PH economy could have grown 5.5% in 2025 but for corruption scandal, says Balisacan

The Philippines' economy would have performed better last year if the flood control projects controversy had not compelled the government to put public infrastructure spending on hold, the country’s chief economist said Thursday.

“The sharp contraction of public construction in the fourth quarter contributed to 2.2 percentage points in the decline,” Department of Economy, Planning and Development (DEPDev) Secretary Arsenio Balisacan said in a statement.

“If public construction could have been flat, our GDP in 2025 would have actually increased from 4.4% to 5.5%. In other words, the sharp contraction of public construction because of the corruption scandal contributed to something like 1.1 percentage points [in the decline],” he added.

The economy as measured by gross domestic product (GDP)—the value of goods and services in a period—eased to 3% in the October to December 2025 period, slower than the downwardly revised 3.9% GDP growth rate seen in the third quarter of last

The fourth quarter 2025 economic performance brought the full-year 2025 GDP growth rate to 4.4%, falling below the Marcos administration’s target of 5.5% to 6.5%.

This marked the third straight year that the country failed to hit its economic growth target—5.7% in 2024, below the 6% to 6.5% goal; and 5.5% in 2023, lower than the 6% to 7% target.

Data from the Philippine Statistics Authority (PSA) showed that the industry sector declined 0.9% in the last quarter of 2025, dragged by construction which contracted by 7.1% on the back of a staggering 41.9% drop on general government capital formation in construction in the October to December 2025 period.

Balisacan added, however, that the sharp slowdown seen in the last quarter of 2025 was a necessary setback to build a lasting growth momentum.

“But as we said it is a must for us to do. It is something that had to be done. As the President mentioned, it cannot be business as usual. Otherwise, we can have growth last year, maybe higher, but with corruption all over the places in infrastructure that would not be expected to last,” he said.

The country’s chief economist further said that “we’d better have a slowdown… to correct the problems, build the trust of our people in the institutions, in the government.”

“Yes, we could have grown faster but... the question is, will you be able to achieve your long-term vision of an inclusive society? A resilient growth? Because what you find in a growth context like that is sooner or later the economy will burst because it cannot sustain that kind of [growth],” he said.

“In other words, yeah, it's a growth that will not, that doesn't yield or result in better outcomes for society in terms of say, poverty reduction… because it’s highly concentrated. Because you know, when money is spent or put for improving access to opportunities, livelihood, went to the pocket of the corrupt, right? Then, of course, you don't have those opportunities. You will miss those opportunities, so you retard the process of social transformation,” he added. 

If the flood control corruption was not exposed, the DEPDev chief said that economic spending would have been poured into “luxury goods that have very little multiplier effects” by the individuals who benefited from it.

“They'll drive more expensive cars, [live in] more expensive mansions… but will this promote widespread inclusive development? No. But the economy will grow, right? But you'll miss the inclusivity,” he said. — BM, GMA Integrated News