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The Bangko Sentral ng Pilipinas (BSP) will likely keep interest rates on hold this week as inflation risks linger, according to most analysts polled by BusinessWorld.

A BusinessWorld poll conducted last week showed 10 of 16 analysts expect the Monetary Board to pause monetary easing at its Oct. 9 meeting, keeping the benchmark rate at 5%.

On the other hand, six analysts anticipate a 25-basis-point (bp) rate cut, citing below-target inflation and the need to support economic growth. If realized, this would bring the benchmark rate to 4.75%.

The central bank has so far lowered borrowing costs by a total of 150 bps since the start of its easing cycle in August last year.

Security Bank Chief Economist Angelo B. Taningco said upside inflation risks would likely prompt the Monetary Board to hold rates steady on Thursday.

“I expect the Monetary Board to pause from rate cuts largely due to the inflation acceleration and upside inflation risks from potential extension of rice import ban and rice tariff hike,” he said in an e-mail.

September inflation data will be released on Oct. 7. A BusinessWorld poll of 12 analysts yielded a median estimate of 1.9% for September inflation, faster than the 1.5% in August, reflecting the impact of recent typhoons on food prices, as well as higher pump prices and electricity rates. This was within the BSP’s 1.5-2.3% forecast for the month.

The 60-day suspension on imports of regular milled and well-milled rice took effect on Sept. 1. However, the import ban is expected to be extended by another 30 days.

Moody’s Analytics economist Sarah Tan said a pause would allow the BSP to evaluate how its past rate cuts impacted the economy, particularly on domestic demand and lending activity.

“The central bank will also weigh the balance between supporting growth and ensuring inflation expectations remain anchored. Global oil price volatility, the impact of recent typhoons on food supply, and the Fed’s policy stance are also important considerations,” Ms. Tan said in an e-mail.

Philippine National Bank economist Alvin Joseph A. Arogo said a pause would minimize the depreciation pressure on the Philippine peso since the BSP eased more than the US Federal Reserve so far this year.

The local unit closed at PHP 58.196 per dollar on Sept. 30, weakening by PHP 1.066 or 1.83% from its PHP 57.13 finish on Aug. 29.

“A pause from the BSP will also be more supportive of the peso given the current USD/PHP levels, which lie above the 58-level despite a generally weak dollar,” Metropolitan Bank & Trust Co. (Metrobank) said in a separate commentary.

Metrobank said the BSP will likely wait for the release of third-quarter gross domestic product (GDP) data on Nov. 7 before making policy adjustments.

“We project household consumption and investment to remain tepid while the lagged effects of the BSP’s previous RRP (reverse repurchase rate) reductions begin to make a significant impact. We expect this to be the reason for the BSP to deliver another reduction to the RRP during its last meeting for 2025 in December,” it added.

In the first semester, the economy expanded by 5.4%, slower than the 6.2% growth posted last year. This was slightly below the government’s 5.5-6.5% target range for this year.

“With the central bank describing the current policy rate as the ‘Goldilocks rate,’ policymakers may require a firmer justification for an immediate adjustment to monetary policy,” Chinabank Research said in a note.

Rate cut

On the other hand, some analysts expect a 25-bp rate cut at this week’s meeting as inflation remains below the BSP’s 2-4% target and the pace of economic growth is still a concern.

Earlier, BSP Governor Eli M. Remolona, Jr. said they are open to delivering a cut this month if the country’s economic output further weakens.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said they expect a 25-bp cut on Thursday “to preempt downside risks to growth.”

“While inflation remains benign and below target, the BSP is likely to prioritize supporting economic momentum amid subdued fiscal spending, persistent external headwinds (and) recent weather-related disruptions that could weigh on activity,” Mr. Asuncion said.

Azril Rosli, economist at Maybank Investment Banking Group, said in an e-mail that sluggish investment spending and uncertainty from the US tariffs will also weigh on the outlook for growth.

Meanwhile, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message that the BSP could match the Fed’s rate cuts with 25-bp cuts each at the October and December meetings.

