Between scandal and slowdown

I’ve been asked a blunt question: is the Philippines teetering on the edge of an economic crisis? I’ll answer it plainly. We’re not in a full-blown crisis today, but the risk has climbed, and the flood-control scandal has made it worse by freezing public spending, damping confidence, and exposing weak controls. When government investment stalls, growth stalls. That’s exactly what happened in the third quarter, when gross domestic product (GDP) growth sank to four percent year-on-year, the slowest in more than four years, with officials and analysts pointing to delayed infrastructure disbursements amid the graft probe. Even household spending cooled. This is not an academic footnote; it’s a confidence shock that touches jobs, sales, and credit decisions.

- REYNALDO C. LUGTU JR.

The big picture numbers tell a mixed story. On the positive side, inflation has stayed low. Headline inflation was 1.7 percent in October 2025, below the central bank’s twoto four-percent target band, helped by easing food and transport prices. That keeps real purchasing power from eroding and gives the Bangko Sentral ng Pilipinas (BSP) room to support the economy. Markets were already talking about another rate cut in December. Low and steady prices are a cushion, not a cure.

The peso, meanwhile, has hovered near P59 per United States (US) dollar this November. That’s not a collapse, but it keeps imported costs sticky and reminds us that global investors are cautious. A soft currency is manageable when export orders surge; it’s a drag when foreign investment is fading and public projects are on pause.

Jobs data offer a ray of light. Unemployment was reported at 3.9 percent in August, an improvement from last year. Still, if firms cut hours or freeze hiring decisions while waiting for the scandal dust to settle, that headline rate can mask underemployment or slipping quality of work. Labor markets lag when confidence breaks.