
But the conversation always returns to what lies ahead — and the one thing that could upend traditional economic models: AI.
Roces sees AI as both a threat and an opportunity. While it will not wipe out jobs entirely, he warned that many roles will change, and those who cannot keep up may be left behind.
“We should anticipate AI,” he said. “It will not entirely replace jobs. You need the human elements. What we need to do is to retool them so that they will not be left behind.”
Adding to that complexity is the rising risk of global conflict and supply chain disruptions.
“Second is the geopolitical war. We will get affected because we don’t have lots of manufacturing here,” he said. Without a solid industrial base, the country could be sidelined if tensions escalate in key trade corridors.
To recall, even the Department of Economy, Planning, and Development Secretary Arsenio Balisacan admitted last week that the Philippines is unlikely to achieve its goal of becoming a poverty-free, middle-class society by 2040 if economic growth stays in the single digits.
At the agency’s mid-year press briefing, Balisacan said the Covid-19 pandemic delayed progress under the “Ambisyon Natin 2040” roadmap, which aims for high-income status and tripled per capita income. He noted the target may instead be reached by 2050.
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