China and the Philippines recently traded accusations over the medical evacuation of a Philippine serviceman from a grounded naval vessel in the hotly disputed Second Thomas Shoal in the South China Sea. The incident has sparked renewed worries about potential armed skirmishes in a global artery of trade.
But Philippine President Ferdinand Marcos Jnr was also quick to emphasise the economic dimensions of a major conflict. After a decade of rapid economic growth, the Philippines is facing potential “stagflation” due to multiple headwinds.
Both the ill-conceived US war on Iran and the domestic flood-control corruption scandal, which has hobbled infrastructure projects across the Philippines, have hammered the nation’s economy.
Reeling from record low approval ratings, Marcos is doubling down on attracting multibillion-dollar investments from traditional partners. In particular, he is betting on the newly launched Luzon Economic Corridor, which has Japanese and European support, and the US-led Pax Silica initiative. US President Donald Trump is expected to sign a framework agreement for Pax Silica during a visit to Manila next month.