Anomalous flood control project disbursements shaved about 0.3 percentage points off gross domestic product (GDP) growth, according to Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr.

Speaking during a meeting of the Management Association of the Philippines (MAP) at Shangri-La at the Fort yesterday, Remolona said full-year 2025 GDP growth would have reached 4.7 percent — marginally higher than the 4.4 percent reported by the Philippine Statistics Authority (PSA) two weeks ago — if 70 percent of flood control disbursements were withheld.

‘Our growth has stalled’

“Our growth has stalled. And as you know, it’s stalled mainly because of a loss of confidence, especially in the second half of 2025,” he said. “Consumption and investment fell, and then most tellingly, public infrastructure spending in the second half of 2025 fell.”

The PSA reported that full-year 2025 GDP growth settled at 4.4 percent, well below the national government’s target range of 5.5 to 6.5 percent and weaker than projections from multilateral lenders, international institutions, and the BSP itself.

Fourth-quarter growth likewise declined by 0.9 percent to 3.0 percent, with the PSA attributing the slump to a 41.9 percent year-on-year contraction in public infrastructure spending following the flood control scandal.

The onset of the “Floodgate” saga derailed a once-promising growth outlook for the Philippines, with GDP expansion slowing sharply in the second half of the year to about 3.5 percent from 5.5 percent in the first half. Beyond the economic losses caused by reduced infrastructure investment, investor confidence also deteriorated.

Heightened apprehension across sectors

BSP consumer and business confidence surveys showed heightened apprehension across sectors after the President flagged about P525 billion worth of anomalous flood control projects last July.

Remolona previously acknowledged that the BSP would reassess its earlier outlook of an economic rebound in the second half of 2026 following the GDP data release. He said restoring investor confidence would be the main catalyst for recovery.

“Compared to our potential, 4.7 percent is pretty bad. A big risk going forward, of course, is whether we can bring confidence back. There are signs that confidence is coming back tentatively, slowly,” he said.

High-profile individuals jailed

To date, several high-profile individuals, including former Senator Bong Revilla, contractor Sarah Discaya, and several Department of Public Works and Highways (DPWH) officials, have been jailed or charged in connection with anomalous flood control projects. The Anti-Money Laundering Council (AMLC), which Remolona chairs, has frozen around P25 billion in assets linked to individuals or entities implicated in the controversy, including assets tied to fugitive ex-solon Zaldy Co.

“I think we’ve made progress in that, in identifying something like poverty. We’ve made, I think, about P25 billion in [frozen assets] that belong to these individuals. These guys, maybe 800 of them, but they had something like 8,000 accounts,” he said.

“I think you can expect more. But the problem we have is we can only do something if the money is in the bank. The money moves so fast. It’s stored in someone’s basement and then put on a plane and then delivered to Hong Kong,” Remolona added, noting the AMLC’s jurisdictional limits.

Low inflation a bright spot for the economy

The central bank said low inflation remains a bright spot for the economy, with January headline inflation at 2.0 percent, within BSP projections for the month. Remolona said inflation is expected to settle at around 3 percent over the next two years, still within the central bank’s target range.

“We project that [inflation] will hover around 3 percent over the next two years. 3 percent is our target, then we have a tolerance band around 3 percent, which is 1 percent each side,” he said.

Remolona underscored the BSP’s mandate of maintaining price stability, noting that lower inflation particularly benefits lower-income households.

“If [inflation] falls to 2 percent, falls to 1.5 percent, I don’t mind,” said Remolona.

“And even more important to us is that for the bottom 30 percent of households, inflation is even lower. So that’s the good news,” he added.