Philippines 2025 Midterms: What Investors Should Watch

On May 12, 2025, Filipinos headed to the polls in a pivotal midterm election that has become a defining test for the administration of President Ferdinand “Bongbong” Marcos Jr and a key battleground for his estranged former ally, Vice President Sara Duterte. What began as a routine electoral cycle has evolved into a referendum on leadership, political alignments, and future policy direction.

The fallout between the Marcos and Duterte factions has fractured the once-dominant UniTeam alliance, leading to two opposing slates of candidates vying for control of the Senate, House of Representatives, and thousands of local offices. For foreign investors, this election holds serious implications for policy continuity, economic reform, and political stability.

A divided coalition and competing slates

President Marcos has launched the “Alyansa para sa Bagong Pilipinas” — a broad centrist coalition comprising major political parties such as the PFP, Lakas-CMD, NPC, and Nacionalista Party. His senatorial lineup includes Manny Pacquiao, Camille Villar, Bong Revilla, and Francis Tolentino — candidates who broadly support Marcos’ infrastructure-driven economic agenda, continuity in foreign investment policies, and fiscal reform. The coalition aims to ease legislative approval of key programs such as the Maharlika Investment Fund and amendments to economic liberalization laws.

In contrast, Vice President Sara Duterte has aligned herself with PDP–Laban and allied nationalist-leaning blocs. Her faction supports candidates like Ronald “Bato” dela Rosa, Bong Go, and Rodante Marcoleta — all of whom favor more populist economic measures, stricter oversight of foreign investors, and at times, more inward-looking economic rhetoric. While Duterte’s camp does not oppose investment outright, their posture generally supports stronger regulatory scrutiny and protectionist tendencies in strategic sectors.

Though Duterte faces impeachment proceedings scheduled for July, her slate remains a potent electoral force, especially in Mindanao and among voters dissatisfied with the pace of current economic reforms.

The economy in 2025: Growth with caution

The Philippine economy is projected to grow by six percent this year, according to the Asian Development Bank, supported by infrastructure investment, a rebound in services, and stable consumption. The International Monetary Fund projects slightly lower growth at 5.5 percent. Meanwhile, inflation has eased significantly, with April 2025 recording a 1.4 percent rate — the lowest in more than five years, primarily due to declining rice and transport costs.

While macroeconomic indicators are positive, the government recently revised its full-year growth target to between six and 6.5 percent, down from an initial seven percent projection. The adjustment reflects persistent concerns around global uncertainty, export performance, and the need for sustained private investment.

Foreign investors see a mixed picture — a fundamentally strong economy tempered by political headwinds and structural challenges.

What voters are demanding

Surveys ahead of the election show that the Filipino electorate is deeply concerned about jobs, food security, and healthcare. A Social Weather Stations (SWS) poll found that 90 percent of voters are likely to support candidates prioritizing food affordability and access to healthcare.

Governance is another major concern. The impeachment case against Vice President Duterte has raised broader questions about integrity and misuse of public funds. Meanwhile, foreign policy and national sovereignty — especially concerning China and the South China Sea — have become part of campaign narratives, particularly among pro-Marcos candidates who advocate a stronger alignment with the United States.

Social services, anti-corruption efforts, and economic resilience remain at the top of voter priorities, shaping the types of candidates gaining traction across the country.

The impact of U.S. tariffs on Philippine trade

A new layer of complexity has emerged from abroad. On April 2, 2025, U.S. President Donald Trump enacted a universal 10 percent import tariff — dubbed the “Liberation Day” tariffs — with country-specific rates applied on top. The Philippines faces a 17 percent tariff, prompting concerns about declining export demand to the U.S., the country’s largest single trading partner.

Early economic modeling suggests that Philippine exports to the U.S. could drop by as much as 15 percent, potentially shaving off a few tenths of a percent from GDP. However, some analysts believe the country could benefit from trade diversion effects. The Philippines enjoys relatively broad tariff exemptions in high-value sectors like semiconductors and electronics — areas where it could absorb production rerouted from China or Vietnam.

To fully capture these gains, the country must address infrastructure gaps, investment barriers, and logistical constraints that limit its global competitiveness.

Implications for foreign investors

The outcome of the 2025 midterms will influence legislative dynamics and the broader operating environment for foreign businesses. Investors should treat the election as a signal of how predictable — or volatile — policy implementation may become over the next three years.

If President Marcos’ coalition secures a clear majority, investors can expect relative continuity in areas like infrastructure development, public-private partnerships, digital transformation, and economic liberalization. This scenario would likely support ongoing reforms aimed at streamlining investment procedures, easing ownership limits, and enhancing fiscal transparency.

If the Duterte-aligned opposition gains significant ground in Congress, the risk of legislative gridlock and populist policy pressures may increase. Investors may face more scrutiny in politically sensitive energy, media, and land sectors. Regulatory delays, heightened compliance demands, or shifts in project approvals may occur — particularly for businesses with high public visibility.

Foreign investors should also closely watch local government outcomes. Mayors and governors in key hubs like Metro Manila, Cebu, and Davao play a decisive role in licensing, tax administration, and land-use permissions. Their posture toward foreign capital can either accelerate or obstruct market entry and expansion plans.

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