Gov't graft battle chills investment

Business confidence and investment in the country are expected to take a hit as the government escalates anti-corruption efforts, with the ongoing scandal potentially causing firms to postpone projects, according to London-based think tank Capital Economics.

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In a report dated Oct. 22, Jason Tuvey, Capital Economics deputy chief economist for emerging markets, stated that the government could ramp up investigations into corruption spanning multiple sectors, beyond just infrastructure.

Nonetheless, the think tank cautioned that increased political instability and concerns about potential corruption charges could lead companies to delay investment plans.

The think tank cited data from Brazil and South Africa, where investment declined following major corruption scandals that broke out in 2014 and 2016, respectively, with a sharper drop observed in Brazil.

The think tank cautioned that individuals may hold off on buying major assets, such as land or property, while those with illicit gains could move funds abroad, potentially leading to a surge in capital outflows and putting pressure on the currency.