“These Fed rate cuts could be matched locally by the BSP so that healthy interest differential would eventually be maintained to help support/stabilize the peso exchange rate, import prices, and overall inflation,” he said.

The Monetary Board’s last meeting for this year is on Dec. 11.

Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said the BSP could have another rate cut in December as GDP growth in the third quarter likely weakened.

“We still see another 25-bp cut coming in December, as we expect the Q3 GDP report due in November to be weak enough to convince the Board to ease policy at least one final time,” he said in an e-mail.

In a note, Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said there is a higher probability the BSP will cut in December if third-quarter GDP confirms “potential demand softness.”

“With rates already near neutral and inflation seen converging to 3% by 2026-2027, we think the scope for further easing after this is limited,” Mr. Neri said.

“Nonetheless, the BSP could still deliver up to two more cuts if the economy continues to operate below potential. They may also decide to move in tandem with the Federal Reserve’s moves, especially if markets expect aggressive cuts after Powell’s term ends in May 2026.” — Katherine K. Chan

The national government’s (NG) debt service bill soared in August as amortization and interest payments surged, the Bureau of the Treasury (BTr) reported.

The latest data from the Treasury showed that the debt service bill more than tripled (256.96%) to PHP 664.72 billion in August from PHP 186.22 billion in the same month last year.

Month on month, the debt service bill also went up by 515.17% from PHP 108.06 billion in July.

Debt service refers to the payments made by the government on domestic and foreign borrowings.

In August, amortization payments more than quadrupled (350.86%) to PHP 601.62 billion from PHP 133.44 billion in the same month in 2024.

The bulk or 90.51% of the debt payments in August were made up of amortization payments, BTr data showed.

Principal payments on domestic debt surged by 389.93% to PHP 597.89 billion in August from PHP 122.03 billion a year ago.

Amortization paid on foreign debt, on the other hand, slumped by 67.29% to PHP 3.73 billion in August from PHP 11.4 billion in the same month a year ago.

On the other hand, interest payments increased by 19.56% to PHP 63.11 billion from PHP 52.78 billion a year earlier.

Domestic interest payments went up by 17.82% to PHP 46.38 billion in August from PHP 39.36 billion in the same month last year.

This was composed of P24.85 billion for fixed-rate Treasury bonds, PHP 16.87 billion for retail Treasury bonds, and PHP 4.62 billion for Treasury bills, and others (PHP 34 million).

Interest payments for foreign borrowings climbed by 24.65% to PHP 16.73 billion in August from PHP 13.42 billion a year prior.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the larger debt service bill to the PHP 516-billion government securities (GS) that matured in August.

“This is an unusual increase in NG principal payments,” he said in a Viber message over the weekend.

End-August

For the first eight months of the year, the NG debt service bill inched down by 0.6% to PHP 1.54 trillion from PHP 1.55 trillion in the same period last year.

The eight-month tally was 75.01% of the PHP 2.05-trillion debt service program this year.

Amortization payments, which made up the bulk of the total, declined by 8.07% to PHP 956.74 billion as of end-August from PHP 1.04 trillion a year ago. This was 79.32% of the PHP 1.21-trillion full-year amortization program.

Principal payments on domestic debt slipped by 12.63% to PHP 768.52 billion, while external payments increased by 16.84% to PHP 188.22 billion.

Meanwhile, interest payments went up by 14.66% to PHP 584.15 billion in the January-to-August period from PHP 509.44 billion in the same period a year ago.

This was 68.88% of the PHP 848.03-billion programmed interest payments for 2025.

Interest payments on domestic debt stood at PHP 429.12 billion, 18.31% higher year on year than PHP 362.72 billion a year ago.

Of the total interest payments on domestic debt, PHP 292.14 billion went to fixed-rate Treasury bonds, PHP 99.71 billion to retail Treasury bonds, PHP 30.36 billion to Treasury bills (T-bills), and others (PHP 6.91 billion).

On the other hand, external debt inched up by 5.66% to PHP 155.03 billion in the first eight months from PHP 146.72 billion a year ago.

