7 Nov 2025 – Corruption woes drag Philippines’ economic growth to 4-year low in Q3 2025

Nov 7, 2025 2:07 PM PHT
Tatiana Maligro

MANILA, Philippines – The Philippine economy grew just 4% in the third quarter of 2025 as the flood control scandal dampened investor and consumer confidence, the Philippine Statistics Authority (PSA) reported on Friday, November 7.

The latest gross domestic product (GDP) print is slower than the second quarter’s 5.5% growth rate, and places the country’s average economic growth for the year so far at just 5%. The Marcos administration aims to grow the economy by 5.5% to 6.5% in 2025.

Corruption woes drag Philippines’ economic growth to 4-year low in Q3 2025
The GDP print is also much lower than analysts’ expectations of around 5.3%.

It marks the Philippine economy’s slowest growth since the contraction in the first quarter of 2021, during the COVID-19 pandemic.

Government infrastructure spending plunged to a 14-year low of -26.2% growth amid stricter validation measures for the Department of Public Works and Highways’ projects, as well as delayed billings and disbursements for government works. These measures were implemented in light of the government’s ongoing probe into anomalous flood control projects.

Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan also noted that the flood control scandal affected consumer confidence, as households postponed their purchases of durable goods. Household spending grew by just 0.5% in the third quarter.

On the production side, all three major industries posted growth in the third quarter. The agriculture sector (2.8% growth) rebounded from last year’s contraction (-2.7%), but growth in industry (0.7%) and services (5.5%) slowed from the same quarter in 2024.

Balisacan admitted that to meet the government’s target growth range, the economy will have to grow by around 6.8% in the fourth quarter.

“Given the shocks that are happening at the moment and are expected to linger in the remaining weeks and before the year ends, that’s quite challenging,” he said.

Corruption and the economy
Balisacan noted that the last time public construction spending contracted by over 20% was in 2011 amid the late former president Benigno “Noynoy” Aquino III’s crackdown on corruption.

Because of the loss of consumer and investor confidence, Balisacan vowed to implement “strategic interventions” to bolster trust and accelerate economic growth. These include fast-tracking social protection for vulnerable Filipinos and pursuing long-term governance reforms such as proposed amendments to the bank secrecy law.

He also hopes that the government can begin disbursing funds for projects that are not tainted with corruption.

(1st UPDATE) Beyond failed flood control projects, the cost of corruption is reflecting in a weaker peso, a falling stock market, and the threat of losing the Philippines’ hard-won investment grade

Philippine economy grows 5.5% in Q2 2025 amid cooling inflation

(1ST UPDATE) The Philippines’ gross domestic product growth meets the Marcos administration’s targets in the second quarter of 2025 as household spending growth offsets dampened government expenditures

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“Those projects that were intended for 2025 that were already completed and are not involved with any of those red flags, they should be paid so that the resources, the funds will recirculate in the economy and create other opportunities, more opportunities,” he said.

The country’s chief economist also noted that the government is underspending in key priority areas despite an increase in funding for infrastructure over the years.

“The productive capacity that we had wanted to happen was muted by all this corruption because the investment in infrastructure that we are trying to ramp up is supposed to enhance the capacity of the economy to produce more, to employ more, to generate higher quality jobs,” Balisacan explained.

Balisacan underscored the importance of not just merely increasing infrastructure spending, but improving the quality of spending as well. This means ensuring that public funds are spent on high-quality projects that will boost economic growth, even if it means working with a smaller budget.

“So what I think lagged behind and we should have worked on harder are the governance and institutional mechanisms that would allow us to accommodate such kind of spending. And this is…I think an important lesson — that we did not focus much on equally important areas of good economic management, and it is the ecosystem that would allow us to ensure that there is consistency between policy design and implementation and outcomes,” he said. – Rappler.com

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