Will Philippines’ bad boy Rodrigo Duterte dent growth?

The Philippines’ new president, Rodrigo Duterte, is rattling investors and undermining confidence.

The Philippines' new president, Rodrigo Duterte, has "stepped onto the world stage with the swagger of a bad-boy rock star", says Bloomberg.com's David Tweed. He called the head of the United Nations a "fool" and the US president a "son of a whore". Barack Obama had expressed concern about the surge in extrajudicial killings that Duterte has encouraged as part of a crackdown on drugs. Around 3,000 suspected drug dealers have been dispatched by police and unknown assailants since Duterte was elected in May, says The Economist "without even a nod at due process".

"Duterte is going to be a constant source of uncertainty and instability in terms of our understanding of the Philippines and where it is going," Malcolm Davis of the Australian Strategic Policy Institute told Bloomberg.com. The question is what he might do to the economy, which has become a regional star in recent years. It has carved out a niche for itself in global services, such as business process outsourcing, and gradually improved the business environment to the extent that investment growth hit 28% year-on-year in the second quarter. GDP grew by 7% between April and May, while inflation is under 2%.Duterte promised to delegate economic management to advisers, and their plan looks sensible enough, says The Economist.

It concentrates on keeping the macroeconomy steady and improving infrastructure. But while Duterte probably won't choke the economy to death with capricious micromanagement, he is rattling investors and undermining confidence. August saw foreign investors withdraw a net $33.5bn from Philippine stocks. Businesses are worried that in this lawless atmosphere, the police could turn on a particular firm or industry with Duterte's approval. He has already singled out the chairman of an online-gambling firm as someone with excessive political influence. Investors will be keeping an extremely close eye on Duterte in the next few months.

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Andrew Van Sickle

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.