Duterte-Marcos ICC drama shows political instability a hindrance to Philippine development - think tank

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The deepening rift between the Marcoses and the Dutertes reflects deep-rooted political instability in the Philippines, which ultimately hinders the country from achieving its full economic potential, according to the think tank Capital Economics.

"The arrest this week of former Philippine President Rodrigo Duterte by the International Criminal Court for his role in extra-judicial killings of over 6,000 suspected drug dealers has no direct economic implications," said Capital Economics senior Asia economist Gareth Leather in a March 12 report titled "Duterte arrest puts political instability in spotlight."

"However, it shines a spotlight on the breakdown in relations between Duterte's successor, Ferdinand Marcos Jr. (son of a former president) and Vice President Sara Duterte (Rodrigo Duterte's daughter). Sara resigned from the cabinet in June last year and was subsequently impeached after claiming to have arranged for Marcos Jr. to be assassinated if she were killed," Leather noted.

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"Given all this, it is no surprise that the Philippines is rated as one of the least politically stable countries in the region," Leather said, adding that "while many fundamentals are in place for strong growth in the Philippines, the country's political environment means it will struggle to fulfil its potential."

Capital Economics Political Stability Rating

Last week, Leather said in another report that "unstable politics" in the Philippines is getting in the way of it becoming an alternative regional export hub to Vietnam amid the threat of tariffs from US President Donald Trump. https://mb.com.ph/2025/2/24/unstable-politics-drags-philippines-potential-to-succeed-vietnam-as-export-hub-think-tank

"The country's unstable politics and failure to make needed improvements to infrastructure and the broader business environment means it would struggle to capitalize on any opportunities," Leather said on March 6.

Last year, Leather noted that the Philippines entered a demographic sweet spot, which "could provide a big boost to economic growth."

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"But this will only happen if enough new jobs can be created for the wave of young people that will enter the workforce over the coming decade," Leather said in July last year.

Citing the latest forecasts from the United Nations' (UN) Population Division, Leather had noted that the Philippines' working-age population is expected to grow by 1.5 percent annually during the next decade, a rate higher than that of any other Asian country, save for Pakistan.

To fully capitalize on its demographic dividend, Leather had said the Philippines must ensure there are sufficient quality job opportunities for the growing workforce in the coming years.

For Leather, crucial to this goal will be the expansion of the manufacturing sector, which he had pointed out has historically been the primary driver of productive employment needed to absorb a rising workforce.

Unfortunately, there are "few signs of this happening" in the Philippines, as Leather had lamented that manufacturing output as a share of gross domestic product (GDP) is not only lower than the regional average, but it has also been on the decline.

"The fracturing of the global economy between the West and China presents opportunities for countries able to link their economies to shifting global supply chains. So far, the main beneficiaries of this shift have been Vietnam and Mexico. But as a low-wage economy, close to existing supply chains, and a key ally of the US, the Philippines is also well-placed to benefit," Leather had said.

"Whether it can capitalize on this opportunity will go a long way to determining whether the Philippines can make the most of its demographic dividend," according to Leather.

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