Antigraft drive might dampen growth thru ’28

The Philippine economy is unlikely to post faster, sustained growth in the run-up to the 2028 presidential election. This, as political fallout from an ongoing anticorruption drive, undermines the government’s ability to push through reforms that could meaningfully lift expansion.

This is according to Diwa Guinigundo, an analyst at New York-based GlobalSource Partners. Commenting on the recent report of the International Monetary Fund (IMF) on the Philippines, he said the IMF’s medium-term projections for the country were “revealing.”

The IMF expected the economy to have grown 5.4 percent in 2025, down from 5.7 percent the year before.

Growth is projected to recover to 5.8 percent this year, before rising to 6.1 percent in 2027 and easing slightly to 6 percent in 2028.

These forecasts broadly track the economy’s estimated growth potential of around 6 percent. But Guinigundo, a former deputy governor of the Bangko Sentral ng Pilipinas (BSP), said weak investor and business confidence were undermining economic momentum.

“In plain terms, the IMF sees no policy break powerful enough to generate a sustained growth acceleration before the 2028 presidential election,” he wrote.

“Cautious optimism, in this case, reflects not confidence in reform momentum, but the absence of a credible alternative,” he added.

President Marcos’ economic managers have warned that official macroeconomic targets might need revisiting to reflect the impact of an expanding anticorruption campaign.

The investigation has widened to lawmakers, Cabinet officials, state engineers and private contractors. This has made a dent in sentiment and constrained public outlays just as the economy leans on domestic demand to buffer rising global risks.

Slowest in 4 years

As a result, data showed the economy expanded just 4 percent in the third quarter of 2025—its slowest pace in over four years.

The BSP acted swiftly, cutting its benchmark rate by another quarter point to 4.5 percent at the Monetary Board’s Dec. 11 meeting.

The move was intended to “compensate” for the economic drag from the anticorruption drive. It brought reductions since the easing cycle began in August 2024 to a total of 2 percentage points.

Meanwhile, the drag is spilling over to consumption, which typically makes up about 70 percent of output.

Easing inflation and lower borrowing costs should have lifted household spending. But private consumption grew by just 4.1 percent in the third quarter of 2025, the slowest pace in four years.

Guinigundo said any increase in public spending aimed at shoring up growth would need to be paired with reforms to restore government credibility.

“While improvements in spending efficiency, investment selection, and transparency are welcome, they will have limited credibility without fundamental reforms—namely, the prosecution of corruption cases across the bureaucracy, passage of the anti-dynasty bill, and a serious overhaul of election laws and the Commission on Elections,” he said.

“Without these, governance reforms risk becoming temporary mitigants rather than durable solutions,” he added.