The Philippines’ economy could have grown faster in 2025 if the controversy surrounding flood control projects had not forced the government to pause public infrastructure spending, the country’s chief economist.
“The sharp contraction of public construction in the fourth quarter contributed to 2.2 percentage points of the decline,” Department of Economy, Planning and Development (DEPDev) Secretary Arsenio Balisacan said in a statement.
He added that if public construction had remained steady, gross domestic product (GDP) growth for 2025 could have risen from 4.4% to 5.5%. “In other words, the sharp contraction caused by the corruption scandal cost us around 1.1 percentage points in GDP growth,” he said.
GDP, the total value of goods and services produced, slowed to 3% in the October–December 2025 period, lower than the revised 3.9% growth in the third quarter. This brought full-year GDP growth to 4.4%, falling short of the Marcos administration’s 5.5%–6.5% target and marking the third consecutive year the country missed its growth goal. GDP had grown 5.7% in 2024 and 5.5% in 2023, both below target.
Data from the Philippine Statistics Authority showed the industry sector contracted 0.9% in the last quarter, dragged down by a 7.1% drop in construction. General government capital formation in construction fell sharply by 41.9% during the same period.
Balisacan, however, framed the slowdown as a necessary step to secure long-term economic stability. “As the President mentioned, it cannot be business as usual. We could have grown faster last year, but with corruption rampant in infrastructure, that growth would not have been sustainable,” he said.
The chief economist emphasized that the temporary slowdown allows the government to address corruption, restore public trust, and ensure that future growth benefits society more broadly.
“Yes, we could have grown faster, but the question is whether that growth would lead to inclusive development and resilient growth. Without addressing corruption, economic gains become concentrated, and opportunities for the poor are lost,” Balisacan explained.
He added that if the flood control corruption had gone unnoticed, public funds might have been diverted into luxury spending by those benefiting from the projects.
“They might buy expensive cars or live in luxury mansions. The economy might grow, but inclusivity would be lost,” he said.
