ADB: Corruption probe adds to PH growth risks
A widening corruption inquiry into flood control projects threatens to cast a shadow over the Philippines’ growth outlook, the Asian Development Bank (ADB) warned, as intensifying scrutiny may slow the government’s infrastructure push.
Speaking at a press conference in Manila, Andrew Jeffries, the ADB’s country director for the Philippines, said the scandal’s economic impact may show up in the lender’s updated growth forecasts due in December.
For now, Jeffries said the fallout was difficult to quantify, as funds originally earmarked for flood control works are expected to be redirected to other government priorities.
Recall that some P255.5 billion had been slashed from the Department of Public Works and Highways’ (DPWH) proposed 2026 outlay following President Marcos’ order to conduct a sweeping review of its original P881.3-billion budget.
Malacañang had said the money would be shifted to social services and education, among other key sectors. Even so, the budget department had warned that a “temporary slowdown” in infrastructure spending was likely as the DPWH verifies completed projects and tightens scrutiny of billings and payment claims.
“That’s certainly a risk to economic projections going forward,” Jeffries said. “More broadly, corruption has broad impacts on economic growth in general and investment sentiment. We’re monitoring that and how that may be affected going forward.”
In its flagship Asian Development Outlook report, the ADB pegged its growth forecast for the Philippines at 5.6 percent for this year. If realized, gross domestic product (GDP) expansion would settle near the low-end of the Marcos administration’s 5.5- to 6.5-percent target for 2025.
Looking ahead, the bank trimmed its projection for 2026 to 5.7 percent, from 5.8 percent previously. This would fall short of the government’s 6- to 7-percent goal, with the ADB mainly attributing the downgrade to external headwinds, including higher US tariffs that could sap investments.
The government’s growth ambitions hinge partly on keeping infrastructure outlays at 5 to 6 percent of GDP. With investigations into alleged irregularities in flood control projects ongoing, Jeffries said the ADB would hold off on revising its outlook until more data is available.
“We didn’t see a reason at this point in time to reduce those GDP projections due to that issue. But it’s certainly a heightened risk,” he said.
Despite the recent revisions, the ADB still ranks the Philippines as Southeast Asia’s second-fastest-growing economy this year and next, trailing only Vietnam. The country is also expected to outpace Developing Asia—a group of 46 economies projected to expand by an average of 4.8 percent this year and 4.5 percent in 2026.
“The Philippines’ growth outlook remains resilient amid a global environment of shifting trade and investment policies and heightened geopolitical uncertainties,” Jeffries said.
“Though these uncertainties pose increased risk, we see strong domestic demand anchoring growth, with sustained investments and an accommodative monetary policy supporting the economy’s expansion,” he added.
