The impeachment of Vice President Sara Duterte will unlikely have a direct impact on the economy, though the capital market could potentially experience immediate effects, an analyst said Thursday.

“If this has any effect, it will only be related to the production of rice and other basic foods, and not directly because of the impeachment. This report could coincide with the increase in commodity prices due to other factors,” economist, policy, and risk analyst Emmanuel Leyco said in a televised interview.

This comes after the House of Representatives on Wednesday impeached Duterte, with 215 members, out of 306, voting in favor following complaints about alleged corruption.

Leyco said that if there are price fluctuations, they will be due to domestic production capabilities and not because of the impeachment.

“The prices will be affected not because of the impeachment but because of our production capabilities. It’s like growing rice or vegetables — it won’t stop because of the impeachment. But if there is any impact, it will be on the stock market.”

Possible effects on the capital market

Citing possible revelations, Leyco said the Vice President’s banking transactions may be demanded, which could affect the banking sector’s stocks.

“It depends because, if the revelations are shocking, the banks’ stocks may be hit. Deposits could also be withdrawn,” he explained.

He emphasized, however, that the banking system in the Philippines is “secure” and “stable,” so any political repercussions can be absorbed by the banking system.

“The immediate impact I see will be on the stock market because it is very reactive to what happens around us. Investments, however, are already programmed. They don’t just pull back because of something they heard. If they have investments, these have already been programmed last year, and they’re just being executed now,” he added.

Leyco also stressed that unless there is a dramatic shift in the political system, the economy will not be significantly affected.

“Especially now, we’re only talking about the vice president, not the president. So there will be political noise; it will be loud,” he said.

Senate President Francis “Chiz” Escudero said it would be legally impossible for the Senate to act on the impeachment complaints against Duterte now, as a plenary session is needed first to convene the Senate impeachment trial court. Congress adjourned on Wednesday and will reconvene on 2 June.  

Political noise

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC), the impeachment could result in political noise, distracting lawmakers from implementing reform measures that require legislation and other productive activities.

“Sometimes, political noise is part of the democratic process and would be relatively manageable, though it would be better for the markets if there were none,” he said, adding that as long as these issues do not lead to destabilization and political uncertainty, the impact would be limited.

 The local bourse on Thursday closed in the red, ending at 6,241.97, down by 39.11 points or 0.62 percent. 

The peso finished at P58.18 to the dollar.