Drug war, Islamists 鈥榬ising鈥� risks for Philippines: Moody鈥檚

Protesters burn an effigy of U.S. President Donald Trump riding on a missile with an image of Philippine President Rodrigo Duterte as they tried to march towards the U.S. Embassy in Manila, Philippines, Friday, Sept. 15, 2017. The group is protesting against the alleged increasing intervention of the U.S. military in the ongoing war in Marawi and growing presence in Mindanao. (AP)

MANILA: President Rodrigo Duterte鈥檚 deadly drug war and armed Islamist rebellion pose 鈥渞ising鈥� risks to the Philippine economy, though it should continue to grow robustly in the short term, Moody鈥檚 Investors Service said.
Duterte is battling militants in the southern city of Marawi, while rights groups have accused him of orchestrating a crime against humanity with police killing more than 3,800 drug suspects in 14 months.
鈥淭he re-emergence of conflict in the southern Philippines, as well as the Duterte administration鈥檚 focus on the eradication of illegal drugs, represents a rising but unlikely risk of a deterioration in economic performance and institutional strength,鈥� the credit ratings agency said.
Sound economic and fiscal policies including a focus on infrastructure development balance out political and other risks, it said in a country report released on Friday that affirmed the Philippines鈥� investment-grade credit rating and stable outlook.
But martial law, imposed by Duterte on the southern region of Mindanao to stop the Islamist threat, could be declared elsewhere in the country and upset this balance, it said.
鈥�(A) worsening of the Islamist insurgency in Mindanao... could lead to an expansion of martial law, undermine both foreign and domestic business confidence, and disrupt economic activity in other parts of the country,鈥� it said.
Duterte has said the military campaign in Marawi, which has left more than 800 people dead in a region wracked by decades of Muslim armed rebellion, was on its final stages.
However on Friday Defense Secretary Delfin Lorenzana warned Duterte may also declare nationwide martial law if threatened protests against his rule turned violent or disrupted the country.
Anti-Duterte protests are planned for September 21, the 45th anniversary of the imposition of martial law by the late dictator Ferdinand Marcos, who was ousted in a bloodless 鈥淧eople Power鈥� revolution in 1986.
Moody鈥檚 also cited 鈥渃ontinued uncertainties鈥� over Duterte鈥檚 proposed comprehensive tax reform law that Congress had yet to pass.
鈥淚n the absence of a significant boost to government revenues from the passage of the (bill), the government will likely pare back its plan to aggressively increase its spending on infrastructure,鈥� it added.
The report affirmed Moody鈥檚 short-term 6.5 percent GDP growth forecast for the Philippines this year and 6.8 percent in 2018.