Mr. Ricafort said the government is still on track to meet its PHP 2.05-trillion debt service program.

He said the debt service bill may have gone up in September as PHP 288 billion in Treasury bonds matured.

“After that, no more large NG GS maturities for the rest of 2025. Next large GS maturities that would increase NG debt servicing would be in February 2026 and April 2026 at P200 billion each,” Mr. Ricafort said. — Aubrey Rose A. Inosante

Local economists kept their growth forecasts for the Philippines unchanged for now, even as a widening corruption scandal weighs on investor sentiment.

“We’re keeping an eye on governance issues like corruption because they can affect investor confidence and, ultimately, growth,” Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines said in a Viber message on Oct. 2.

“But for now, our baseline view remains unchanged and we will continue to monitor macro data as they become available,” he said.

Mr. Asuncion said the bank kept its 5.5% gross domestic product (GDP) growth outlook for this year and 5.7% for 2026, supported by stronger domestic demand and recovery in infrastructure spending.

The government is targeting 5.5-6.5% GDP growth this year, and 6-7% in 2026.

The Independent Commission for Infrastructure, Congress and Ombudsman are conducting investigations into allegations of corruption in government infrastructure projects, particularly flood control projects under the Department of Public Works and Highways.

Emilio S. Neri Jr., lead economist at Bank of the Philippine Islands, said the 2025 growth projection remains at 5.6%, citing minimal declines in government spending through August.

“We will wait for clearer evidence of any sizeable declines among our leading growth indicators before we revise,” Mr. Neri told BusinessWorld in a Viber message.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said he is not expecting any growth forecast revisions anytime soon, as their 5.3% forecast for 2025 and 5.4% for 2026, are already on the “downbeat side.”

“The risks, even to our already-soft projections, are arguably now more skewed to the downside, particularly for the second half of this year and early next,” he said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said it is still possible to achieve the government’s growth targets.

Mr. Ricafort said the government probe is expected to “realistically” dampen growth in state infrastructure spending and weigh on GDP, though the impact may be offset by the reallocation of certain flood control projects to other departments.

Meanwhile, Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas has trimmed his growth forecast for this year from 6% to 5.7%, but not due solely to the flood control mess.

The downward revision takes into consideration the impact of US tariffs,  upside risks to inflation and political noise, he said.

Institutions like the Asian Development Bank (ADB) and the International Monetary Fund (IMF) have downgraded their Philippine growth forecasts, citing elevated global uncertainties.

In its latest Asian Development Outlook, the ADB trimmed its Philippine growth forecast to 5.7% in 2026 from 5.8% in its July projection. It also kept its growth forecast unchanged at 5.6% this year.

ADB Country Director for the Philippines Andrew Jeffries earlier said corruption remains a “heightened risk” but will further monitor.

For this year, the IMF cut its 2025 forecast to 5.4%, slightly lower than its 5.5% projection in July. It also slashed its 2026 outlook to 5.7% from 5.9% previously, amid global uncertainties and geopolitical tensions.

More support for monitoring agencies

Meanwhile, Economy Secretary Arsenio M. Balisacan earlier called for increased support for research and development monitoring and evaluation, as well as for regional development councils (RDCs) tasked with overseeing infrastructure initiatives, including flood mitigation projects.

“I find also quite missing, the lack of appreciation of what monitoring and evaluation can do,” Mr. Balisacan told a Senate Finance Committee hearing on Oct. 3.

“We don’t provide enough support to good studies doing impact assessment, monitoring assessment of completed and ongoing projects, especially for completed projects so that we don’t keep repeating mistakes over and over again.”

Mr. Balisacan also called for more resources for RDCs, who are on the ground monitoring projects.

“We have that committee, and they’re supposed to know and able to monitor these various infrastructure projects, including flood control projects. But they don’t have resources to be able to do that function, especially as a difficult region (such as) Mimaropa (Mindoro, Marinduque, Romblon, and Palawan,” he said. — Aubrey Rose A. Inosante

The Department of Information and Communications Technology (DICT) said it hopes to obtain World Bank loans within three to four months to finance the remaining phases of the national fiber backbone project.

