THE upcoming May midterm elections has medium to low impact on the country’s overall economic health and financial market conditions, an international think tank said.
In its Global Event Risk Calendar released just recently, Moody’s Analytics, the research arm of Moody’s Corp., assigned a “medium” economic importance to the upcoming general elections in May.
The events were ranked according to key domestic economic and market risk, with “high” having the largest impact and “low” with the least impact.
In terms of financial market risk, the think tank gave the elections a “low” risk.
This is slightly different from the country’s neighbor, Indonesia, which is also holding its general elections in April 2019. Moody’s Analytics assigned “medium” to both economic importance and financial market risk to the elections in the country.
Moody’s Analytics economist for the Philippines Katrina Ell explained to the BusinessMirror the rationale behind the ratings.
“We attached a medium economic importance because politics has the ability to influence and alter the economic outlook in Southeast Asia, including the Philippines,” Ell said.
“There are a number of positions being contested at the May elections, including all seats in the House of Representatives and 12 seats in the Senate, so we’ll be keeping watch for potential economic impacts, mostly around policy-making,” she added.
A “low” financial market risk rating has been given to the upcoming Philippine elections, meanwhile, due to its nature.
“The election is occurring mid-way through the Presidential term, and usually, we don’t see much of a financial market impact unless the Presidential position is up for contention,” Ell said.
Earlier this month, Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo said the “unavoidable interaction” between economics and politics is usually a “very important but often overlooked” aspect of policy-making.
“Political issues can potentially cause a systematic grit on the wheels of policy-making and alter their intended outcomes,” Guinigundo said.
“Similarly, suboptimal economic policies can potentially fuel discontent among the public, which could lead to adverse political events that can at times have widespread and enduring effects on the broader economy,” he added.
The country is expected to hold its 2019 general election on May 13. On that day, 12 seats in the Senate of the Philippines will be up for election, as well as all seats in the House of Representatives and all provincial, city and municipal level positions.