Pro-Consumer Policies Anchor Marcos Plan for Philippine Economy

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(Bloomberg) — Philippine President Ferdinand Marcos Jr. laid down his economic priorities in his annual address to Congress Monday, focusing on Filipino consumers battered by high prices due to the Iran War.

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Marcos championed tax relief measures and lower electricity bills in his fifth State of the Nation address, vowing to help households that power the consumption-driven economy. He also pledged sustained subsidies to help an import-dependent nation that’s vulnerable to oil price swings caused by the Middle East conflict.

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“For as long as it takes, you can expect that the government’s support will not stop,” the president said in his speech. “We will redirect our programs toward our fellow Filipinos who are in greater need, so that the assistance can reach a wider scope and a greater number of people.”

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He began his address by announcing progress in a long-running graft investigation, which has weighed on growth. He said cases will soon be filed, including against his cousin, the former House speaker.

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The president received a standing ovation for proposing to end an unpopular charge where power consumers pay for electricity lost during delivery. That could be costly for Manila Electric Co., whose shares closed 4.7% lower Tuesday. In contrast, fast food giant Jollibee Foods Corp. shares ended the session 1.9% higher, even as the broader stock index was slightly lower. 

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The president’s emphasis on consumption highlights how the Marcos government is trying to revive a fragile economy that has stumbled to its weakest growth since the pandemic. It also shows how Marcos is centering his economic agenda on issues directly affecting consumers, after his popularity declined.

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His plans include raising the ceiling for non-taxable income to 350,000 pesos ($5,675) from 250,000 pesos annually. 

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The government would lose around 53 billion pesos in revenue in 2027 if Marcos’ proposal to raise the personal income tax exemption threshold is enacted, said Domini Velasquez, chief economist at China Banking Corp. The measure could lift economic output by 0.12 percentage point, while only having limited impact on inflation, she added.

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“Given the Philippines’ sluggish growth momentum, the proposal could serve as a timely pump-priming measure by supporting consumer spending, which accounts for roughly three-fourths of the economy,” she said.

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The official 2026 growth target was slashed to the 3.5% to 4.5% range in June, from as much as 6% before the Middle East conflict.

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Marcos’ pitch for relief measures covering middle-income earners should be positive for consumer companies, including Jollibee, Century Pacific Food, Inc., Universal Robina Corp. and Monde Nissin Corp., according to Maybank Securities analysts including Kervin Sisayan.