Slowing growth, weak spending sap confidence
WATERLOGGED Floodwaters continue to inundate the NLEX San Simon Exit in Pampanga on Wednesday, causing heavy traffic congestion as motorists navigate the affected area. NLEX operator Metro Pacific Tollways Corp. deployed temporary flood barriers, water pumps and siphoning equipment to help drain the roadway.
PHOTOGRAPH by Yummie Dingding for DAILY TRIBUNE
The political noise in the country is weighing on investor and business confidence, adding to concerns over slowing economic growth and weakening consumer spending, warned BDO Capital and Investment Corp. president Ed Francisco.
In a recent television interview, Francisco said the Philippines has underperformed relative to its regional peers, with the political turmoil contributing to skittish investor confidence.
“Despite these gems of outstanding Philippine companies, they’re not investing anymore or they’re reducing their exposure. And all this political noise is not helping us,” he said.
“Because instead of wanting to invest here, it’s giving them an excuse to stay out,” he added.
The Philippines is currently grappling with several political controversies, with the unresolved flood control scandal from last year continuing to weigh on the local economy. The Vice President is facing her second impeachment trial, which has added to the friction between the Marcos and Duterte factions in government.
The Bangko Sentral ng Pilipinas (BSP) reported that foreign direct investment (FDI) in the country fell to $250 million in April, the lowest monthly level in a decade and 58.8 percent below the $607 million recorded a year earlier.
The central bank’s confidence surveys of both business and consumers have indicated subdued optimism or outright pessimism, as governance concerns have compounded the onset of the energy emergency in March.
Francisco said the country’s weaker gross domestic product (GDP) growth figures have added to the apprehension.
“The very poor GDP number[s] in the last two quarters have not contributed [anything],” he said.
“Because for them [investors], that will signal that the story of the consumption growth of the Philippines — how it is resilient — is no longer panning out because even the consumers are slowing down with their expenditures,” Francisco said.
The economy grew by 2.3 percent in the second quarter, its weakest rise since 2021, excluding the pandemic years. The government partly attributed the slowdown to weaker infrastructure spending following the flood control scandal, while economists also pointed to softer household consumption and investment.
The onset of the energy emergency in March pushed headline inflation nearly sevenfold year-on-year by July, which Francisco said prompted consumers to save more amid the heightened uncertainty.
“People are now saving more because they’re being more careful, but it also means they’re not as optimistic about the future,” he said.
The current political climate, particularly Vice President Sara Duterte’s impeachment and her trial, has complicated the outlook for the 2028 elections.
Despite facing her second impeachment trial, Duterte remains the frontrunner, with the Marcos bloc yet to come up with a candidate for the upcoming elections.
Francisco said a clean transition in leadership may help restore some confidence in the local economy.
“If the business leaders and the foreign investors like what’s happening in the transition, that will really allow a big pullback of money coming in,” he said.
Francisco said the political noise has been a distraction, but noted that some changes were already taking place.
“We should be talking about what’s happening in their businesses, how we’re trying to make things better. That way, at least we become more optimistic rather than just looking for the latest chismis,” he said.
“There are some improvements, slowly, yes, but at least these things are happening,” he added.
