Amid Christmas merriment, growth momentum is expected to skid as spillovers from the corruption scandal persist well into next year. Still, business leaders are betting on the economy’s fundamental strength to weather the backlash from the debilitating anomaly.

Philippine Amalgamated Supermarket Association president Steven Cua said consumer spending is on a skid due to uncertainty over the next year.

The failure of investigations to proceed fast enough has dampened spirits. “I think it has moved to a dampening of consumer confidence as well as business confidence,” Cua said.

Asked whether consumers were shopping for Noche Buena meals, several said they were waiting for assistance from their barangays.

“So their point is that there is no need to splurge this year, given the uncertainty. But of course, there will always be those people who will be buying, leaving their pockets empty by shopping until they drop because it’s Christmas after all,” Cua said.

“Corporate buying supported consumer spending in what was supposed to be a busy season, but it’s done. Corporate buying is done. With two days to go, it’s household buying,” he added.

Consumers have turned to cheaper alternatives from smaller grocery chains or stores offering the same products carried by most supermarkets but at significantly lower prices.

Cua said the brands sold by the said stores are not widely recognized, but with limited budgets, some consumers simply do not care.

The retail veteran said small stores can sustain low-price strategies only for a short period.

“Bottom line, I guess they’re having some problems right now. I don’t know how long they can withstand it or how much capital they still have to keep opening new stores,” Cua said.

Meanwhile, small retailers are encroaching on the market of sari-sari stores, mini-marts, and convenience stores.

Cua said government support should come in the form of less regulation and a focus on expanding and developing industries—not only supermarkets but businesses across sectors.

BDO president and CEO Nestor Tan said the 2025 slowdown will affect momentum in 2026 but noted that provincial expansion and continued investments in energy and infrastructure offer recovery opportunities.

“Outside of the environment that we see, provincial expansion is growing faster than NCR on average. We still see some positive light. We still see activity in infrastructure and energy. People continue to invest,” Tan said.

The flood-control controversy dragged third-quarter economic indicators down, with gross domestic product growth slowing to 4 percent, the peso falling to record lows in November and December, and foreign direct investment declining.

Bangko Sentral ng Pilipinas Governor Eli M. Remolona Jr. said fourth-quarter GDP growth is expected to slow further to 3.8 percent.

Indicators below goal

Despite headwinds, inflation remains below the BSP’s 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.

SM Investments Corp. economist Dan Roces said sentiment, rather than fundamentals, remains the main challenge.

“I think SMIC did well, all things considered. We have strong fundamentals, great reserves, and low inflation. The problem really is sentiment,” Roces said.

Remolona acknowledged that the Philippines will miss its 5.5 to 6.5 percent growth target but remains optimistic about a rebound by mid-2026.

Flood-control investigations continue to weigh on confidence. Business optimism rose modestly in the fourth quarter, with the business confidence index increasing to 29.7 percent from 23.2 percent, according to the BSP’s Business Expectations Survey.

Consumer confidence, however, deteriorated. The BSP’s Consumer Expectations Survey showed the index plunged to negative 22.2 percent in the October-to-December period, a 12.4-point drop from the previous quarter.

The BSP said sentiment remains weighed down by natural calamities and corruption allegations tied to flood-control projects.

“The lingering effects of recent natural calamities, together with the negative impact of corruption allegations on investor and business sentiment, weighed down the outlook,” the BSP said.

Household consumption, which accounts for 73 percent of GDP, remains critical. With Christmas approaching, businesses are hoping for a seasonal boost that could offer a rare bright spot in an otherwise challenging year.

Corruption affects sentiment

The BSP attributed declining confidence to concerns over corruption, lower household income, and adverse weather conditions.

A negative confidence index indicates pessimists outnumber optimists.

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