This year's US presidential election and the Philippines' midterm polls next year, among other geopolitical and climate events, pose risks to near-term economic outlook here and abroad, according to the Washington-based Institute of International Finance (IIF).
"Political uncertainties and policy missteps in key emerging markets could dampen growth prospects; for example, general elections in the Philippines and Chile and legislative elections in Egypt and the Czech Republic could create uncertainty around economic policy directions, potentially deterring investment," IIF managing director and chief economist Marcello Estevão and economist Jonathan Fortun said in a Sept. 19 report.
In the case of the Philippines, the midterm elections in May 2025 for national and local executive and legislative officials would likely reflect the electorate's sentiment on the current administration's performance midway into the six-year term of President Marcos, who won overwhelmingly in 2022.
Globally, "the US general election in November stands out as the most significant political event of the year," the IIF said.
"The outcomes of this election could have far-reaching implications for both domestic and international policy, influencing everything from trade relations to military engagements," the IIF pointed out, referring to the close battle for the US presidency between Democrat candidate and current Vice President Kamala Harris and Republican bet and former president Donald Trump.
In general, global geopolitical tensions "remain elevated, shaped by ongoing conflicts in the Middle East, the protracted war between Russia and Ukraine, and a noticeable cooling in relations between Western democracies and China," the IIF noted.
"These developments are occurring simultaneously, adding layers of complexity and uncertainty to the global landscape. In such a volatile environment, political events gain heightened importance," the IIF added. A recent survey among Philippine business leaders showed that geopolitical uncertainties keep the majority of them awake at night.
Beyond geopolitics, the IIF said that in emerging economies like the Philippines, "downside risks are particularly acute."
"Many countries are vulnerable to external shocks, such as fluctuating commodity prices or sudden shifts in global investor sentiment, which could trigger capital outflows and currency depreciation" among emerging markets, the IIF warned.
Adding to these woes are climate-related risks seen by the IIF as a "substantial threat" to global economic prospects next year.
"More frequent and severe natural disasters could disrupt economic activity, particularly in regions heavily dependent on agriculture or vulnerable infrastructure, such as South and Southeast Asia. Efforts to transition to a low-carbon economy may also create transitional challenges, including energy shortages or increased costs for energy-intensive industries, impacting both developed and emerging markets," according to the IIF.
The Philippines is among the world's most vulnerable countries to extreme climate and natural calamities.