Philippine economic growth in the fourth quarter is set to once again disappoint, as spillovers from dampened public and private consumption in the aftermath of the flood-control infrastructure corruption scandal linger, according to think tank Capital Economics.<\/p>\n
\u201cSurveys suggest that the scandal has continued to depress activity in the fourth quarter, with the PMIs [purchasing managers\u2019 indices] falling to multi-year lows,\u201d noted Capital Economics senior Asia economist Gareth Leather, deputy chief emerging markets (EMs) economist Jason Tuvey, and Asia economist Shivaan Tandon in a Dec. 29 report.\u00a0The Philippines\u2019 manufacturing PMI slid to an over four-year low of 47.4 last November\u2014a level below 50, which signals contraction.<\/p>\n
The think tank pointed out that third-quarter gross domestic product (GDP) growth already slowed to just four percent year-on-year\u2014a 4.5-year low\u2014as the discovery of \u201cghost\u201d and substandard flood-control projects led to protests as well as the postponed rollout of other infrastructure projects.<\/p>\n
Earlier this month, Capital Economics further slashed its near-term GDP growth forecasts for the Philippines to four percent for 2025, 4.5 percent for 2026, and five percent for 2027.<\/p>\n
The government targets a downscaled 5.5- to 6.5-percent GDP expansion this year, with the end-September average at five percent. For 2026, the official GDP growth goal is an also tempered six to seven percent.<\/p>\n
Capital Economics said that the \u201cmassive corruption scandal in the Philippines is continuing to weigh on economic activity.\u201d<\/p>\n
\u201cA key risk is that the corruption scandal causes investor sentiment toward the Philippines to sour,\u201d the think tank warned.<\/p>\n
This is already showing in the performance of the Philippine peso, which Capital Economics noted has weakened since President Ferdinand R. Marcos Jr.\u2019s State of the Nation Address (SONA) last July. It was during Marcos\u2019 fourth SONA\u2014marking the start of the second half of his administration ending in 2028\u2014that the President brought to public attention the billions, if not trillions, of pesos wasted on flood-control corruption.<\/p>\n
In recent weeks, the local currency reached record-low levels against the United States (US) dollar, breaching the \u20b159:$1 mark, and it does not help that \u201cthe large current account deficit leaves the peso vulnerable,\u201d Capital Economics said.<\/p>\n
Based on the Bangko Sentral ng Pilipinas\u2019 (BSP) latest balance of payments (BOP) forecasts released last week, the current account deficit\u2014the gap in the country\u2019s net dollar earnings from trade in goods and services as well as remittances from overseas Filipinos (OFs)\u2014is now seen easing to 3.2 percent of GDP this year, slightly narrower than the central bank\u2019s previous 3.3-percent forecast.<\/p>\n
As of end-September 2025, the current account deficit stood at 3.6 percent of GDP, narrower than the full-year 2024 shortfall equivalent to four percent of GDP.<\/p>\n
For 2026, the current account deficit is seen to further narrow to three percent of GDP, although slightly wider than the earlier forecast of 2.9 percent.<\/p>\n
Amid weak economic activity coupled with low inflation, Capital Economics believes that \u201cthere\u2019s scope for a bit more easing in 2026\u201d following the 25-basis-point (bp) interest rate cut by the BSP this month.<\/p>\n
From a policy rate of 4.5 percent at present, the think tank had forecast another 25-bp reduction in the first quarter of 2026 and a terminal rate of four percent before the end of next year.<\/p>\n
The think tank had also projected headline consumer price index (CPI) inflation at 1.6 percent in 2025, 2.3 percent in 2026, and three percent in 2027. The BSP targets an inflation rate of two to four percent, a range deemed manageable and conducive to economic growth.<\/p>\n","protected":false},"excerpt":{"rendered":"Philippine economic growth in the fourth quarter is set to once again disappoint, as spillovers from dampened public…\n","protected":false},"author":2,"featured_media":217929,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,113082,958,61,60,25126,113185,113186,17471,12514,2709],"class_list":{"0":"post-217928","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-flood-control","11":"tag-growth","12":"tag-ie","13":"tag-ireland","14":"tag-keeps","15":"tag-philippine","16":"tag-q4","17":"tag-scandal","18":"tag-under","19":"tag-water"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/217928","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=217928"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/217928\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/217929"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=217928"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=217928"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=217928"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}