POLITICAL instability linked to the impeachment case against Vice President Sara Duterte could weigh on the Philippines’ outlook if tensions escalate into broader social unrest, Fitch Group unit analysts said.
Brandon Ong, BMI country risk analyst, told The Manila Times that political risks and social polarization had increased as impeachment proceedings against Duterte had intensified the power struggle between the Duterte and Marcos political camps ahead of the 2028 presidential elections.
GeoQuant, which is part of BMI, last week said that both government and social polarization could be expected to continue rising “as long as the process continues, with the potential for political violence rising if Duterte is sidelined.”
BMI analysts acknowledged the GeoQuant outlook but said that risks remained muted for now.
“Government risk is rising, but very gradually,” Ong said.
He noted that the social polarization risk was also increasing since the House of Representatives began formal impeachment hearings against Duterte in late March, although this remained below levels seen during the latter part of former president Rodrigo Duterte’s administration ahead of the 2022 elections.
“So risk is rising, but not yet elevated relative to recent history,” Ong said.
BMI head of political science Ross Schaap, meanwhile, said rising political tensions could eventually affect the country’s credit outlook if impeachment proceedings led to turmoil.
“If impeachment leads to conviction and results in social unrest, that will weigh on investor sentiment,” he said.
Still, he said this remained a “low probability risk” for now, although businesses and that investors should continue monitoring developments closely.
The impeachment case against Duterte stems from alleged misuse of public funds and threats against President Ferdinand Marcos Jr.
The dispute has deepened tensions between Marcos and Duterte, who had combined forces and swept the 2022 national elections. Attacks by Rodrigo Duterte, Sara’s father, against Marcos and claims that the vice president had misused funds shattered the partnership.
The elder Duterte is now incarcerated at The Hague, where he is facing trial for alleged crimes against humanity during a bloody crackdown on drugs during his time in Malacañang.
Sara, who gave up her 2022 presidential ambitions, is the front-runner in the 2028 polls. Marcos, meanwhile, is limited by law to a single term.
Schaap said the social polarization risk began climbing after the Senate convened as an impeachment court for Sara’s trial and that government risk started rising shortly afterward. Her trial is expected to begin in July.
Schaap said recent changes in Senate leadership could significantly alter the impeachment process, with Duterte allies having taken the majority.
He described the current situation as involving “multiple low probability events,” including impeachment, conviction and a potential backlash from Duterte supporters.
He also noted that the Philippines remained less polarized than some regional peers such as Pakistan, India and Indonesia, although the country’s polarization risk was above the regional average.
For investors, Schaap said concerns would likely intensify only if impeachment proceedings trigger prolonged protests or violent unrest.
“If impeachment proceedings do lead to sustained protests, investor confidence will suffer. But again, this outcome remains a low probability prospect for now,” he said.
He added that businesses and foreign investors should continue monitoring political developments closely, although current conditions do not yet warrant reducing exposure to the Philippines.
“Even if social unrest follows, that will mostly be a concern for businesses with assets on the ground and less so for portfolio assets,” he said.
Fitch Ratings last month lowered its outlook on the Philippines to “negative” but affirmed its investment-grade “BBB” rating, signaling rising risks to the country’s credit profile.
A negative outlook signals an increased risk of a ratings downgrade over the medium term — usually within 12 to 18 months — if existing pressures continue.
Fitch warned that a downgrade could be triggered by weaker confidence in medium-term growth, a rise in government debt or a worsening external position marked by declining reserves or persistent current account deficits.
