Confidence sinks from ‘floodgate’ stink

Filipino consumer confidence, a crucial indicator of growth, slumped in the fourth quarter amid widespread concerns over graft and corruption linked to the flood control scandal, according to the latest data from the Bangko Sentral ng Pilipinas (BSP).

In its Consumer Expectations Survey (CES) released on Friday, 19 December, the central bank reported that the consumer confidence index (CI) plunged to -22.2 percent for the October-to-December period, a 12.4-point drop from the previous quarter.

The BSP attributed the sharp decline to heightened concerns over government corruption, lower household incomes, and unfavorable weather conditions.

The CES is a key economic surveillance tool used by the BSP in formulating monetary policy. A negative CI indicates that pessimistic respondents outnumber optimistic ones.

The economy relies heavily on household consumption, which accounted for 73 percent of gross domestic product (GDP) as of 2024. 

The weaker fourth-quarter index signals growing consumer apprehension, which could dampen spending during the period typically seeing peak consumption, particularly over the Christmas season.

BSP Governor Eli M. Remolona Jr. earlier said fourth-quarter GDP growth is expected to slow to 3.8 percent, down from 4 percent in the previous quarter, amid persistent uncertainty stemming from the floodgate scandal affecting the Marcos administration.

Year’s proceedings concluded

The Independent Commission for Infrastructure (ICI) recently concluded its 2025 proceedings. It recommended filing cases against high-profile figures, including former and incumbent senators Bong Revilla, Jinggoy Estrada, and Chiz Escudero, as well as several officials of the Department of Public Works and Highways (DPWH), in connection with the scandal.

On Friday, the ICI also called for a thorough investigation into the death of former DPWH undersecretary Catalina Cabral, who had been implicated in alleged kickback schemes and was reportedly responsible for determining “allocable” district amounts.

The BSP uses the CES as a gauge for monetary policy decisions. Last week, the central bank cut its key policy rate by 25 basis points, a move aimed at stimulating economic activity by increasing liquidity in the system.

Despite the weak fourth-quarter sentiment, the BSP said consumer confidence is expected to improve beginning next year. The CI for the first quarter of 2026 and the next 12 months remains in positive territory at 3.6 percent and 11.8 percent, respectively, reflecting a more favorable near-term outlook and echoing Remolona’s earlier projection of an economic rebound by mid-2026.

“Sentiment remains weak due to the corruption issue, as we can gauge from various sentiment indices. However, we expect a recovery in 2026 and 2027, partly due to previous rate cuts,” Remolona said.