“There are two loans for phases four and five (of the national fiber backbone). The one for Eastern Mindanao is already approved. There will be a second loan for Western Mindanao, the status of which is already approved by the (Philippine) Economic Development Committee,” Information and Communications Technology Secretary Henry Rhoel R. Aguda said on the sidelines of a recent forum.

The second loan is estimated at around USD 300 million, Mr. Aguda said, noting that the agency is now awaiting word from the World Bank on the loan.

“What we are waiting for now is for the World Bank to give us the formal proposal. Maybe the study would take around three to four months, but at least on the side of the Philippine government, we’re okay to entertain their proposal of extending us a loan,” Mr. Aguda said.

In August, the DICT announced that phases 4 and 5 of the national fiber backbone will be completed next year, following the start of construction that same month.

The project is expected to bring high-speed internet to more nodes in Mindanao via a 1,000-kilometer high-speed government-owned fiber network connecting Butuan, Cagayan de Oro, Bukidnon, Zamboanga, and Davao.

The completion of the project is expected to spur growth in rural areas, especially in the Visayas and Mindanao.

The National Fiber Backbone project aims to provide faster and reliable internet connectivity. The DICT expects around 70 million Filipinos to benefit from the project.

The current two phases cover southern Luzon and parts of the Visayas and Mindanao.

The first phase, which involves high-speed connections between Laoag, Ilocos Norte and Quezon City, was completed in April 2024. It covers 1,245 kilometers with 28 nodes. It has an initial 600 gigabits per second optical spectrum capacity that will serve the government and at least 14 provinces. — Ashley Erika O. Jose

Headline inflation likely quickened to a six-month high in September, but still below the 2-4% target, due to a rise in food and fuel costs, analysts said.

A BusinessWorld poll of 12 analysts yielded a median estimate of 1.9% for September inflation, within the Bangko Sentral ng Pilipinas’ (BSP) 1.5-2.3% forecast for the month.

If realized, inflation would have accelerated from 1.5% in August but steadied from the 1.9% clip in September 2024.

This would also be the fastest print in six months or since the 2.1% in February.

September may also be the seventh month in a row that the consumer price index fell below the central bank’s 2-4% target range.

The Philippine Statistics Authority is scheduled to release the September inflation data on Tuesday, Oct. 7.

“Inflation in the Philippines likely quickened to 1.9% (year on year) in September from 1.5% in August, after a series of tropical storms damaged crops and pushed up food prices,” Moody’s Analytics economist Sarah Tan said in an e-mail.

Last month, typhoons Mirasol, Ragasa (locally known as Nando) and Bualoi (Opong), coupled with the southwest monsoon, brought heavy rains and flooding in parts of the country.

“Food prices in September surged, mainly because of the strong storms that hit the country. Prices for vegetables and fish shot up significantly, with vegetable prices seeing a particularly dramatic rise compared to last year’s weaker price base,” Metropolitan Bank Trust & Co. (Metrobank) said in a note.

Emilio S. Neri, Jr., lead economist at the Bank of the Philippine Islands, said inflation may have quickened to 1.9% in September, “lifted by higher fish prices amid rains and rising rice costs following the government’s rice import suspension order.”

The 60-day suspension on imports of regular milled and well-milled rice took effect on Sept. 1.

“The ban was put in place to help lift local palay prices and protect Filipino farmers from financial loss. Despite the ongoing import ban, sustained deflation in rice prices this month will continue to temper headline inflation,” Metrobank said.

Energy costs

Higher cost of fuel, electricity and cooking oil may have also pushed up inflation in September, Chinabank Research said.

“However, these upward price pressures were likely tempered by declines in the prices of rice, meat, vegetables, fruits, and sugar,” it said.

In September, pump prices posted a net increase of PHP 2.80 per liter for gasoline, PHP 3.70 per liter for diesel and PHP 2.50 per liter for kerosene.

