Despite the headwinds being faced by the Philippine economy this year, executives of the country’s largest conglomerate, the SM Group remain confident of an economic rebound in 2026.

Speaking at a press event last week at BDO (Banco de Oro) Ortigas offices, SM Investments vice chair Teresita Sy-Coson said the country’s economic prospects remain strong despite the political turmoil triggered by the “Floodgate” scandal.

“The next year will not be so bad if we think more positively. We just have to do our work in spite of all the political noises, so for us we’re going to continue what we have planned, and I think we will be able to achieve our targets next year,” Sy-Coson said.

Meanwhile, BDO president and CEO Nestor Tan noted that the 2025 slowdown may spill over into 2026, but emphasized that provincial expansion and continued investments in energy and infrastructure offer avenues for recovery.

Provincial expansion going on

“Outside of the environment that we see, we still see provincial expansion going on. It’s growing faster than NCR on average, so we still see some positive light there. We still see some activity in infrastructure, in energy and the like, people continue to invest,” he said.

The ghost flood control project scandal, first raised publicly by President Ferdinand R. Marcos Jr. in July, has cost the Philippines up to P118.5 billion, according to former Finance chief Ralph Recto. 

Q3 economic indicators dragged 

The scandal dragged third-quarter economic indicators across the board — GDP growth slowed to 4.0 percent, the peso fell to record lows in November and December, and foreign direct investments have declined.

These indicators reflect a broader sense of investor unease. Only two companies went public on the Philippine Stock Exchange (PSE) this year amid the corruption scandal, with the PSE index hitting record lows in October following video exposés by fugitive ex-Congressman Zaldy Co, who alleged that Marcos Jr. himself orchestrated the flood control budget insertions.

Inflation within BSP’s target range

Despite these headwinds, inflation remains below the Bangko Sentral ng Pilipinas’ target range of 2 to 4 percent, indicating preserved purchasing power, particularly for the bottom 30 percent of income earners, according to the Philippine Statistics Authority (PSA).

“I think we did good, all things considered. We have strong fundamentals, great reserves, [and] low inflation. The problem really is sentiment,” said BDO Economist Dan Roces.

RRR cut

Last week, the BSP cut its Target Reverse Repurchase Rate in an effort to stimulate economic activity in 2026. 

BSP Governor Eli M. Remolona Jr. has acknowledged that the Philippines will miss its 5.5 to 6.5 percent growth target for the year but remains optimistic about a rebound “in the middle of 2026.”