Corruption, uncertainty threaten economy
Governance issues create drag, making it harder for the Philippines to hit high growth, attract investments and achieve its broader economic goals, despite its underlying strength.
Daily TribuneGovernance issues create drag, making it harder for the Philippines to hit high growth, attract investments and achieve its broader economic goals, despite its underlying strength.
The Philippines has missed the ambitious GDP growth targets for 2023, 2024, and, most likely, 2025 due to severe corruption and policy inconsistency.
The Philippine economy, while not collapsing, is at a crossroads, requiring the addressing of structural weaknesses to accelerate growth beyond current levels and compete more effectively with its regional peers, as highlighted by economists and financial reports.
It is experiencing steady, albeit slowing, growth and remains one of Asia’s faster-growing economies despite challenges such as global headwinds and domestic issues. Forecasts indicate continued expansion, though it may miss ambitious government targets, driven by consumption and investment, but it faces concerns over governance and reforms.
Key Points:
1. Growth is Sustained: The economy grew by 5.6 percent in 2024, making it a top performer in the ASEAN region, with projections for 2025 and 2026 remaining robust, above 5 percent according to the World Bank, IMF and government figures.
2. Slowing Momentum: Growth has decelerated from the post-pandemic rebound and the government has missed its targets for the past few years, settling at closer to 5.2–5.3 percent for 2025.
3. Drivers of Growth: Strong household spending increased investment, and the stabilizing inflation is supporting the economy.
4. Challenges and Risks: Issues like corruption, which dampens investment sentiment and the need for deeper structural reforms (e.g., in agriculture, public funds) are persistent concerns according to the World Bank.
5. Resilience and Outlook: The economy shows resilience, with strong fundamentals and efforts to attract investment, but faces a critical period requiring significant reforms to reach higher potential, according to the World Bank.
But most unfortunately, the Philippines has missed ambitious growth targets for 2023, 2024 and is projected to miss the 2025 goal, with governance issues like corruption in public works and policy uncertainty dampening investment/consumer confidence and slowing government spending, hindering progress towards becoming an upper-middle income economy and achieving broader development goals despite strong potential. Specific missed goals include the 6.8-percent growth target, with actual growth falling short, impacting poverty reduction and infrastructure development.
Key Missed Targets and Governance Impacts:
Economic Growth (GDP)
1. Original Targets (e.g., 6.8%): The government consistently missed ambitious growth targets, with actual growth falling short, as earlier noted by DAILY TRIBUNE and Business World.
2. 2025 Projection: Missing the already 5.6-percent target due to the corruption scandal and slower third quarter performance.
3. Investor and Consumer Confidence: The major corruption scandal involving public works projects has significantly shaken confidence, leading to reduced spending and investment.
4. Poverty Reduction and Development: Slowed growth hinders efforts to lift the people out of poverty, improve infrastructure and reduce inequality.
Underlying governance issues:
1. Corruption Scandals: Major scandals, particularly in public works, have deterred spending and highlighted governance weakness.
2.Policy inconsistency/Uncertainty: Governance concerns create unproductivity, affecting long-term investments.
3. Weak Institutions: The need to strengthen institutions to protect economic gain is a recognized challenge.
Governance issues create headwinds, making it harder for the Philippines to achieve high growth, attract investment and reach its broader economic goals, despite its underlying strengths.