Philippine Economic Gains Under Marcos: A Path to Sustainable Growth or Political Mirage?

Philippine President Ferdinand Marcos Jr. has staked his Senate election campaign on the country’s economic performance, touting a 5.4% GDP growth rate in the first quarter of 2025 as proof of progress. Yet beneath the headline figures lie complex realities: a reliance on pre-election spending, unresolved inflation pressures, and political fractures that could undermine long-term stability. For investors, the question is clear: Can Marcos’s economic narrative translate into sustainable returns, or will external risks and internal divisions derail the agenda?

The Numbers Behind the Pitch

The administration’s growth claim hinges on robust domestic demand, driven by a 5.3% rise in household consumption and a staggering 18.7% surge in government spending—a reflection of front-loaded fiscal stimulus ahead of the May 12 midterm elections. Sectoral performance was broadly positive: agriculture grew 2.2%, industry expanded 4.5%, and services surged 6.3%. .

However, the 5.4% figure falls short of the Marcos administration’s full-year target of 6–8%, and it trails the 5.9% growth achieved in Q1 2024. To meet its annual goal, the economy must average 6.2% growth over the remaining quarters—a steep climb, given that GDP grew just 5.6% annually in both 2023 and 2024.

This comparison highlights the Philippines’ mixed regional standing. While outpacing Malaysia (4.4%) and Indonesia (4.87%) in Q1 2025, it lags Vietnam’s 6.9% growth, underscoring the challenge of sustaining competitiveness.

The Political Economy of Growth

Marcos’s Senate pitch emphasizes two pillars: affordability and legislative unity. The flagship P20/kilo rice program, revived in early 2025, aims to subsidize staple food for vulnerable groups. While initially rolled out in Cebu, it was suspended due to election-related spending bans—a logistical hurdle critics argue signals deeper implementation challenges.

The administration also claims credit for easing inflation, which dipped to 3.2% in April 2025 from a 2022 peak of 6.9%. However, this progress is uneven: food inflation remains stubbornly high at 4.4%, and the central bank’s rate cuts (now at 4.5%) have been constrained by global volatility.

This data reveals a tightrope walk: lower rates stimulate growth but risk reigniting inflation. Marcos’s pitch assumes continued political cohesion to navigate these trade-offs, but internal fractures threaten that stability.

Political Risks: Unity vs. Division

The Senate race is framed as a referendum on Marcos’s economic agenda. His slate, featuring high-profile candidates like Manny Pacquiao and Makati Mayor Abby Binay, seeks to maintain a supermajority to push through reforms. Yet the campaign is overshadowed by two critical fault lines:

1. The Duterte Split: Vice President Sara Duterte’s impeachment trial and her faction’s opposition to Marcos’s ICC prosecution of her father have turned the election into a proxy battle. A Duterte-led Senate could block key economic policies, from tariff reforms to infrastructure spending.
2. Administration Infighting: The defection of Marcos’s sister, Senator Imee Marcos, to Duterte’s camp—and her “ITIM” ad campaign accusing the administration of neglect—has eroded the “unity” narrative.

These divisions amplify investor concerns about policy continuity. The Senate’s composition, projected to give Marcos 8–9 seats out of 12, will determine whether his economic agenda advances or stalls.

Investment Implications

For investors, the Philippines presents opportunities but demands caution:

• Infrastructure & Real Estate: The administration’s focus on public projects (e.g., roads, schools) bodes well for construction firms and property developers.
• Agriculture & Consumer Staples: The P20 rice program could boost demand for subsidized goods, though supply-chain challenges and political execution risks remain.
• Tech & Financial Services: A stable Senate could accelerate regulatory reforms in fintech and digital banking, attracting capital.

This comparison shows the PSEi underperforming Jakarta and Kuala Lumpur in 2024–2025—a sign that markets are pricing in political risks.

Conclusion: Growth vs. Governance

Marcos’s economic pitch rests on a precarious balance. On one hand, the Philippines’ 5.4% Q1 growth and outperformance of regional peers suggest underlying resilience. Infrastructure investments and domestic demand remain pillars of strength.

On the other hand, the economy faces headwinds: reliance on pre-election spending, unresolved inflation, and geopolitical risks like U.S. trade policies. The Senate election’s outcome will decide whether the administration can pivot from short-term stimulus to long-term reforms.

Investors should weigh the positives—low policy rates, a young population, and geographic diversity—against the negatives: political volatility and fiscal constraints. To meet its 6% annual growth target, the Philippines must average 6.2% growth for the remaining three quarters of 2025—a stretch that requires both economic momentum and political cohesion.

In the end, the Marcos administration’s success hinges not just on GDP numbers, but on its ability to unite a fractured political landscape. Without that unity, the economic gains celebrated in Manila’s skyline may prove fleeting.