The Marcos Jr. government continues to sell a story of economic transformation, international relevance and national renewal. But behind the rhetoric lie dire realities and an exceedingly murky future.
A decade ago, Philippines was a country of hope and promise. But those days are now gone.
Today, the country is coping with weakening growth, an accelerating cost-of-living crisis, entrenched inequality, institutional corruption, extreme climate crises, and a foreign policy increasingly defined by strategic confrontation rather than the economic needs of ordinary Filipinos.
The Philippines risks becoming a country that talks endlessly about development while it is ceaselessly undermining its foundations.
Economic red lights flashing
In the past few years, the government’s inflated growth ambitions, which cost Manila its international credibility, have given way to successive downward revisions. Now budget authorities project 2026 growth of just 3.5–4.5%, against the prior fallacies of fast expansion.
Domestic governance failures, self-induced geopolitical instability, weak confidence and inflation are all acknowledged as contributing factors.
The October figures are particularly troubling: headline inflation reached 7.8%, up from 1.7% a year earlier. Food inflation stood at 6.4%, rice inflation at 20.7%, while transport costs increased 20.1%. Housing, electricity, gas and other fuels rose 9.3%. These are not abstract macroeconomic indicators: they represent the erosion of household purchasing power, particularly among those with little capacity to absorb higher prices.
The peso’s weakness adds another layer of vulnerability. A depreciating currency makes imported fuel, food, industrial inputs and debt servicing more expensive. The country’s dependence on imported energy and its exposure to external shocks amplify the damage.
The government likes to point to the Philippines’ recent attainment of upper-middle-income status. But a change in statistical classification means little when more than half of Filipino families describe themselves as poor in SWS polling.
Entrenched divides
The Philippines’ economic problem is not just insufficient growth. It is the historical concentration of economic and political power.
Land ownership, business interests, political influence and access to public resources remain closely interconnected. The country’s political dynasties are an inherent part of its nominal democracy. Some 55% of elected officials who succeeded in the 2025 midterm elections had dynastic connections. This concentration undermines political competition and accountability.
The World Bank reports that the top 10% of Filipinos receive half of national income, while the bottom half receive just 13%. Wealth concentration is far greater. Nearly 28% of the population remains vulnerable to falling back into poverty, and only one-quarter belongs to the fragile middle class.
Millions of Filipinos remain economically dependent on insecure employment, overseas remittances and patronage networks, while economic elites retain disproportionate access to political decision-making.
The result is a democracy in which the poor constitute the overwhelming majority yet cannot shape the distribution of economic opportunity.
Corruption without structural accountability
Investigations into the $9.2 billion flood-control scandal have triggered severe legal and civil repercussions, including targeted criminal plunder charges and the freezing of over $418 million in illicit assets tied to high-profile politicians and contractors. This massive clampdown on the direct theft of climate adaptation funds—estimated up to $2 billion in direct procurement losses—has fueled intense public outrage and massive street protests.
Worse, the problem is systemic. Local think tanks and oversight bodies estimate the broader annual toll of rampant public procurement fraud and elite capital capture drains $23.7-$33.8 billion from the Philippine economy each year. Yet, systemic investigations, prosecutions, convictions and recovery of public money remain elusive.
The problem is the absence of convincing structural reform: procurement transparency, independent auditing, contractor accountability, political campaign financing and effective safeguards against conflicts of interest.
Punishing selected individuals without dismantling the networks that make recurrent corruption debacles viable is not reform.
Similarly, the tweaking of the rule of law, including the constitution, in efforts to undermine opposition reinforces perception of political persecution.
Militarization and securitization, not diplomacy
The latest “diplomatic” exchanges illustrate the risks. Following confrontational statements by Defense Secretary Gilberto Teodoro and Chinese responses, more than 20 Philippine business, labor and civic organizations issued an unusually direct appeal on November 2–3 to lower tensions. Belatedly, they warned that the deterioration of relations could severely damage trade, investment, energy cooperation and employment.
Teodoro’s response was to challenge the business community rather than acknowledge its economic concerns.
The October 28–29 ASEAN Defense Ministers’ Meeting-Plus in Cebu also exposed diplomatic difficulties. China’s participation became contentious after disputes over its invitation and representation. It was an embarrassing episode for the host and an indication of how bilateral confrontation can undermine ASEAN’s consensus-based diplomacy.
Then, there is the contested and controversial Pax Silica and the proposed Luzon Economic Corridor: the US-led 4,000-acre economic security zone at New Clark City.
If the current course prevails, the Philippines is morphing into strategic platform supplying land, infrastructure and geopolitical leverage to foreign powers without securing technology transfers, domestic industrial development, local employment and enforceable environmental protections.
Three possible trajectories
The Philippines is approaching a consequential political and economic crossroads, due to weak governance, economic vulnerability and the concentration of political power. Three trajectories are possible:
Managed decline: The government maintains political stability through patronage, selective prosecutions, foreign investment announcements and nationalist rhetoric. Growth remains mediocre, household insecurity persists, and structural inequalities survive. This is the most plausible continuation of the present trajectory.
Nationalist and security-driven consolidation: Economic disappointment and political polarization encourage greater reliance on military partnerships, geopolitical confrontation and centralized decision-making. Foreign strategic interests increasingly shape domestic priorities, while democratic accountability weakens.
Institutional and economic renewal: Public pressure forces genuine procurement and judicial reform, greater political competition, investment in domestic manufacturing, agricultural productivity and energy diversification. Foreign policy becomes more pragmatic, defending sovereignty without sacrificing economic interests. Though possible, the third scenario requires structural reforms, which do not seem to be likely in the foreseeable future.
President Marcos inherited a country with enormous potential and a renewed international profile. He risks leaving behind an economy less secure, a society far more divided, a political establishment unwilling to confront its own privileges and a future driven by the US national interest.
The original version was published by The Manila Times on November 9, 2026.
About the Author
Dr Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net/.
