PH economy hit by climate shocks, governance issues

MANILA — The Philippine economy expanded by 4.4 percent in 2025, decelerating from 5.7 percent the previous year, as climate disruptions, corruption scandals, and global uncertainties dampened growth, according to Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan.

In a press briefing held January 29 at the Philippine Statistics Authority, Balisacan said the economy grew by 3.0 percent in the fourth quarter of 2025, capping off a slower-than-expected year.

“This outcome reflects several converging factors,” Balisacan said.

“These include the adverse economic effects of weather- and climate-related disruptions, which led to unexpected class and work suspensions… [and] the measures we are taking to ensure that only the right infrastructure projects move forward.”

He added that public scrutiny and ongoing investigations related to the flood control corruption scandal also weighed on consumer and business confidence, contributing to a slowdown in domestic demand growth.

Domestic demand rose by only 0.7 percent in Q4 2025, resulting in a full-year demand growth rate of 3.7 percent, down from 5.8 percent in 2024.

Public and private construction, along with household consumption, were among the most affected sectors.

Despite the short-term drag, Balisacan emphasized that the Marcos administration remains committed to reforms that will enhance accountability and ensure better value for public funds.

“The investigations into the flood control corruption controversy had to be undertaken,” he said.

“The resulting measures and governance reforms are necessary to strengthen accountability, improve project quality, ensure better value for scarce public resources, and build our capacity for faster and more sustainable growth.”

To address climate-related economic risks, the government is ramping up adaptation measures, including improved disaster preparedness and early warning systems.

The administration has restored funding for Project NOAH (Nationwide Operational Assessment of Hazards) and is investing in climate-resilient agricultural technologies and infrastructure to ensure food security and boost exports.

Balisacan described 2026 as a turning point.

“We are accelerating efforts to restore public trust through improvements in governance and public services—improvements that Filipinos can see and feel in their everyday lives,” he said.

In infrastructure, the government is resuming delayed projects while implementing stricter anti-corruption safeguards.

New planning reforms will rely on science- and technology-based master plans to guide long-term development.

The administration is also advancing legislative reforms aimed at improving transparency and accountability.

These include the New Government Procurement Act, the proposed Anti-Dynasty Bill, and amendments to the Party-List System Reform Act, the Bank Deposits Secrecy Law, and the Anti-Money Laundering Act.

Governance modernization is another key focus, with plans to integrate digital tools across budgeting, planning, and monitoring systems. These include upgraded public dashboards and audit and revenue tracking platforms.

In the international arena, the Philippines is leveraging its 2026 ASEAN Chairship to promote itself as a competitive tourism and investment destination.

Fast-tracked interagency efforts on digital visitor services and destination readiness are expected to benefit micro, small, and medium enterprises (MSMEs) and drive regional travel growth.

Balisacan also announced that the Economy and Development Council had approved the Executive Report titled “Making 2026 the Rally Point to Revitalize PDP Implementation,” prepared by the DEPDev.

The report, finalized on January 26, will be made public by mid-February.

He concluded by reaffirming the importance of continuing governance reforms despite short-term economic costs.

“These reforms protect public funds, strengthen our institutions, build a more resilient, inclusive economy, and ultimately, rebuild trust between government and the people we serve,” Balisacan said.

“With discipline, better governance, and sustained reforms, we are decisively moving to ensure that growth in 2026 and beyond is stronger, more inclusive, more resilient—and truly felt by all Filipinos.”