The country’s political noise is weighing on investor and business confidence, adding to concerns over slowing economic growth and weakening consumer spending, according to 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 country’s political turmoil contributing to skittish investor confidence.

“Despite these gems of these 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.”

The Philippines currently finds itself amid several political controversies, with the still-unresolved flood control scandal of last year continuing to impact the local economy. The Vice President is currently facing her second impeachment trial, which has added friction to an already tense relationship between the Marcos and Duterte factions of government.

The Bangko Sentral ng Pilipinas (BSP) reported that foreign direct investments (FDIs) into the Philippines slumped to $250 million in April, the lowest monthly level in a decade and down 58.8 percent from $607 million a year earlier.

The central bank’s confidence surveys on both the business and consumer sides 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 apprehension.

“The very poor GDP number[s], the last two quarters have not contributed,” he said.

“Because for them, that will signal that the story of the consumption growth of the Philippines, how it is resilient, is not anymore panning through because even the consumers are slowing down in expenditures.”

Growth slumped to a 17-year low, excluding the pandemic years, in the second quarter, which the government largely attributed to the ongoing slump in infrastructure spending following the “floodgate” scandal.

The onset of the energy emergency in March has resulted in headline inflation accelerating nearly seven times higher year-on-year as of July, which Francisco said has incentivized consumers to save more amid 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 situation, particularly involving VP Sara Duterte’s impeachment, has complicated the outlook for the 2028 elections. Despite currently facing her second impeachment trial, Duterte remains the front-runner, with the Marcos bloc yet to have a clear candidate in the upcoming elections.

Francisco said a clean transition of 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 added that the political noise has been acting as a distraction, noting that some changes are happening.

“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 be just looking for the latest chismis,” he said.

“There are some improvements, slowly, yes, but at least these are things happening.”