The Philippines would have met its economic growth target in 2025 if not for the flood control corruption scandal, according to Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan.

“If public construction could have been flat, our GDP in 2025 would have actually increased from 4.4% to 5.5%. In other words, the sharp contraction of public construction because of the corruption scandal contributed to something like 1.1 percentage points [in the decline],” Balisacan said in a statement on Thursday.

His remarks followed the official release of the country’s fourth-quarter and full-year 2025 gross domestic product (GDP) figures during a joint press conference with the Philippine Statistics Authority (PSA). The PSA reported that fourth-quarter GDP growth plunged to 3.0 percent, far below the already downgraded 3.9 percent recorded in the previous quarter.

Growth from October to December dragged full-year 2025 GDP growth to 4.4 percent, well below the government’s 5.5 to 6.5 percent target range and the slowest growth rate since 2011. Had the corruption scandal not triggered a sharp pullback in infrastructure spending and dampened overall market sentiment, the economy would have reached at least the lower bound of its growth target.

Instead, the Marcos Jr. administration missed its growth target for a third consecutive year. Economic growth had already fallen short in prior years, registering 5.7 percent in 2024 against a 6.0 to 6.5 percent goal, and 5.5 percent in 2023 versus a 6.0 to 7.0 percent target.

Earlier shortfalls were attributed mainly to external shocks, including lingering effects of the COVID-19 pandemic, natural disasters, and global geopolitical uncertainty. In 2025, however, Balisacan acknowledged that the flood control scandal played a significant role by “[weighing] on business and consumer confidence.”

The PSA likewise noted that a sharp contraction in government construction spending weighed heavily on growth, with construction activity declining 42 percent year on year in the fourth quarter, contributing an estimated 1.1 percentage-point drag on GDP.

“The sharp contraction of public construction in the fourth quarter contributed to 2.2 percentage points in the [fourth quarter] decline,” Balisacan added.

The controversy, which erupted in late July 2025, implicated senior government officials, including the President himself. While GDP growth in the first half of the year averaged a modest 5.5 percent, within the lower end of the target range, growth slumped to an average of 3.5 percent after the scandal broke—representing trillions of pesos in foregone economic output.

Balisacan sought to reassure the public that ongoing investigations and governance reforms would help restore growth momentum.

“The resulting measures and governance reforms are necessary to strengthen accountability, improve project quality, ensure better value for scarce public resources, and build our capacity for faster and more sustainable growth in the years ahead,” he said.

He added that the Philippines’ 2026 ASEAN Chairmanship presents an opportunity to boost growth through tourism and foreign direct investments (FDIs), which have declined by nearly 40 percent since July 2025—roughly $2 billion or ₱118 billion lost amid the scandal, a drop that the Makati Business Club (MBC) has said marked a five-year low.

“Looking ahead, we see 2026 as our rally point. We are accelerating efforts to restore public trust through improvements in governance and public services—improvements that Filipinos can see and feel in their everyday lives,” Balisacan said.

To date, most so-called “big fish”—high-profile individuals alleged to have benefited from anomalous infrastructure projects—remain free. Only the Discaya couple, former Senator Bong Revilla, and several former Department of Public Works and Highways (DPWH) officials have been detained or charged in connection with ghost flood control projects.

On Friday morning, Balisacan and other members of the government’s economic team met with President Ferdinand R. Marcos Jr. at Malacañang Palace to discuss strategies to support an economic rebound in 2026.

Presidential spokesperson Claire Castro said the meeting focused on digitalization and transparency measures, including a directive requiring government agencies to submit project spending updates every two weeks. Marcos Jr. also called for infrastructure development to be prioritized, beginning with the backlog of public school classrooms.