Philippines jobs and wages issues could hit government

Subject

Economic policy challenges facing the government.

Significance

President Rodrigo Duterte’s administration soon enters its eleventh month. The president campaigned on greater infrastructure investment and more equitably spread economic growth, among other pledges. So far, most macroeconomic indicators are either holding steady or improving; early worries about political disruption, underpinned by a weakening stock market and exchange rate, have also eased. Yet inflation and unemployment numbers are rising, and are highlighting problems in the agricultural sector.

Impacts

• Interest rate increases could be on the horizon.
• The legislature’s proposal for a tax amnesty is unlikely to prosper.
• Failure to implement tax reforms would undermine business and investor confidence.
• Failure to develop infrastructure effectively, such as due to land disputes, could hit Philippine economic performance.
• Rising public calls to focus on the economy over the ‘drugs war’ are possible, putting pressure on Duterte politically.