The Philippines has been a bright spot in an otherwise unstable global economy. The booming S.E. Asian nation has been unleashing its economy within the last few years, posting strong growth rates, even as its neighbors slow and struggle to cope with dropping exports to North America and the European Union. Fueled by a burgeoning service industry and a growing domestic market, the Philippines has been attracting more foreign investments and interest from multinational corporations. Still, the onslaught of the powerful Typhoon Bopha will test the country’s strength and resilience.

Typhoon Bopha

The Philippines has been a bright spot in the global economy, growing some 7.3 percent in 2010, and nearly 4 percent in 2011. It is estimated that the economy will grow at least 5 percent in 2012. FDI is also estimated to have grown by 10.6% in the first half of 2012 to USD .9 billion, up from .8 billion in 2011. This compares with a 35% decrease in North America over the same time frame.

The ability of the Filipino government to respond to this crisis will offer proof of whether or not it has truly reformed its wasteful and inefficient government. The Philippines may have dodged a bit of a bullet, however, as the powerful typhoon did not slam into any major industrial or economic centers. Instead the typhoon made landfall in Compostela, the impoverished and rural southern Island in the archipelago. With thousands being forced from their homes and massive damage to rural infrastructures, however, the economic impact could be felt country wide.

The economic damage in Compostela will certainly be felt. Already, aerial surveys are revealing that large banana and coconut plantations have been destroyed. Local authorities are estimated that as much as 70% percent of the crops in effected areas may have been destroyed and that numerous bridges and other pieces of infrastructure have been wiped out,  a huge blow to the poor rural region.

Normally, the southern regions of the Philippines are spared the worst of the typhoons but a weaker storm hit the region last year and caused over 1500 casualties and millions of dollars in damage. Typhoon Bopha is the most powerful typhoon to have hit the region in years, so the death toll and damage could be tremendous.

Already rescue efforts have been hampered. Troops had been stationed throughout the region to assist with rescue and clean up operations but in a stroke of irony many of the places the military was stationed have been slammed by flash floods and mudslides. Compostela is a hilly and mountainous region and large mud storms and flash floods are now being reported.  In many areas the irrigation systems of farmlands located up in the hills and mountains have been overwhelmed with the heavy rain. As the dams and water reserves are collapsing they are sending large mudslides and flash floods down the mountain side, heavily impacted villages and towns located further down the hills and mountains.

While the storm will undoubtedly cause millions in damage and could cost thousands of lives, it also offers the government a chance to prove its effectiveness and efficiency in coping with natural disasters. The Philippines has long been held back but a mixture of weak and corrupt governments. In 1965 Ferdinand Marcos was elected President. While he rode into the office through Democratic elections he wasted no time consolidating his power under authoritarian rule. For the next two decades Marcos would rule the Philippines all but unchallenged.

His one serious challenger,  Benigno “Ninoy” Aquino, Jr., who was forced into exile would be killed upon his return to the nation, barely stepping off of the plane. His widow, Corazon Aquino would later run for office of President in a snap election in 1986. Marcos declared himself the winner in an election widely viewed as rigged. This would set off  the People Power Revolution and several of Marcos’s closest allies betrayed him. In the face of widening opposition Marcos would flee into exile, making his way to Hawaii.

Corazon would eventually obtain the office of President, however her rule was viewed as weak and corruption was rampant in spite of her efforts to strengthen Democratic institutions. Also, several military coups would weaken her rule and nearly succeed in destabilizing the government.

Fidel V. Ramos would then be elected into office in 1992 and while the economy progressed under his administration the 1997 Asian Financial Crisis would all but wipe out the gains made. Later politicians would continue to fight for social and economic reform but progress was slow and tumultous. In 2003 the military would again stage a coup leading to the declaration of a nation-wide state of rebellion. Then President Gloria Macapagal-Arroyo would later be recorded trying to influence election officials which led to wide spread protests and a failed attempt to impeach the President.

Benigno Aquino III, the son of the slain “Ninoy” Aquino, was elected into office in 2010. So far he has continued to push a platform of economic and social reform. For a country so besieged by tumultuous politics and a fractitious civil society, his response to Typhon Bopha could seriously strengthen or weaken his administration. To make matters even more complicated, Southern Philippines is also home to the majority of the country’s Muslim population which has sprouted some radical fringe groups, such as MILF, that have launched attacks againt the government. Worsening social conditions on the island could raise tensions and help empower radical Islamists in an otherwise moderate Muslim population.

What is certain is that Typhoon Bopha has wreaked havoc on Compostela. For a country trying to raise living standards and to grow its economy in the face of an unstable global economic landscape this offers an opportunity to prove to both the Filipino people and international investors that the government is now a stable, responsive, and strong institution that can be relied upon. Likewise a poor performance could raise tensions and destabilize the federal government.