President Ferdinand R. Marcos Jr. delivers his fifth State of the Nation Address (SoNA) today, 27 July, facing the most difficult backdrop of his presidency: an economy edging toward stagflation and a political alliance that has unraveled into open conflict.

For much of his first three years in office, the administration weathered a succession of external shocks — from the lingering effects of the pandemic to the Russia-Ukraine war.

Today, however, domestic political turmoil has become increasingly intertwined with economic uncertainty, complicating the challenges confronting the President.

The economy: From rebound to slowdown

Marcos inherited an economy on the upswing. Gross domestic product expanded 7.6 percent in 2022 as consumer spending and tourism rebounded from the pandemic.

Despite aggressive interest rate hikes by the Bangko Sentral ng Pilipinas (BSP) to contain inflation triggered by the Russia-Ukraine war, the Philippines remained among Southeast Asia’s fastest-growing economies.

That momentum faltered in 2025 as the flood-control corruption scandal erupted, weakening investor confidence and disrupting public infrastructure spending.

Economic growth slowed to 4.4 percent for the year before easing further to just 2.6 percent in the first quarter of 2026 — the weakest quarterly expansion since the pandemic.

Inflation, which had cooled to 1.7 percent in 2025 as BSP tightening took effect, has since resurged.

The Philippines’ dependence on oil shipments passing through the Strait of Hormuz has left it vulnerable to the conflict in the Middle East.

Headline inflation accelerated to 6.4 percent in June despite government fuel price rollbacks, while economists warned that an approaching El Niño could push food prices even higher.

The BSP has now begun reversing course, raising interest rates to contain inflation just as growth weakens — a combination economists say raises the risk of stagflation.

The nation’s scorecard

The broader economic picture reflects those mounting pressures.

Jobs. Unemployment stands at 4.8 percent, or about 2.5 million Filipinos, according to the Philippine Statistics Authority. While still better than pandemic-era levels, economists warn that slower growth could make quality job creation increasingly difficult.

Poverty. Poverty incidence declined to 15.5 percent in 2023 from 18.1 percent in 2021, but millions of Filipinos remain vulnerable to rising food, transport and energy costs.

Markets. The Philippine Stock Exchange Index ended 2025 at a 12-year low of 6,052.92 amid the corruption controversy. Although it has recovered to 6,281.01, it remains below its year-end levels in both 2023 and 2024, reflecting continued investor caution.

The peso. The currency has weakened from P56.120 against the US dollar at the end of 2022 to a record P61.847 on Friday — its 12th all-time low since the Gulf conflict escalated in March.

Credit ratings. The Philippines has retained its investment-grade ratings, but warning signs have emerged. S&P Global Ratings revised its outlook from Positive to Stable in 2026, while Fitch Ratings changed its outlook to Negative, citing heightened external and fiscal risks.

Politics shapes economy

Economic uncertainty has become inseparable from political instability.

The flood-control controversy has triggered investigations into alleged ghost projects, substandard infrastructure and questionable contract awards, intensifying scrutiny of public spending and governance.

The controversy deepened after former congressman Zaldy Co, in a series of video statements released last year, alleged that Marcos Jr. and former House Speaker Martin Romualdez received billions of pesos in kickbacks from flood-control projects.

Both Marcos and Romualdez denied the allegations, with Malacañang dismissing Co’s claims as baseless and unsupported by evidence.

Likewise, the once-formidable Marcos-Duterte alliance unraveled into an increasingly public confrontation.

Vice President Sara Duterte resigned as Education Secretary in 2024, and tensions escalated further when the House of Representatives impeached her in 2025, a move that Duterte and her allies said was orchestrated by the Marcos administration.

The political rupture deepened after former President Rodrigo Duterte was arrested by Philippine authorities pursuant to an International Criminal Court warrant and transferred to ICC custody.

This year, Ms. Duterte faces an impeachment trial before the Senate on charges that include culpable violation of the Constitution, betrayal of public trust, corruption, misuse of confidential funds, and alleged threats against Marcos Jr., First Lady Liza Araneta-Marcos and former Speaker Martin Romualdez.

The impeachment has been widely viewed by Duterte allies as part of a broader effort by the Marcos administration to prevent her from seeking the presidency in 2028 and to deepen the political rupture between the country’s two most powerful political families.

Public opinion reflects those mounting political and economic headwinds.

The latest Pulse Asia survey placed Marcos Jr.’s approval rating at 29 percent, with 50 percent disapproving of his performance — the lowest approval rating of his presidency.

In contrast, Duterte registered a 56-percent approval rating. On trustworthiness, Marcos posted 28 percent, compared with Duterte’s 58 percent, underscoring the sharp divergence in public confidence as the once-united Marcos-Duterte alliance has given way to open political rivalry.

What Monday’s speech needs to answer

Filipinos will not be listening only for economic statistics. They will be looking for a convincing explanation of how the country arrived at this point — and, more importantly, a credible roadmap for restoring growth, taming inflation, creating better jobs, strengthening the peso, rebuilding investor confidence and restoring trust in government.

By tradition, the State of the Nation Address is the President’s account of where the country stands. This year, however, Filipinos already know the questions. They are waiting for the answers.

Whether Marcos can present a credible path back to economic stability and stronger public confidence may ultimately define not only his fifth SoNA, but the remainder of his presidency.