As far as one economist is concerned, spending related to this year’s national and local elections (scheduled for May 12, 2025) will not add much to the nation’s economic growth this year, according to a Manila Bulletin news report.
To put things in perspective, posted below is an excerpt from the Manila Bulletin news report. Some parts in boldface…
Elections and related spending no longer provide the same economic boost as they once did. As a result, an economist at Ateneo de Manila University expects the Philippine economy to grow below goal this year, despite the upcoming midterm elections in May.
Luis Dumlao, associate professor and senior research fellow at the university’s economic research arm, Ateneo Eagle Watch, forecasted that there won’t be any “extraordinary GDP [gross domestic product] spike” due to election-related activities during the first half of this year.
During Ateneo Eagle Watch’s 2025 economic briefing last Thursday, March 6, Dumlao projected that annual GDP growth could potentially accelerate from 5.6 percent in 2024 to 5.9 percent in 2025.
If Dumlao’s forecast proves accurate, it would mark the third consecutive year that economic growth falls short of the government’s target, following a peak of 7.6 percent in 2022—the year of the last presidential election, which President Ferdinand Marcos Jr. won.
The Marcos administration targets growth of six to eight percent for 2025.
In the past, elections—even midterm polls—bolstered the economy. GDP grew by 6.1 percent in 2019 and 6.8 percent in 2013 due to midterm election-related spending.
In 2016, when former President Rodrigo Duterte won the presidency, economic growth reached 7.1 percent. Back in 2010, when former President Benigno Aquino III was voted to the top position in the land, GDP expanded by 7.3 percent.
Despite his below-expectations GDP growth estimate for this year, Dumlao also projected that annual inflation would average 2.4 percent, falling within the Bangko Sentral ng Pilipinas’ (BSP) two- to four-percent target range for manageable price increases.
His headline inflation forecast for 2025 is lower than the 3.2 percent in 2024. As of end-February, inflation averaged 2.5 percent, mainly due to rice deflation or declining prices of the Filipino food staple.
With the election campaign season rolling in, Dumlao noted that the practice of politicians giving away dole-outs or “ayuda” may no longer be as feasible.
While such spending was effective as a band-aid solution during the Covid-19 pandemic, when there was a greater need for financial support to sectors badly hit by the health and socioeconomic crises it wrought, Dumlao emphasized that “there’s no excuse” for continuing such expenditures post-pandemic.
“Ayuda was excused during the pandemic… However, for some reason, the government’s expenditure [on dole-outs] grew” even after the pandemic.
“There’s still [ayuda] spending as if it’s still the pandemic,” he said.
As elections gradually lose their hefty contribution to economic output, Dumlao urged the government to focus on key industries that would foster long-term growth.
“The economic drivers right now are accommodation like hotels, retail, trade, and construction. Business process outsourcing (BPO), too. Those are the fastest-growing subsectors,” he said.
Dumlao also suggested a further push for privatization of certain infrastructures and utilities.
Let me end this post by asking you readers: What is your reaction to this recent development? Do you still think that election-related spending can still add a lot to the growth of the national economy this year? Do you think further privatization by the government will prove to be more crucial and helpful to enhancing economic growth? Did you notice how the local politicians and election candidate have been giving away assistance or ayuda to local communities recently?
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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