“I surmise that headline inflation for the month of September 2025 have gone up to 1.7%, owing to the conglomeration of several factors, foremost of which is the unceasing increase in the price of basic petroleum products notably diesel product which in a month’s time has cumulatively increased by more than PHP 4,” Emmanuel J. Lopez, professorial lecturer at the University of Santo Tomas Graduate School, said in an e-mail.

Metrobank said Manila Electric Co. (Meralco) rates were lower month on month in September, but remained elevated compared to last year.

Meralco cut electricity rates by PHP 0.1852 per kilowatt-hour (kWh) in September, bringing the overall rate for a typical household to PHP 13.0851 per kWh from PHP 13.2703 per kWh a month ago. However, this is still higher than the PHP 11.7882 per kWh recorded in September 2024.

“Visayas Electric and Davao Light also saw higher prices for the month, attributed to power plant outages across the country,” Metrobank added.

Angelo B. Taningco, research head and chief economist at Security Bank, said the peso depreciation may have also contributed to the inflation uptick last month.

The peso closed at P58.196 per dollar on Sept. 30, weakening by P1.066 or 1.83% from its finish of P57.13 on Aug. 29.

Outlook

Chinabank Research said it expects inflation to remain low for the rest of the year, with average inflation settling below the 2-4% target.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory & Research, Inc., said inflation may pick up ahead of the Christmas season as “higher demand adds to price pressures.”

“For the rest of the year, there is a chance inflation could edge up with holiday demand, weather risks, and global oil price movements. But barring major shocks, it would likely stay below or at 2%,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said.

The state weather bureau earlier said they are anticipating that five to nine more tropical storms will hit the country before yearend.

“Looking ahead, inflation risks are skewed to the upside as favorable rice base effects fade, with the extension of the import suspension through yearend adding pressure,” BPI’s Mr. Neri said.

He said inflation will likely stay at the 2% level until December before climbing above 3% in the first half of 2026 due to “base effects and potential supply shocks from possible supply-chain disruptions linked to Trump’s tariffs.”

“Meanwhile, the influx of cheap Chinese exports into global markets, including the Philippines, may help temper price pressures,” Mr. Neri added.

In a separate commentary, Diwa C. Guinigundo, country analyst at GlobalSource Partners, said the projected faster headline inflation may prompt the BSP to pause at its next policy-setting meeting. 

“Rice and fish prices remain elevated, while higher fuel costs add another layer of strain on household budgets. These factors are expected to intensify headline inflation,” he said.

“Given this backdrop, the BSP may find it prudent to hold its policy rate steady in the upcoming Monetary Board meeting, prioritizing financial stability over short-term growth support,” he added.

On Aug. 28, the central bank lowered borrowing rates by 25 basis points (bps) to 5%. It has so far slashed the benchmark interest rate by 150 bps under the current easing cycle.

The Monetary Board is set to have its last two meetings this year on Oct. 9 and Dec. 11. — Katherine K. Chan

The Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) said exports may possibly hit USD 110 billion in five years, but uncertainty clouds the outlook.

“It is possible… I will just leave it at that because there are a lot of external factors,” said SEIPI President Danilo C. Lachica at the pre-event conference for the 20^th Philippine Semiconductor & Electronics Convention and Exhibition (PSECE) on Thursday.

He said the industry’s growth will be driven by new and emerging technologies.

“The drivers of growth for the electronics industry will be new devices and new technology in different sectors, whether they may be automobiles, devices, cellphones, computers, data centers, or renewable energy,” Mr. Lachica said.

Under the roadmap, the industry is targeting to make the Philippines a consistent and reliable global partner for packaging USD 70 billion of semiconductors, assembling USD 40 billion of electronics, and providing globally recognized integrated circuit (IC) design services by 2030.

Mr. Lachica said exports are rising but the industry still expects flat growth this year.

“This year, the (SEIPI) board projected a flat growth for 2025. However, we’ve seen some movements. In fact, if you look at the year-to-date numbers through August, we were seeing modest growth,” he said.

