The country’s much-touted growth trajectory is sinking under the weight of the pork barrel revival scandal, driven by the exploitation of flood control projects.

Economic managers said the country missed its goal of achieving upper-middle income status by just $26 last year. But with the economy now taking a direct hit from the corruption scandal, that development target may have drifted even farther out of reach.

Based on Philippine Statistics Authority (PSA) figures, the government pulled back on project spending, with public outlays rising by an anemic 5.8 percent from a year ago in the third quarter, its slowest pace for the period since 2024.

Economic, Planning and Development Secretary Arsenio Balisacan said that as a result of the uncovering of the widespread irregularities, stricter validation procedures were implemented, which delayed the release of funds.

Spending on infrastructure contracted by 26.2 percent — the worst in nearly 14 years — as stricter measures were enforced to curb the misuse of funds.

Household consumption, a key growth driver, grew only 4.1 percent, its weakest since the first quarter of 2021, as consumers deferred major purchases, particularly of durable goods, likely as a reaction to the overall gloom as the government becomes preoccupied with uncovering the rot.

The corruption scandal linked to government projects hammered consumer and investor confidence.

Waning confidence led to the gross domestic product (GDP) growing a lackluster 4 percent in the third quarter from a year earlier, well below the 5.2-percent growth in 2024 and the 5.5-percent expansion in the previous quarter.

Economic officials are expected to go back to the drawing board and rewrite lower the 5.5 to 6.5-percent growth target range for the year.

“All this corruption muted the productive capacity that we had wanted to happen,” Balisacan said at a press briefing. “It’s just so shocking to see how extensive it was.”

The corruption probe has implicated several government officials and lawmakers and is believed to reach the upper echelons, as investors expressed concern over the integrity of public spending.

Adding to the slowdown, the country also grappled with a series of natural disasters, including a super typhoon, which disrupted economic activity and infrastructure in parts of the country during the quarter.

The stagnating economy is more clearly reflected in the quarterly numbers, which experts track to gauge momentum.

On a seasonally adjusted basis, GDP expanded 0.4 percent from the previous quarter, a flat growth.

Dutch multinational banking and financial services corporation ING raised the red flag, saying the weak GDP numbers raise concerns that soft government spending could become a longer-term drag, weighing not only on fiscal outlays but also on business and private sector sentiment.

Its main worry is that investment and public spending may remain muted for a long stretch.

It cited the Business Outlook Survey of the Bangko Sentral ng Pilipinas (BSP) that showed the 12-month all-industry confidence indicator falling to its lowest level since 2022 in the third quarter, with pessimism dominating construction and real estate.

Exports picked up a bit in the third quarter but ING said this resilience may fade as the full impact of higher tariffs takes hold next year, “eroding competitiveness.”

ING thus revised its full-year growth projection to 4.7 percent, down from its earlier 5.2-percent estimate.

The rising toll from the yearly calamities that plague the country rests on the shoulders of government thieves who have plundered billions of pesos, losses now measured in Filipino lives and properties destroyed.