Building permits slide 17.5% as flood scandal bites

Total approved building permits declined in October amid the fallout from the infrastructure scandal involving alleged ghost flood control projects.

According to the Philippine Statistics Authority (PSA), the number of constructions covered by approved building permits reached 12,705 in October 2025 — a 22.6 percent drop from 16,405 in the same month last year.

This marked the third consecutive month of decline in building permits. 

Public disclosure

PSA data show that approvals have fallen 17.5 percent since July 2025, coinciding with President Ferdinand R. Marcos Jr.’s public disclosure of the now-infamous ghost flood control projects under the Department of Public Works and Highways (DPWH).

The scandal dragged third-quarter GDP growth down to 4.0 percent, the lowest in three years. 

Economists have attributed the 1.5-percentage-point slowdown from the previous quarter largely to a contraction in public infrastructure spending, which plunged 26.2 percent during the period. 

This decline shaved an estimated 1.3 percentage points off GDP growth, according to BPI lead economist Jun Neri.

P910 million in lost project value

PSA data further show that the drop in approved building permits translated into roughly P910 million in lost project value from July to October. While August posted relatively high peso values despite fewer approved projects, both the volume and total value of construction projects have declined steadily since then.

The flood control scandal has also weighed heavily on both business and consumer confidence. Recent surveys from the Bangko Sentral ng Pilipinas (BSP) indicate a continued deterioration in sentiment since the issue gained prominence. 

Broader implications

Neri warned of the broader implications in his analysis released alongside the third-quarter GDP report.

“Beyond the direct hit to government spending, the issue may dampen business and consumer sentiment further, discouraging them from spending amid expectations of slower growth,” he said.

In response to the slowdown, the BSP recently cut its key policy rate by another 25 basis points, a move intended to stimulate economic activity by increasing liquidity in the economy. 

Rate cuts only a temporary remedy

Neri cautioned, however, that rate cuts offer only a temporary remedy and may carry inflation risks.

Inflation remains well below the BSP’s 2 to 4 percent target range, providing some policy headroom. 

Still, Neri warned against excessive monetary easing.

“Excessive rate cuts could lead to an overshoot, as monetary policy might be used disproportionately to compensate for weaker growth performance,” he said. 

“If the BSP cuts its rates too much and inflationary pressures suddenly rise, the central bank could be forced to reverse course abruptly, hiking rates faster than the ideal pace,” he said.