“Don’t get your hopes up too much (but) you may even go up by maybe 5% or something like that.”

The outlook is still uncertain because of the geopolitical factors, which include the US tariffs.

“But hopefully we’ve had enough momentum through August that we will sustain that modest growth for the year,” Mr. Lachica said.

Data from the Philippine Statistics Authority showed that exports of electronic products reached USD 29.48 billion in the first eight months, up 7.4% from a year ago.

“Almost everything has electronic components, and the Philippines does the assembly and packaging for those devices… so, the overall demand in the world is increasing notwithstanding the tariffs, so that causes optimism on our part,” the SEIPI official said.

US President Donald J. Trump previously announced plans to impose sectoral tariffs on chips as high as 300% in a bid to bring back manufacturing to the US.

“If we continue with our pattern that we are seeing [in the first eight months], we may even reach, if not exceed, the 2023 numbers this year,” Mr. Lachica said.

In 2023, exports of electronics reached USD 45.65 billion.

Meanwhile, Office of the Special Assistant to the President for Investment and Economic Affairs Undersecretary Ma. Angela E. Ignacio said that the government is targeting to move from traditional assembly, test, and packaging (ATP) to a more advanced ATP in the next five years.

“And of course, we want to move into the IC design industry as well, because we have realized that most of it is coming from Filipinos, so we want to promote it and let them come home and develop the industry here,” she said, adding they are also looking at wafer fabrication plants in the future.

To support this, the Semiconductor and Electronics Industry Advisory Council on Thursday unveiled its five-year workforce development plan.

“So, the target is 128,000 new jobs across the said industries, and we have three technical working groups working on this,” Ms. Ignacio said.

SEIPI has long been urging the government to build a USD 10-million lab-scale wafer fab, but Mr. Lachica said that the government has yet to find the funding for the project.

However, he warned that the country should not wait too long, as it may “miss the boat,” noting that the Philippines is already missing out on a significant amount of exports.

Aside from increasing exports, having its own wafer fab will allow the country to increase the localization of electronic exports, Mr. Lachica said.

He said that the industry has already made strides in localization, producing around PHP 130 million worth of localized parts. However, this is still relatively small versus what the country is importing, he added.

“If we can localize 1% of the materials we import, that will be something like PHP 15 billion, which means a lot of jobs and a lot of prevention of dollar leakage,” he added.

He warned, however, that the Philippines still does not have the capacity to produce most of these materials.

“So, there is a lot of work that needs to be done, but we are making progress slowly but surely,” he added.

SEIPI is set to hold PSECE 2025 from Oct. 28 to 30 at the SMX Convention Center Manila, Pasay City, which is expected to host 250 local and international companies from China, Germany, and Taiwan. — Justine Irish D. Tabile, Reporter

The Philippine government must deliver swift and credible results in its investigation into allegations of corruption in flood control projects, to avoid hurting growth prospects and losing the confidence of investors and the business community, experts said.

Department of Economy, Planning, and Development  Undersecretary Rosemarie G. Edillon said investor confidence can be restored if the probe into alleged irregularities in some projects is conducted swiftly and impartially.

“We have to show results. We have to demonstrate credibility. Maybe, that’s what (investors) need to see,” she told BusinessWorld on the sidelines of an event on Wednesday, noting that the capital market tends to be “flighty.”

Financial markets have been rattled by the widening probe into corruption in flood control projects. Separate investigations by Congress, the Ombudsman, and the Independent Commission for Infrastructure are looking into alleged collusion among Department of Public Works and Highways officials, contractors, and even lawmakers to divert billions in funds meant for flood control projects.

Ms. Edillon also said waning investor confidence should be viewed in the context of broader global market, including US tariff policies that continue to weigh on sentiment.

However, she noted that ensuring political issues do not seep into the economy is a “big challenge.”

Economists and business groups also warned that the Marcos administration’s graft probe is now becoming politicized and lacks substance, stoking unease among the private sector.

Foreign Buyers Association of the Philippines President Robert M. Young said the government-wide probe has devolved into a “circus” and became politicized, citing abrupt leadership changes in both the House and Senate, as well as the creation of a new infrastructure oversight body.

