Jauhn Etienne Villaruel

Shanties stand along the Pasig River in the Baseco Compound in Manila on August 10, 2023. The Philippine economy posted lower growth at 4.3 percent in the second quarter amid higher inflation and interest rates, according to the Philippine Statistics Office. Mark Demayo, ABS-CBN News

Article (news)

Baseco Compound Shanties

Marilyn Cahatol

ABS-CBN News

<div><span class="fr-img-caption fr-fic fr-dib" style="width:960px;display:block" width="960"><span class="fr-img-wrap"><img src="https://od2-image-api.abs-cbn.com/prod/editorImage/176974539402120230810-cbd-skyline-shanties-MD-4.jpg" style="width:960px" class="fr-fic fr-dib" width="960"/><span class="fr-inner" style="text-align:left">Shanties stand along the Pasig River in the Baseco Compound in Manila on August 10, 2023. The Philippine economy posted lower growth at 4.3 percent in the second quarter amid higher inflation and interest rates, according to the Philippine Statistics Office. Mark Demayo, ABS-CBN News</span></span></span></div><p>MANILA — The Philippines may be heading to its low-growth era as investors are no longer attracted to invest in the country following the massive flood control corruption scandal, an economist said Friday.</p><p>“I think the numbers kind of need to wake us up with the fact that we need new growth drivers for the Philippine economy and we seem to be heading into a low-growth era already,” economist and UP professor JC Punongbayan told ANC’s Headstart. </p><p>The Philippines recorded a <a href="https://www.abs-cbn.com/news/business/2026/1/29/philippines-gdp-fourth-quarter-2025-below-target-1012">4.4 percent expansion in 2025</a>, far below the June projection of 5.5 to 6.5 percent, which was already a downgrade that took into consideration the imposition of US tariffs and &quot;global uncertainties.&quot; This is the slowest non-pandemic pace in 14 years.</p><p>Punongbayan stressed that the Philippine economy’s growth heavily lies on investors’ sentiments, which <a href="https://www.abs-cbn.com/news/business/2025/10/16/biz-group-says-foreign-investors-worried-about-ph-corruption-issue-1149">dipped hard</a> since late last year following the exposé of the multibillion-peso flood control corruption issue.</p><p>“They&#x27;re on a wait-and-see mode. They&#x27;re waiting to see that the government credibly addresses the corruption scandal and actually holds to account people who are responsible for the scandal to begin with,” he said. </p><p>This, aside from the various opportunities investors see in other countries, particularly in Vietnam, which has grown by eight percent in 2025, said Punongbayan. </p><p>“So apart from the short-run problems when it comes to the growth momentum, I&#x27;m afraid that we seem to be losing out our competitiveness in the region,” he said. </p><p>“Unfortunately, because of the high uncertainties in the Philippine economy, the weak governance, the weak rule of law, we&#x27;re not turning out to be a terribly attractive destination for these investments,” he added. </p><p>The economist also noted that the “hundreds” of permits required by the government of the Philippines became a “major turnoff&quot; for investors. </p><p>At present, the economy’s best shot is the service sector, Punongbayan said. </p><div> </div><div><strong>LACK OF QUALITY INFRASTRUCTURE</strong></div><div><span class="fr-img-caption fr-fic fr-dib" style="width:960px;display:block" width="960"><span class="fr-img-wrap"><br/><img src="https://od2-image-api.abs-cbn.com/prod/editorImage/176974543892120240807-work-labor-employment-JC-3140.jpg" style="width:960px" class="fr-fic fr-dib" width="960"/><span class="fr-inner" style="text-align:left">The Philippines recorded a 4.4 percent expansion in 2025, far below the June projection of 5.5 to 6.5 percent, which was already a downgrade that took into consideration the imposition of US tariffs and &quot;global uncertainties.&quot; Jonathan Cellona, ABS-CBN News</span></span></span></div><p>The economist stressed the need for quality infrastructure projects that connect provinces and islands of the archipelago to allow efficient transportation of goods and services.