Despite the percolating political turmoil, which even ramped up with the simultaneous efforts to oust both President Ferdinand Marcos Jr. and Vice President Sara Duterte through impeachment, the stock market has posted an upswing. So what gives?

Much lies in the vow of good governance and the steps being taken to prove it, according to an economic expert.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said during yesterday’s Straight Talk program that the apparent market paradox showed investors are keeping tabs on moves to pass priority legislation on good governance and anti-corruption.

More than the commitment, the market is holding on to the P1.4 trillion that the government plans to spend, especially on infrastructure, to prime the economy, which grew a disappointing 4.4 percent last year.

Once the good governance aspect is squarely addressed, everything will fall into place, according to the independent economist.

“Economic growth of 4.4 percent was the slowest since 2011. That’s the time when the early part of the previous administration of the late President Noynoy Aquino was affected by volatile markets because of the global financial crisis.

“And at the same time, also, some underspending happened, but look at it, the anti-corruption measures (during Aquino’s term), they bore fruit,” he explained.

The market is also betting that the Marcos administration does not have a choice but to follow the reform path, particularly as it prepares to host the Association of Southeast Asian Nations (ASEAN) Summit, which aims to be a showcase of the country’s progress.

“Do they have a choice? No. They have to be taken seriously because the world leaders will be here. Not only ASEAN leaders but world leaders will be here later this year. So that’s the best opportunity to showcase all of these and convince the investors,” he indicated.

Everything hinges on the government priorities, particularly good governance reforms, he indicated.

Ricafort added that the slowdown in growth was the result of a confluence of several factors, not merely timidity to spend due to apprehension of being mixed up in the scandal.

Government spending accounts for about 30 percent of economic activity, which links it to consumer confidence.

The ban on Philippine Offshore Gaming Operators (POGO) also contributed to the overall weakness in gross domestic product (GDP).

“We don’t have POGOs anymore by 2025. But we still have the POGOs in 2024. That’s why year on year there’s suddenly a slowdown in electricity demand. Their offices are not there anymore,” he indicated.

The POGO retreat had a multiplier effect on the economy’s backlash.

“Commercial establishments that serviced POGOs and their ecosystem, some of them are already gone. So that’s part of the year-on-year decline. And the same goes for the construction sector. Because of the pull-out in POGOs, vacancies increased,” Ricafort underscored.

The economic slide last year was expected due to the corruption scandal, but all is not lost, as reflected in the recent outcome of the stock market.

It was as if the business sector was caught in a flux, where the growth potential remained strong and poised to break out, were it not for the destructive politics that shackled the nation.