“This is lacking a clear roadmap or a plan,” Mr. Young told BusinessWorld over the phone on Wednesday. “All these are making the businessmen jittery and nervous. They have a feeling of pessimism and withdrawal to conduct business, which explains why the stock market has this week-long slump.”

He also noted the peso weakness is also dampening business sentiment.

“As the Senate hearing progresses, revealing the extent of corruption done by key legislators’ reckless impunity, the government has lost the trust of the private sectors. This negative sentiment has weakened business confidence and will take time to regain,” Philippine Chamber of Commerce and Industry Chairman George T. Barcelon said in a Viber message.

Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes warned that unless key figures are prosecuted, investor sentiment will continue to deteriorate.

“The big fish, as it were, should be held accountable,” he said in a Viber message.

Mr. Peña-Reyes also said capital flight is possible similar to the debt crisis in the early 1980s during the time of the late President Ferdinand E. Marcos, Sr.

Meanwhile, Foundation for Economic Freedom President Calixto V. Chikiamco said the flood control mess only adds to the bearish investor sentiment in the capital market.

“However, a disruptive political event, such as a military takeover, will fuel economic chaos and massive capital flight,” Mr. Chikiamco said.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said the Philippine economy is in a “holding pattern.”

“Growth is slowing, confidence is shaky, and corruption is clouding the outlook. The fundamentals are there — but we’re not firing on all cylinders. The steep discount to our peers reflects doubt,” he said.

GlobalSource Partners Country Analyst Diwa C. Guinigundo said political uncertainty linked to corruption in some infrastructure projects “could undermine investor confidence and sustain depreciation pressures on the peso.”

Meanwhile, Ms. Edillon warned that the country’s growth outlook faces downside risks as concerns over corruption are weakening investor sentiment.

Asked if this would have an impact on the economy, she said: “We don’t know yet. We have to wait for the results of the investigation.”

The government is targeting 5.5% to 6.5% growth for 2025.

Investment inquiries

Meanwhile, Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica said investments are still coming in the country.

“Well, even if (investors) don’t verbalize it, I’m sure there will be concern. But then again, let’s be realistic, there is some level of corruption in whatever country you’re in, right? It’s just how much is exposed,” he said at a conference on Thursday.

“But in terms of investments, there are still some that come in. In fact, Murata is expanding, and I’m going to Cebu to (see) another company for their expansion. So, there are some that are still happening. It’s not that the faucet has been shut off, but we could do better,” he added.

Mr. Lachica said corruption is a concern for the industry, noting its direct effect on investments due to ghost projects that could have addressed flooding issues and eased the flow of goods.

Office of the Special Assistant to the President for Investment and Economic Affairs Undersecretary Ma. Angela E. Ignacio said they continue to receive inquiries from investors.

“We’re really just focusing on promoting our investments. We continue to get very promising inquiries from a lot of the countries still very interested in investing in the Philippines, because, as we’ve said, there are a lot of reforms that have been put in place over the past three years,” she said.

“So, I think they’re only finding it very attractive now to go into the Philippines, even our tariff situation. We’re still in a good place, as we’re actually in the low regime for the tariff, so many are still looking at us. We haven’t had any concerns,” she added.

First Philippine Industrial Park Head of External Affairs Ricky A. Carandang said issues on corruption may not immediately result in loss of investor confidence in the Philippines.

“The decisions made by the locators tend to be long term, so an event like this will make them concerned, but it is not going to immediately lead to a change of plan,” he said. “For example, if they have plans to expand, that is not going to stop just because of this.”

Mr. Carandang also said investors are giving President Ferdinand R. Marcos, Jr. the benefit of the doubt.

“He has done a lot for investors. And I think they are watching to see how this is resolved, and if the Marcos administration is perceived to be doing the right things in light of the crisis, I think it can be something that will benefit the country,” he added. — Aubrey Rose A. Inosante and Justine Irish D. Tabile, Reporters