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Mindanao economy in 2016 hinges on external factors that affect growth

By Manuel T. Cayon / Mindanao Bureau Chief

DAVAO CITY—The economic growth of Southern Philippines this year will largely depend on how the global financial turmoil would pan out and where oil prices would settle, according to the Mindanao socioeconomic planning unit.

Mindanao has seen some growing cities like Davao,  Cagayan de Oro and General Santos, but its poor infrastructure and failure to upgrade its raw material exports would be affected by financial slowdowns in three continents.

So far, prices of oil products have been contained in the middle of a brewing political conflict between Saudi Arabia and Iran, two major oil producers where the country source its oil supply, said Romeo Montenegro, chief of investment promotion, international relations and public affairs at the Mindanao Development Authority (MinDA).

The holding out of oil prices would do well for the country’s economy, which is heavily dependent on the commonly volatile oil supply and prices. Still, the Philippines and the rest of the world are hoping that the conflict would not escalate into war that constricts the flow of oil.

More than the financial slowdowns in South Africa, the African continent’s second-largest economy, and Brazil, one of the larger economies in the Americas, the Philippines will feel the effects of a weakened China economy.

“These global issues are external shocks for Mindanao whose regional growths are expected to absorb local disruptions like the El Niño dry spell and the presidential and local elections,” he said.

Montenegro said investments would continue to crowd these cities, but some investors are likely to sit on the fences until the conclusion of the May elections and the new set of political leaders take over.

The Davao and Northern Mindanao regions have been taking turns at occupying the top spot as being the fastest-growing region in the South, and have consistently posted sharp growths at par or even surpassing the average national growth.

Zamboanga City has also rebounded in 2014 after a sharp relapse due to the energy crisis in Mindanao. In 2012, its 12.4 gross domestic regional product was the highest by any of the country’s 17 regions. But it failed to sustain its growth due to the severe power outages.

Overall, Mindanao’s growth path would likely achieve 6 percent or 7 percent this year, Montenegro said, “even with the El Niño.”

“We have to watch out, however, for the external shocks,” he said.



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