Marcos 2.0
At noon on June 30, Ferdinand “Bongbong” Marcos, Jr., took his oath of office as the 17th president of the Philippines. He is starting his six-year term at a particularly inauspicious time for the local economy. Two years of battling the Covid-19 pandemic has left the economy much weakened, with output barely back to 2019 levels, the government with more limited macro policy headroom due to rising inflation, hefty budget deficits alongside a much higher public debt, and a ballooning of the current account deficit. The economy is also facing external headwinds brought about by a slowing global economy, a gloomy outlook for energy and food markets as well as continuing supply chain bottlenecks that are pushing up global inflation, and tighter financial market conditions as advanced economies try to rein in soaring inflation. Downside risks remain elevated, associated with increased food and energy insecurity, rising risk of recession in the U.S. following aggressive monetary tightening, debt overhang and possible defaults in emerging markets, and the lingering pandemic and government responses.
In two major respects, Marcos 2.0 represents a continuation of the Duterte administration. At the macroeconomic policy level, the transition is seamless, especially in oversight agencies. The finance secretary designate, Benjamin Diokno, would need only to cross a connecting bridge from his old office in the BSP to his new office in the finance department. For Felipe Medalla, the new governor, who has been a member of the Monetary Board for 11 years now, the change is only a matter of moving from one room to the next. For Planning Secretary-designate Arsenio Balisacan, who left the National Economic and Planning Authority (NEDA) six years ago to head the Philippine Competition Commission, the transition just means moving back to his old office.
The other mark of continuity is Marcos 2.0’s commitment to sustaining investments in infrastructure at 5% of GDP. The name of the public works secretary-designate may not have a familiar ring but Secretary Manuel Bonoan has in fact spent a career in the department, from being an assistant secretary, then undersecretary in 1990s through the 2000s, at one point serving as department secretary in an acting capacity. He was recruited from being CEO of a major conglomerate active in infrastructure.
In two notable areas, Marcos 2.0 is gearing up for change: agriculture and education. The clearest signal is that the President and the Vice President, Sara Duterte, are taking over the respective portfolios. Both sectors suffer from decades of government underinvestment (and especially in agriculture, poor governance) and will take years to reform to improve their developmental impacts. Both sectors are now grappling with rising risks, the former a looming food crisis, the latter in relation to the two-year suspension of in-person schooling.
Now read on...
Register to sample a report