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PHILIPPINES: Could the pandemic undo Duterte’s succession plans?

Table of Contents

  • The economy could face headwinds that range from a slow or uneven vaccine rollout to persistent inflationary pressures.
  • Should the economy become the key issue for the upcoming election season, then Duterte’s ability to influence his succession could weaken.
  • To protect his base, Duterte may revert to his tried-and-tested strategy of attacking the political elites and businesses of choice.

The 2022 elections are still 15 months away but the noise and maneuvering for the presidential race will start to pick up by the second quarter. One reason is the early filing period for candidates, which will run from 1-8 October. Another reason is that the weak party system incentivizes election donors and coalitions to form around candidates seen as having the best chances; therefore, those wanting to run will highlight themselves as contenders to draw funding and develop national alliances.

The main question for the next few months is the extent to which President Rodrigo Duterte could influence this coalition-building process, which is, in turn, tied to the value that candidates see in his endorsement for the 2022 vote. Duterte has more at stake compared to his predecessors at the end of their respective terms, because should the opposition Liberal Party win, then the allegations of state-sanctioned extrajudicial killings and the business deals of some of his close associates are more likely to become the target of official scrutiny.

The idea that the president can strongly influence the succession has weak evidence in the Philippines — only one chosen successor has won since the end of the Marcos era — but Duterte’s high approval ratings continue to generate the possibility of his outsized influence on the 2022 vote. Historically, more important than the incumbent's endorsement is the narrative that forms as the election nears, such as public sympathy for the Aquino family in 2010 and the need for an outsider and effective administrator in 2016, which was Duterte's springboard.

And this is why the economy matters. If the country recovers at a good pace with no major issues, then Duterte may be able to focus the 2020 narrative on the theme of continuity, from his infrastructure program to his law-and-order campaign. This would provide him with substantial political clout, and even increase the perception that his daughter, Sara, who also succeeded him as mayor in Davao city, could become the leading candidate. At the very least, Duterte would be able to negotiate terms with the next administration not to investigate his administration’s actions.

Conversely, should public attention turn to the economy and there is a perception that the government has mishandled the pandemic and the recovery, then the election narrative becomes less friendly to Duterte. The effects could range from a wide-open presidential race, one that could make even boxer Manny Pacquiao a contender, to a reduction in Duterte’s ability to bargain with succeeding governments. It may cause more candidates to hew to the center, and away from the president.

In this worse-case situation for the president, to energize his base for his preferred candidate, Duterte may revert to familiar attacks against his previous targets, such as the Ayala family, Metro Pacific (of Indonesia’s Salim family) and the Lopez group (owners of the shuttered media network ABS-CBN).

The risks from the economy and the pandemic to Duterte’s succession plans

There are three broad issues that therefore need to be watched in the coming months:

The first is more persistent inflation. Duterte suffered his most significant drop in approval ratings in 2018, just as fuel and rice price inflation were rising. Currently, inflation is gaining more domestic headlines, as food prices have been rising or volatile over the past two months. A long-running swine flu epidemic has depleted domestic hog stocks, and demand for alternative proteins is already driving up chicken and fish prices. Vegetable prices have been very volatile as well. The government is planning to increase pork imports under reduced tariffs, but this could discourage local farmers. Rice harvests are due in a couple of months, but current farm gate prices are already higher than last year. This risk bears watching around the harvest months from April to June.

PHILIPPINES: Could the pandemic undo Duterte’s succession plans? 1

The second factor is the speed of the economic recovery, which is heavily dependent on consumer demand. This will be tested if, as proposed by the country’s economic planning agency, the capital region shifts to the lowest quarantine level starting in March. It could answer whether consumers will remain cautious even with restrictions being eased until the fear of infection structurally recedes, either because of a successful vaccination campaign or a gradual increase in confidence due to health protocols limiting transmission even while vaccinations proceed. Some data from other regions in the chart below should temper expectation. These regions moved to the more liberal quarantine regime months ago, but are still showing retail and recreation mobility well below their baselines. Metro Manila may show a measurable but limited bump with the numbers still significantly below the baseline. Another factor that may affect consumer demand is the resilience of remittance inflows from overseas workers. The numbers have held up well given the pandemic, dropping only 0.8% to USD 29.9bn for all of 2020, but its sustainability is debatable.

PHILIPPINES: Could the pandemic undo Duterte’s succession plans? 2

This third variable will be the speed and fairness of the vaccination process, and the economic and social effects of both. The government is highlighting how it is negotiating for 108 million doses, although firm agreements have been signed only for a small percentage. The lead official for the vaccination program says the country will be able to inoculate 50m — 70mn of the country's 110mn population this year, which is overly optimistic given the logistical challenges and the high levels of vaccine hesitation. The most recent survey pegs the number of those unwilling to be vaccinated at 47%, with 21% undecided. As other countries’ experiences have highlighted, much will also depend on the human and physical infrastructure for distribution, storage and administration — of which there is still a lack of clarity.

Also, while the government has a plan for those who will be vaccinated from the public supply, private importation is also being allowed. Controversy may increase if there is a major delay in public procurement since vaccine administration will then skew towards the middle class and those in urban areas. This could generate resentment from the lower-income classes that becomes a political issue for the government as election season approaches.

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PHILIPPINES: Could the pandemic undo Duterte’s succession plans?

The economy could face headwinds that range from a slow or uneven vaccine rollout to persistent inflationary pressures. Should the economy become the key