Duterte Is Rising

(Source: www.forbes.com)

President Rodrigo Duterte is getting more popular — his approval and trust rating are rising among the Filipinos.

That’s according to a Pulse Asia survey conducted last month and released on Friday.

Duterte enjoys an approval rating of 88% and a trust rating of 87%, up from 80% and 82% back in January.

That should come as a surprise to outside observers. Most of his policies hardly deserve the approval and trust of the Filipino people.

Like his flip-flops on the South China Sea disputes, which in essence cede control of the country’s undersea resources to Beijing. And they will put Manila in the middle of an open military confrontation between China and the U.S., trying to decide who’s the friend and who’s the enemy. That’s the wrong place for a country to be.

Then there’s Duterte’s war against drug trafficking. It’s a war that leaves the country deeply confused, and divided, and at odds with international rights agencies, including the UN.

Also, there’s the war against corruption, which has yet to yield any meaningful results.

What’s behind Duterte’s surge in popularity, then?

A strong economy.

The Philippines economy continues to grow at a fast pace, matching China’s. In the most recent quarter of 2018, the Philippines economy grew at 6.8%, well above its long-term average of 3.76%.

That’s in line with China’s growth rate, and roughly one point below that of India.

The Philippines economy has benefited from a stable macroeconomic environment of low inflation and low debt to GDP ratio, which has helped sustain a healthy domestic demand growth; and from a revival of the Asian Pacific region, which has boosted exports, accounting for close to a third of GDP.

Still, Duterte has something to do with the economy’s strong performance. He has maintained a stable macroeconomic environment of low inflation and low debt to GDP ratio, which has helped sustain a healthy domestic demand growth.

But that may change soon, as inflation has made a big comeback recently. It is currently running at 5.2%, well above those of China’s and India’s.

Higher growth also comes with a widening of the country’s trade deficit, which reached $1.55 billion in April 2018. This means that the country is living beyond its means, a dangerous situation at a time when capital flows from emerging markets back to developed countries.

Rising inflation and growing trade account deficits prompted the Philippines central bank to hike its overnight reverse repurchase (RRP) rate recently. It was the first rate hike since September 2014.

Apparently, Philippines central bankers do not want to let inflation get out of control — inflation is one of the top killers of emerging market growth. It killed the Philippines growth back in the 1980s, when it was running at 62.80%.

Meanwhile, higher interest rates will cool the Filipino economy. But will they cool off President Duterte’s popularity among the Filipino people?

It remains to be seen.

More Info: www.forbes.com

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