Runaway inflation exposes Duterte’s slipping grip
Surging prices, flagging growth and a faltering currency all threaten to conspire against the Philippine leader at next year's midterm elections
With as many as 18,000 local positions, close to 300 congressional seats and as many as half of the 24-seats Senate up for grabs, next year’s midterm elections will serve as a de facto referendum on Philippine President Rodrigo Duterte’s administration.
A weakening economy, surging inflation and flagging popularity ratings in opinion polls suggest opposition and independent candidates could gain significant ground and weaken his government’s current strong hold on power.
Duterte administration officials say they are confident that their candidates, including several key Cabinet members, will dominate the polls. But if Filipinos vote, as expected, on bread and butter issues many are likely to lose their jobs.
No less than Duterte’s right-hand man, Special Assistant to the President Bong Go, is running in the high-stakes race for the Senate, which depending on the election result may determine the fate of many of the administration’s key policies.
Using the prestige of his office to bolster his trusted aide, Duterte personally accompanied Go during the filing of his candidacy in an unprecedented show of executive support.
Throughout the first two years of Duterte’s presidency, the powerful Senate has blocked a number of his key legislative proposals, including drives to restore the death penalty, reduce the age for criminal liability, and, most crucially, pass a new constitution which could give the president unlimited powers in the transition to a new federal system.
Alan Peter Cayetano, Duterte’s foreign secretary and a former vice presidential candidate, is running for a congressional seat in his bailiwick of Taguig, hoping to become the new Speaker of the House next year.
By dominating both chambers of the legislature, the Duterte administration hopes to push its legislative agenda with less opposition during the second half of the president’s six-year term.
New Presidential Spokesman Salvador Panelo, formerly chief presidential legal counsel, says that it is “logical” for voters to elect Dutetre’s allies.
“I think so considering the overwhelming popularity of the President,” Panelo said on October 14 during a press briefing in the presidential palace. “The people who support him will support the candidates he will endorse and that’s logical and understandable.”
Government critics contest that electoral logic. They believe the fiery president could face unexpected pushback due to a fast deteriorating economy and deepening exasperation with his populist antics.
The Philippine economy is suffering its highest inflation rate in almost a decade, hitting 6.7% in September. That’s significantly higher than the central bank’s targeted 4% upper range limit.
Fast rising prices are arguably impacting the president’s grass roots popularity, opinion polls show. In the latest Pulse Asia survey, Duterte suffered a 13% drop in his “trust” rating in the third quarter of this year.
Opinion polls also show that many of Duterte’s closest allies are struggling in the bellwether Senate race, including Go, who only received a 14.1% preference rating, placing him in the 22nd-27th rankings of candidates – well outside of the “magic 12” threshold to get elected.
Duterte’s former police chief, Ronald Dela Rosa, ranked 16th in the latest survey with a 27% preference rating, which means he too will likely fall short at the polls without a shift in voter perceptions.
The race is so far dominated by independents such as re-electionist senators Grace Poe (70.1%), Cynthia Villar (57.7%), Nancy Binay (50.6%) and Sonny Angara (37.1%). Duterte’s chief rival in the 2016 elections, Mar Roxas (27.7%), has decided to run in the mid-term elections and currently ranks among the top 12 candidates in the survey.
Despite topping senatorial surveys, Duterte’s daughter, Sara Duterte, chose to instead seek re-election as mayor of Davao City. It’s unclear what motivated her to stay home rather than enter national-level politics, but a faltering economy could have been a contributing factor, analysts say.
The inflationary spike has been driven by a combination of rising global oil prices, a falling currency which is now at its lowest level in 13 years due to a deteriorating trade balance, and an upsurge in food and commodity prices caused in part by widespread mismanagement of the country’s rice supply by the government’s food authority.
Incensed by the double-digit increase in basic commodity prices in the past year (vegetables are up by 20% and fish by 12%), last month Duterte replaced the head of the National Food Authority (NFA) and threatened to abolish the agency if the situation was not quickly improved.
Many also blame the government’s new tax reforms, namely the Tax Reform for Acceleration and Inclusion, known as TRAIN, for the inflationary spike.
Desperate to stave off rising prices, the government has decided to flood domestic markets with cheap food imports, eliminating import quotas in favor of free-for-all licensing for any trader who is willing to pay a determined rate of tariffs to the government.
The policy, known locally as Rice Tariffication, could potentially ruin the livelihoods of tens of thousands of domestic food producers who have already been grappling with hand-to-mouth existences due to poor agricultural infrastructure, lack of financial support from the government and predatory middlemen eating into their already slim profits.
The government has also decided to suspend the imposition of new excise taxes on fuel, hoping to dampen inflation in the run-up to the midterm polls.
Budget Secretary Benjamin Diokno estimates the government could lose around P40 billion pesos (US$742.6 million) from forgone revenues, depriving the government of funds needed for Duterte’s ambitious but staggering “build, build, build” infrastructure development policy.
Far from reassuring, Duterte has sounded increasingly fatalistic about the country’s mounting economic problems.
“If things will move forward in accordance with the present calculations, we will have more difficult times ahead,” Duterte said on October 12. “If you want to go berserk, let’s all go berserk because I am affected by hardship too. That’s the problem now.”
His next problem could be at the ballot box as his government’s inability to solve the country’s economic conundrum threatens to redound on his favored candidates at the polls and taint his legacy as a pro-poor president.