Corruption issues plaguing the administration of President Ferdinand R. Marcos Jr. dragged down the Philippine economy in 2025, with annual gross domestic product (GDP) growth falling to 4.6 percent, according to Bangko Sentral ng Pilipinas Governor Eli M. Remolona Jr..
Speaking at a Tuesday Club meeting this morning at EDSA Shangri-La, Remolona said that while last year delivered some positive developments — including a healthy banking system, ample liquidity, and low inflation — allegations of widespread corruption within government ranks weighed heavily on economic growth.
“The bad news, of course, is the flood control scandal. It has led to a growth rate of GDP of 4.6 percent for 2025,” he said, adding that the loss of confidence among businesses and consumers following the ‘floodgate’ scandal will continue to weigh on the economy.
“The impact of the loss of confidence [has a long way to go], so it will continue through the first half of 2026,” Remolona said.
With these figures, the Philippines has officially missed its annual growth target of 5.5 to 6.5 percent — which had already been revised downward midway through the year — by a wide margin. This marks the third consecutive year the country has failed to meet its growth target under the Marcos Jr. administration.
GDP is the total value of all goods and services produced within an economy over a specific period, usually a year or a quarter. It acts as a broad measure of how big an economy is, and how fast it is growing or shrinking.
When GDP rises, it generally means businesses are producing more, people are earning and spending more, and the economy is expanding. When GDP falls, it signals weaker economic activity, often linked to slower growth, job losses, or reduced investment.
Economic growth stood at 5.6 percent in 2024, below the 6.0 to 6.5 percent target, and 5.5 percent in 2023 against a 6.0 to 7.0 percent goal.
While earlier shortfalls were largely attributed to the lingering effects of the pandemic, natural disasters, and overly optimistic projections, Remolona and other observers now point to the floodgate scandal as the primary driver of 2025’s sharp slowdown.
The BSP’s latest consumer and business confidence surveys, released on 19 December, showed subdued sentiment in both sectors heading into 2026, reflecting lingering concerns over corruption. Remolona reiterated that fourth-quarter GDP growth for 2025 would come in at “less than 4 percent,” consistent with the central bank’s earlier estimate of around 3.8 percent.
Third-quarter GDP had already slipped to a four-year low of 4.0 percent, a decline widely attributed to a contraction in public infrastructure investment.
Data from the Department of Budget and Management show that public infrastructure spending has fallen by 29.4 percent since President Marcos Jr. flagged anomalous flood control projects during his State of the Nation Address in late July, translating to about P27.4 billion in foregone spending.
From January to October, expenditures for infrastructure and other capital outlays declined by 13.1 percent to P943 billion, from P1.09 trillion in the same period last year.
Remolona warned that prolonged weakness in infrastructure spending could undermine the banking sector’s momentum.
“Investments depend on your view of the future. So if infrastructure investments are not what we thought they were, the future growth is slower than we thought it would be,” he said.
He added that the misuse of public funds ultimately increases the burden on taxpayers.
“When you realize that your taxes are not really going into infrastructure spending, it's painful,” Remolona said. “We're paying 15% of GDP in taxes, but it feels like we're paying more like 20% in taxes because it's going to the wrong things.”
The Philippine Statistics Authority also reported today that average inflation for 2025 settled at 1.7 percent, well below the BSP’s 2 to 4 percent target, preserving household purchasing power and standing out as one of the few bright spots in an otherwise challenging economic year.
Remolona said the BSP currently projects GDP growth of 5.4 percent for 2026.