Slow GDP seen a ‘wake-up’ call
The country’s anemic growth rate is a signal for the government to intensify its efforts to combat corruption and restore public and business confidence, according to top business leaders.
“It is a wake-up call to the government,” Philippine Chamber of Commerce and Industry president Enunina Mangio said in a text message. “It reflects the challenges confronting key sectors of our economy.”
This, as the country’s gross domestic product (GDP) growth slid to 4 percent in the third quarter, its weakest output since the 3.8-percent contraction during the pandemic-hit first quarter of 2021.
“MSMEs (micro, small and medium enterprises) continue to struggle with high costs and limited access to financing; manufacturers face rising production expenses and logistical constraints; and our agriculture sector still needs stronger support to improve productivity and food security,” she added.
Loss of confidence
On top of the flood control corruption scandal, Federation of Philippine Industries (FPI) chair Elizabeth Lee noted that the Philippines had been grappling with investors’ risk aversion alongside a string of typhoons that disrupted classes, work and travel.
“People are spending less as prices bite and confidence dips. Government spending slowed down, too, with flood control projects stuck in controversy and procurement delays,” she said. “Put together, it’s no surprise growth came in at its weakest pace in years.
“This is definitely very concerning,” said Alfred Panlilio, president of the Management Association of the Philippines. “In my view, it is all about confidence in the country, especially with all these corruption issues coming out.”
“As a consumption-driven economy, the Chamber sees the recent crackdown on corruption as a contributor to the slower-than-normal growth, due to the cancellation of government projects,” said the European Chamber of Commerce of the Philippines. “Nonetheless, we view this as the government’s commitment to improve investor confidence.”
For his part, Finance Secretary Ralph Recto said the economy was still on “solid footing” and “poised for a strong comeback in 2026.”
Gov’t taking action
In a statement, Recto said the Marcos administration had measures in place for a “major government cleanup” geared toward reversing the GDP slump.
He also assured that those involved with the flood control corruption “will be held fully accountable and brought to jail in the coming months.”
“Although there has been a slowdown in government spending as we continue to address the flood-control corruption controversy, this reflects the administration’s strong resolve for good governance and to spend only on legitimate, high-impact programs and project,” he said.
“As said before, the flood control controversy has also revealed that not all capital expenditures translate into growth. And now that we’re plugging those leaks and reallocating funds to high-impact investments—such as education, health care, agriculture and digitalization—we will only grow faster,” Recto said.
He added that the interest rate cut of the Bangko Sentral ng Pilipinas last month was already in anticipation of the temporary slowdown.
FPI’s Lee agreed that for local industries, the GDP slump would be an “opportunity to regain momentum, with the government prioritizing locally sourced materials that meet product standards, priced correctly to benefit both manufacturers and public projects.”
“This is the path to rebuilding confidence and putting growth back on track,” she added.
