[In This Economy] Welcome to the wait-and-see economic system

​​One would suppose that the flood management corruption scandal that erupted in 2025 would spawn sufficient anger among the many Filipino folks — in the identical manner that huge Gen-Z protests swept Nepal, Indonesia, Madagascar, and different international locations.

Why, then, did public anger fail to translate into bigger and extra disruptive protests?

One cause, I believe, is that the Philippine economic system is in no hazard of collapsing, huge corruption however.

Positive, multilateral businesses just like the IMF and the World Financial institution have downgraded their progress projections for the Philippines this yr (to a degree simply above 5% per yr). However we’re nonetheless speaking about progress: financial collapse entails destructive progress, which is way from taking place.

Development of about 5% continues to be respectable, if disappointingly low in comparison with our pre-pandemic pattern and different neighbors’ comparable figures. (Vietnam, as an illustration, reported a whopping 8% progress in 2025, the yr US President Donald Trump slapped great tariffs on our neighbor.)

However with 5% progress, the incomes of the huge swath of working Filipinos are in no hazard of collapsing. Certainly, huge and sustained protests are inclined to occur when governance is so unhealthy that it results in a “balance-of-payments disaster” — much like what occurred within the few years main as much as the EDSA Individuals Energy Revolution in 1986.

A balance-of-payments or BOP disaster happens when, basically, the federal government runs out of {dollars} and worldwide currencies to pay for its international obligations.

Sri Lanka’s 2022 protests, which noticed the storming of the presidential palace and the resignation of prime minister Mahinda Rajapaksa, have been basically the end result of a BOP disaster. Huge imports, unsustainable international borrowings (particularly from the Chinese language), and a collapse of tourism contributed to a depletion of their worldwide reserves. This was worsened by a need to prop up the rupee and make it stronger than it wanted to be. With nothing to pay imports with, the folks went hungry and took to the streets.

Fortunately, the Philippines is way from experiencing such a disaster. By end-2025, the Bangko Sentral ng Pilipinas reported that our reserves amounted to greater than $110 billion, guaranteeing that we’ve got sufficient to pay for our money owed and imports. This can be a far cry from the gross mismanagement of Ferdinand E. Marcos throughout Martial Legislation (1972–1986), which noticed a file depletion of our reserves, led by the Central Financial institution itself which, at the moment, was not unbiased of Marcos Sr.

Even when we’re removed from any type of financial collapse within the brief run, I’m extra involved with our long-run prospects.

If we need to actually prosper, I’m afraid that 5% progress shouldn’t be one thing we should always decide on. We have to discover new progress drivers for the economic system. However on the similar time, we have to make sure that larger progress cascades to the plenty, and is felt by them genuinely.

One factor I spotted from the flood management scandal, and the next slowdown of progress to 4% within the third quarter of 2025, is that we’ve been dwelling a lie. Financial progress, to a considerable extent, seems to have been pushed by distorted and corruption-ridden public works spending. When authorities infrastructure spending slowed down, so did the funding progress figures.

After all, the spending slowdown was a much-needed course-correction on the a part of the Marcos administration. This was harking back to what had occurred with the Benigno Aquino III administration, within the early 2010s, when the federal government pulled again on spending, too, to rid it of corruption. I recall that financial progress additionally stalled for a while. However progress quickly zoomed to above 6% per yr, boosted by restored investor confidence and credible governance reforms. The expansion dividend of that administration’s anti-corruption campaign was fairly massive.

I’m undecided the current Marcos administration can replicate that success. Everyone seems to be on wait-and-see mode. The Filipino public continues to be ready for “large fish” to be questioned and even prosecuted, amongst them the President’s personal cousin, former Home speaker Martin Romualdez, who allegedly masterminded the funds shenanigans prior to now few years. The Filipino persons are additionally awaiting the return of key personalities who’ve fled overseas, together with former congressman Zaldy Co (reportedly in exile in Portugal with a golden visa), in addition to former public works secretary Manuel Bonoan (who by no means got here again from alleged well being procedures).

Traders, in the meantime, are awaiting the decision of the corruption scandal earlier than placing in extra money into the Philippines. No investor of their proper thoughts will pour billions of {dollars} into a rustic the place the rule of regulation is extra of a suggestion than a actuality. Already, the Bangko Sentral reported that from January to October 2025, international direct investments fell by 25%. In October alone, they fell by 40%.

Overseas investments, in fact, will not be the end-all and be-all of progress. However it’s a fast solution to enhance our home industries and generate first rate, well-paying jobs. Vietnam’s progress right this moment might be attributed largely to vital international direct investments by large tech and manufacturing firms a long time again. Vietnam is reaping the advantages of openness to at the present time, positioning itself because the fastest-growing economic system in ASEAN.

It was not too long ago introduced that Google might be assembling Chromebooks in Camarines Sur, in a brand new financial zone. However this feels just like the exception somewhat than the norm. We have to type out, within the first place, the the explanation why large firms will not be selecting us as a prime precedence funding vacation spot. We’re turning them off generally, and we have to flip them on (so to talk).

Sadly, I don’t imagine anymore that President Marcos will see transformation of the economic system as a precedence in his final 2.5 years in workplace. Even in 2025, politics appears to have preoccupied him, on the expense of key reforms that can profit the nation in the long term.

About 3.5 years in workplace, he spent a lot of his time rehabilitating the household identify and legacy, and downplaying earlier governments’ efforts to get better his household’s ill-gotten wealth. (I’m questioning why this line of assault isn’t being utilized by the Duterte camp.)

Anyway, welcome to the Wait-and-See Financial system, the place everyone seems to be ready with bated breath for reforms that they are going to possible by no means see taking place. – Rappler.com

Dr. JC Punongbayan is an assistant professor on the UP College of Economics and the creator of False Nostalgia: The Marcos “Golden Age” Myths and Tips on how to Debunk Them. In 2024, he obtained The Excellent Younger Males (TOYM) Award for economics. Comply with him on Instagram (@jcpunongbayan).