Marcos’ Vague Plans for the Philippine Economy Spark Concern

Ferdinand “Bongbong” Marcos Jr. is poised to become the Philippines’ next president after taking a massive lead in the May 9 election. Voters, many too young remember, were partly seduced by the 64-year-old’s misleading presentation of his late father’s dictatorial rule as a halcyon economic age to be revived.

Truth be told, Marcos the older, who was a brutal dictator and plucked thousands from state coffers while killing political opponents, was a catastrophe for the Philippine economy. Before his ouster in a 1986 uprising, the dictator used foreign loans to fund an infrastructure binge—building, among other things, a nuclear power plant that was never used. The country’s external debt ballooned from $599 million at the start of his rule in 1965, to $28.3 billion, or some 80% of the country’s GDP, when he fled into exile. Much of the money went in kickbacks to cronies and Marcos Sr. may have stolen up to $10 billion of the country’s funds. From 42% of the population being below poverty level before the dictatorship, to 59% in the aftermath, the proportion grew by 59%.

The younger Marcos has also promised showy projects and pledged to continue, if not beef up, the “Build Build Build” infrastructural program of outgoing president Rodrigo Duterte, meant to usher in the Philippines’ “golden age of infrastructure.” The Marcos camp says it has blueprints for the revival of the agricultural and transportation sectors, as well as plans for SMEs. Marcos Jr. will face economic challenges if he wins the election and is elected to office.

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The Philippine economy grew by 8.3% in the first quarter of this year‚ more than the median 6.8% predicted in a Bloomberg survey, which gives him time to get his feet under the desk. If inflation rises, however, then growth may be hampered. Global markets are also being threatened by the ongoing war in Ukraine, and COVID-19 lockdowns that China has imposed on them.

“The economic managers are going to be critical in the next several years because of the pandemic and the economic crisis, so that is something that we’re looking at very carefully,” Marcos told reporters on May 11. In line with his central campaign message of “unity,” he has offered to work with technocrats from across the political aisle.

Markets have certainly made no secret of their preference for Marcos’ main rival, incumbent vice president Leni Robredo—a economics graduate and lawyer with experience in poverty alleviation, rural development, and housing. An estimated $9.3 billion was taken off the Philippine Stock Exchange the day after her defeat. Analysts do not anticipate a rally until Marcos announces further details.

Marcos Legacy

The Philippines is at the border of South China Sea and China, making it a popular choice for both U.S. as well as Chinese. Its sea ports and young population (nearly 30% of its 110 million people are between 10 and 24 years old) make it a desirable partner—especially if it could start to fulfill its economic potential. It remains to be determined if that is possible under Marcos. In a report released before the election, investment bank JP Morgan expressed misgivings over Marcos’ “lack of an articulated substantive economic platform” and flimsy record in government.

Concern has also been expressed over his proposal to revive some of his father’s economic initiatives, such as an oil price stabilization fund that the state eventually had to subsidize.

“Marcos tends to bring up many of the programs of his father in the hope of stealing people’s emotions and trying to evoke some false nostalgia about his father’s legacy,” says J.C. Punongbayan, assistant professor of economics at the University of the Philippines in Quezon City. A 2021 study coauthored by Punongbayan found that it took 23 years for the country’s per capita GDP to recover from the doldrums of the dictatorship’s final years.

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Cronyism is also in danger. The government gave top government positions to political allies, as well as other benefits such loans guarantee by the government. Many companies controlled by these people were not able to pay off their debts and went bankrupt after his death.

“If the second Marcos administration will reassemble this kind of coalition, then it might mean that the Philippine economy will suffer,” says political science professor Cleve Arguelles at De La Salle University in Manila.

Uncertainty reigns in the interim. Marcos Jr., says Punongbayan, “has failed to really outline a comprehensive and a well researched plan when it comes to the economy.”

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