</p><p>But he said that over the past years, key infrastructure projects have been sidelined “because politicians have prioritized local, hyperlocal infrastructure projects at the expense of many of these possibly growth-inducing infrastructure projects.”</p><p>This, he said, includes the <a href="https://www.abs-cbn.com/news/business/2025/10/2/-metro-manila-subway-to-be-completed-by-2032-after-5-year-delay-1233">Metro Manila Subway </a>that is expected to finish by 2032, five years delayed from its original target completion by 2027. </p><p>The Department of Transportation last year cited “unforeseen events” for the delay. </p><p>“I think at the end of the day, what we&#x27;re missing would be a good governance in the sense that there&#x27;s a very good strategy for the Philippine economy and also a government that can exact accountability for those who have corrupted the public funds,” Punongbayan said. </p><p>He added “many sectors of the economy will be hurt” when funds are taken away from public works, which have taken the brunt of the massive corruption scandal that involved both politicians and officials from the Department of Public Works and Highways, among others.</p><div> </div><div><strong>TOURISM</strong></div><div><span class="fr-img-caption fr-fic fr-dib" style="width:960px;display:block" width="960"><span class="fr-img-wrap"><br/><img src="https://od2-image-api.abs-cbn.com/prod/editorImage/176974552784420250430-boracay-visitors-tourism-MD-1739.jpg" style="width:960px" class="fr-fic fr-dib" width="960"/><span class="fr-inner" style="text-align:left">Visitors flock to Boracay Island in Malay, Aklan. Mark Demayo, ABS-CBN News<br/></span></span></span></div><p>Punongbayan acknowledged that the country’s tourism sector has not been performing as well as it did in previous years.</p><div><a href="https://www.abs-cbn.com/news/business/2026/1/29/dot-visa-free-entry-for-chinese-travelers-seen-to-boost-ph-tourism-0104">DOT: Visa-free entry for Chinese travelers seen to boost PH tourism</a></div><p>He cited airfare cost as among the biggest reasons why foreigners and Filipinos opt to travel in other countries over the top tourist spots in the Philippines including Siargao, Boracay and El Nido.</p><div><a href="https://www.abs-cbn.com/news/business/2026/1/29/dot-travel-tax-supports-tourism-infrastructure-education-0100">DOT: Travel tax supports tourism infrastructure, education</a></div><p>The travel tax “that has long hounded many travelers,” as well as the need to improve the country’s ports, inter-island mobility, and the infrastructure, such as roads, upon landing on destinations, are also major reasons, he said. </p><div> </div><div><strong>IMPROVE LABOR FORCE</strong></div><div><br/></div><p>Punongbayan underscored the urgent need to improve the country’s labor force through the government’s investment in the education and health sectors.  </p><p>He said the business process outsourcing (BPO) industry, which for so long has served as the country’s dollar reserves alongside overseas Filipino workers (OFWs), has been losing to competitor countries like India, as well as the emergence of artificial intelligence. </p><p>He noted that the Philippines has to pivot to other dollar-earning sectors. </p><p>This he said is also the solution so OFWs may compete in higher-paying jobs abroad, or best to find good job opportunities back home. </p><div><br/></div><div><strong>RELATED VIDEO:</strong></div><div style="text-align:center"><iframe width="560" height="315" src="https://www.youtube.com/embed/k0QeY6ImB-s?si=nSfgWPn04P5oCH2O" title="YouTube video player" frameBorder="0" allowfullscreen=""></iframe><br/></div>

<p>The economist also noted that the “hundreds” of permits required by the government of the Philippines became a “major turnoff" for investors. </p>

The economist also noted that the “hundreds” of permits required by the government of the Philippines became a “major turnoff" for investors.

PH heading to low-growth era, no longer attractive to foreign investors—economist

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PH heading to low-growth era, no longer attractive to foreign investors—economist

Marilyn Cahatol,

ABS-CBN News

Published Jan 30, 2026 12:01 PM PHT

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