The ocean and the beach in the Philippines

Philippines Politics April 2019

Philippines: Support for Duterte soars ahead of midterm elections

On 13 May, Filipinos will head to the polls to cast their votes in the midterm general elections that are widely considered to be a referendum on President Duterte’s presidency three years into his term. Although Duterte’s popularity took a knock last year amid strong inflationary pressures, it seems likely that he will maintain control of Congress after his approval ratings bounced back again in the first quarter of this year.

With 12 of the 14 Senate seats, all 297 seats in the House of Representatives, as well as provincial and local officials to be elected, the outcome of the midterms could theoretically have notable implications for policy and the economy, especially given government consumption has been a key driver of growth in recent years. Nevertheless, President Duterte’s powerbase in Congress is unlikely to diminish markedly and a broad continuation of current policies thus seems likely. Recent political polls show Duterte’s approval rating has soared to the highest levels since he took office, while the main opposition party, the Liberal Party, only nominated 8 candidates for the 12 open seats in the Senate, with just 2 of those considered frontrunners. This suggests that the elections are unlikely to see a major shift in the composition of Congress or in the legislative agenda thereafter.

Analysts at Nomura support this viewpoint, noting:

“An improvement in his popularity has been sustained, and we think it could boost his support base in Congress. This implies a rising likelihood of his allies retaining a strong majority in Congress, which, in turn, should support the fiscal reform agenda during the second half his six-year term.”

Given the election results are unlikely to lead to a major change in policy agenda, continued tax reform, fiscal stimulus and an ambitious infrastructure program are likely to continue to define the government’s economic policies moving forward. With this in mind, FocusEconomics panelists project government consumption to remain robust in both 2019 and 2020, albeit softening somewhat from last year’s surge.

However, despite the success of the government’s programs in stimulating economic growth and the likelihood that Duterte continues to maintain a firm grip over Congress, his government faces a number of challenges ahead. Particularly, tax reforms played a pivotal role in fueling inflation in 2018, while Duterte’s tough stance on crime and his controversial war on drugs has seen thousands killed over the last three years; and citizens, as well as the international community, are increasingly concerned about police brutality and human rights violations. Moreover, a recent survey by Pulse Asia showed that the budget deadlock has been a major preoccupation for voters in recent weeks.

According to analysts at Goldman Sachs:

“Duterte will be tested on his administration’s progress on key 2016 election promises to create more jobs, reduce income inequality, and fight corruption, crime and drug abuse. Other emerging issues, such as the affordability of basic necessities following the surge in food prices last year, and relations with China—particularly the surge in Chinese immigrants since 2016—could play a role.”

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