Anomalies hounding the government’s flood control projects heavily battered the Philippine economy in the first quarter of the year, dragging gross domestic product (GDP) growth down to a sluggish 2.8%, Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan disclosed on Monday.
Balisacan stated that the lackluster economic performance was triggered by a “confluence of factors,” pointing to a mix of high inflation, external geopolitical shocks like the Middle East conflict, and deep governance concerns stemming from the infrastructure controversy. Collectively, these factors eroded investor and consumer trust while choking state infrastructure spending.
The DEPDev chief noted that the fallout from the controversy has had a lingering effect on public sentiment since it first broke out last year.
“As I reported way back in the third and fourth quarter when the infrastructure scandal surfaced, you see the immediate reaction of the public, the consumer confidence weakened a lot,” Balisacan said in a television interview.
(As I reported way back in the third and fourth quarter when the infrastructure scandal surfaced, you see the immediate reaction of the public, the consumer confidence weakened a lot.)
Balisacan, who previously served as socioeconomic planning secretary under the administration of the late former President Benigno “Noynoy” Aquino III, emphasized that the psychological blow to the market extended well into 2026.
“In the first quarter this year, apart from the inflation that substantially reduced the purchasing power of households and that reduced the growth, …the lingering effects of those weakened investor confidence and consumer confidence was still there,” he explained.
(In the first quarter this year, apart from the inflation that substantially reduced the purchasing power of households and that reduced the growth, …the lingering effects of those weakened investor confidence and consumer confidence was still there.)
Beyond dampened sentiment, the scandal caused a virtual standstill in state-led developments. Balisacan revealed that government infrastructure agencies became excessively cautious in rolling out funds amid heightened scrutiny, leading to a visible dip in capital outlays.
“I think part of the equation there is that because of the flood control scandal, admittedly, the government, particularly infrastructure agencies, slowed down. And we saw that in the sharp contraction of public spending, public infrastructure spending,” the economic chief said.
(I think part of the equation there is that because of the flood control scandal, admittedly, the government, particularly infrastructure agencies, slowed down. And we saw that in the sharp contraction of public spending, public infrastructure spending.)
Despite the dismal start to the year, DEPDev remains optimistic that the fiscal bottleneck is merely temporary. Balisacan expressed hope that economic momentum will pick up in the coming quarters as pending government projects resume operations.
“And that will [hopefully] also help revive confidence in the business and consumer sector,” he added.
(And that will [hopefully] also help revive confidence in the business and consumer sector.)