• FTCR’s third quarter 2016 indices for economic and political sentiment are at record highs, sustaining gains made well before the election in May of President Rodrigo Duterte.
  • Filipinos are by far the most optimistic in the region about their country’s near-term political outlook.
  • We think that, barring any major domestic disruption, buoyant consumer sentiment can be sustained for at least the next six months, even if the gap widens between voter expectations and the government’s ability to deliver.

Despite mounting international concern over President Rodrigo Duterte’s high-profile antics and the potential consequences of a large-scale “war on drugs” that has been conducted without due process, support for Mr Duterte among the urban population in Manila and elsewhere remains solid.

FTCR’s Philippine Economic Sentiment Index and Political Sentiment Index both rose to their highest levels since these series began, having sustained significant gains since early 2016 (see chart).

Relative to other citizens in Asean, Filipinos are also by far the most optimistic about their country’s near-term domestic political outlook. In contrast, Malaysians are by far the most pessimistic (see chart).

Although some of the improved sentiment is down to rising incomes and a generally healthy economy, FTCR’s Discretionary Spending Index for the Philippines still remains among the lowest in the region, as is our Philippine Household Income Index (see chart).

We believe this is partly attributable to a larger family size in the Philippines, with a considerable portion of household spending going on education, housing and medical care.

Duterte retains the popular vote

Both Mr Duterte’s leadership style and unconventional approach to governance have been the predominant drivers of sentiment in a country where elitist clans from Luzon have long dominated politics.

Our surveys in the months leading up to the presidential election in May found significant support for Mr Duterte from the outset of campaigning.

Many urban Filipinos also deplore what they saw as a rise in gang crime and drug abuse under the administration of former president Benigno Aquino, and support the Mr Duterte’s efforts to eradicate these by force.

Aware of the international community’s perception of Mr Duterte, large sections of the online community have come to the president’s defence, debating what constitutes a “moral” approach to tackling drugs. Thousands of comments on social media, including the Facebook and Twitter feeds of local media outlets such as Rappler, Philippine Star, GMA Network, and ABS-CBN News, suggest Mr Duterte’s approach continues to find favour among many moderate voters.

Moreover, political dramas in the Philippine Senate over the past two weeks have worked largely in Mr Duterte’s favour, even as they have worried foreign investors.

Key to this has been a war of words between Mr Duterte’s supporters in congress and senator Leila de Lima, a former secretary of justice under the Aquino administration who has tried to hold Mr Duterte to account for the thousands of people who have been killed without trial since he took office. Her efforts have largely backfired, with many observers questioning Ms de Lima’s credibility. On a recent trip to Manila, FTCR found that even senior executives at major conglomerates often shared this view.

The honeymoon rolls on

We expect Mr Duterte’s honeymoon to last for at least the next six months, and that many voters will continue to defend their president in the face of growing international criticism. The president also enjoys majority support in both the House and the Senate.

Meanwhile the economy will probably continue to outperform. The central bank held interest rates steady on September 22, while Mr Duterte’s administration appears to be taking a reasonably progressive line on policy. It has made some progress in cutting red tape and improving the speed of business licensing, while opposing controversial industries such as mining. Duterte’s “10-point” economic plan includes revising a law that caps foreign ownership across many industries and sectors at 40 per cent.



Source link