By pointing to the effects of the flood control corruption scandal as well as other factors, Nomura Global Markets Research stated that the economic growth of the Philippines may fall below 4% in the near term, according to a BusinessWorld news report.
To put things in perspective, posted below is an excerpt from business report of BusinessWorld. Some parts in boldface…
PHILIPPINE economic growth may fall below 4% in the near term as the billion‑peso flood control scandal drags on, affecting government spending and dampening consumption and sentiment, Nomura Global Markets Research said.
“I think going forward, these spillover effects (from the graft scandal) will also expand,” Nomura Chief Association of Southeast Asian Nations (ASEAN) Economist Euben Paracuelles told Money Talks with Cathy Yang on One News on Thursday.
The scandal, which curbed state spending last year, is expected to dampen household consumption and business investment amid weaker sentiment, he added.
“If the drag is now sort of becoming more broad-based, not just the drop in government spending, you’ll see growth coming potentially below 4%, at least in the near term,” he said.
Nomura now expects the gross domestic product (GDP) to expand by 5.3% in 2026 from 5.6% previously. This is still within the government’s recently revised 5-6% target this year.
Economy Secretary Arsenio M. Balisacan earlier said growth targets were lowered through 2027, after GDP growth likely slowed to 4.8-5% in 2025 amid the flood control controversy.
The government cut its 2026 projection to 5-6% and to 5.5-6.5% for 2027 from the earlier 6-7% range. The 2028 target was retained at 6-7%.
Mr. Paracuelles anticipates that the government will roll out catch-up spending plans, possibly in the second half of the year.
Meanwhile, the Philippines may earn a credit rating upgrade if the government manages to resolve the flood control corruption issue within a year, Mr. Paracuelles said.
“The key for me is 12 months from here, when they need to decide on whether they need to upgrade the Philippines, I think it’s still quite uncertain,” he said.
Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the economic growth of the Philippines is indeed slowing down right now? Would you be surprised to see the nation’s economic growth reach less than 4%? Do you think the officials of the Department of Public Works and Highways (DPWH) is working sufficiently to restore its credibility?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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