&l;div class=&q;yiv5662153262MsoNormal&q;&g;That&a;rsquo;s a massive construction &l;span&g;plan&l;/span&g; that is expected to drive the country&a;rsquo;s growth for years to come&l;span&g;,&l;/span&g; and create jobs for the Philippines labor force.&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;Early this week, President Duterte appointed &l;span&g;political ally Benjamin Diokno to head of the country&a;rsquo;s central bank, &l;/span&g;&l;span&g;Bangko Sentral ng Pilipinas (BSP).&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;&a;nbsp;&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;That&a;rsquo;s &l;a href=&q;https://www.wsj.com/articles/philippine-president-rodrigo-duterte-goes-his-own-way-with-central-bank-appointment-11551773032&q; target=&q;_blank&q;&g;unusual&l;/a&g; for the Philippines and any modern democracy, where the tradition is for neutral appointments. &l;/span&g;&l;span&g;And i&l;/span&g;&l;span&g;t could mean the end of the independence of the country&a;rsquo;s central bank, and the paving of easy money in the form of low interest rates and runaway government deficits.&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;&a;nbsp;&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;At least that&a;rsquo;s the interpretation of financial markets that have been &l;a href=&q;https://www.cnbc.com/2019/03/07/philippines-duterte-makes-benjamin-diokno-bsp-central-bank-governor.html&q; target=&q;_blank&q;&g;unsettled&l;/a&g;&a;nbsp;by Diokno&a;rsquo;s appointment.&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g; &l;img class=&q;size-large wp-image-19598&q; src=&q;http://blogs-images.forbes.com/panosmourdoukoutas/files/2019/03/koyfin_20190307_074447710-1200x600.jpg?width=960&q; alt=&q;&q; data-height=&q;600&q; data-width=&q;1200&q;&g; Philippines Equity Shares &l;/div&g;
&l;div&g;&l;span&g;&a;nbsp;&l;/span&g;&l;/div&g;
&l;div&g;&l;span&g;For years, an independent (BSP) &l;/span&g;&l;span&g;has been a big asset for the Philippines economy. It provided the macroeconomic conditions to let the Philippines economy grow at rates that parallel those of China.&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;&a;nbsp;&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;High growth rates, in turn, helped elevate the country&a;rsquo;s standard of living.&a;nbsp; The Philippines&a;rsquo; per-capita GDP&a;nbsp;was last recorded at an all-time high of $2,891.36 in 2017, according to&a;nbsp;&l;/span&g;&l;a href=&q;https://tradingeconomics.com/philippines/gdp-per-capita&q; target=&q;_blank&q; rel=&q;noopener noreferrer&q; target=&q;_blank&q;&g;&l;span&g;Tradingeconomics.com&l;/span&g;&l;/a&g;&l;span&g;. That&a;rsquo;s well above the average of $1,627.98 for the period 1960-2017.&l;/span&g;&l;/div&g;
&l;div&g;&l;span&g;&a;nbsp;&l;/span&g;&l;/div&g;
&l;div&g;&l;span&g;If it comes true, the end of BSP independence could change the game for the Philippines economy. It could bring back macroeconomic instability in the form of soaring government deficits, and inflation--one of the country&a;rsquo;s old villain&l;/span&g;&l;span&g;s&l;/span&g;&l;span&g;.&l;/span&g;&l;/div&g;
&l;div&g;&l;/div&g;
&l;div&g;&l;/div&g;
&l;div&g; &l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;To be fair, inflation has been coming down recently. Consumer prices rose at&l;/span&g;&l;span&g; 3.8% in February of 2019, down from 4.4% in the previous month.&l;/span&g;&l;/div&g;
&l;/div&g;
&l;div&g; &l;img class=&q;size-large wp-image-19599&q; src=&q;http://blogs-images.forbes.com/panosmourdoukoutas/files/2019/03/koyfin_20190307_074402835-1200x600.jpg?width=960&q; alt=&q;&q; data-height=&q;600&q; data-width=&q;1200&q;&g; Philippines CPI &l;/div&g;
&l;div&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;That&a;rsquo;s thanks to restrictive policies of BSP last year. But the situation could change if BSP&a;rsquo;s independence is compromised, and the new leadership shift&l;/span&g;&l;span&g;s&l;/span&g;&l;span&g; from a restrictive policy &l;/span&g;&l;span&g;of fighting&l;/span&g;&l;span&g; inflation to an accommodating policy that will bring it back.&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;/div&g;
&l;div&g;&l;span&g;Inflation will add to the country&a;rsquo;s other problems &l;/span&g;&l;span&g;-- l&l;/span&g;&l;span&g;ike corruption, which is getting worse, according to&a;nbsp;&l;/span&g;&l;a href=&q;https://www.forbes.com/sites/panosmourdoukoutas/2017/01/26/dutertes-philippines-is-getting-more-corrupt/#68c168b45a7f&q; target=&q;_blank&q; rel=&q;noopener noreferrer&q;&g;&l;span&g;Transparency&l;/span&g;&l;/a&g;&l;span&g;&a;nbsp;International. Then there&a;rsquo;s &a;nbsp;&l;/span&g;&l;span&g;the &l;/span&g;&l;span&g;ongoing drug war, which continues to divide up the country.&l;/span&g;&l;/div&g;
&l;div&g;&l;/div&g;
&l;div&g;&l;/div&g;
&l;div&g;&l;span&g;And there are Duterte&a;rsquo;s South China Sea flip-flops, which raise rather than reduce the prospect of war in the region.&l;/span&g;&l;/div&g;
&l;div&g;&l;span&g;&a;nbsp;&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;Inflation &l;/span&g;&l;span&g;--&l;/span&g;&l;span&g; together with social unrest, corruption, and violence &l;/span&g;&l;span&g;-- &l;/span&g;&l;span&g;has&a;nbsp;suspended Philippines economic progress before, and it will do it again, if they aren&a;rsquo;t addressed effectively.&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;&a;nbsp;&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g;&l;span&g;That&a;rsquo;s why investors have every reason to be concerned &l;/span&g;&l;span&g;with&l;/span&g;&l;span&g; Duterte&a;rsquo;s unusual choice for a central bank chief.&l;/span&g;&l;/div&g;
&l;div class=&q;yiv5662153262MsoNormal&q;&g; &l;/div&g;
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