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Finance Secretary Ralph G. Recto ruled out an “off-cycle” move on monetary policy easing despite weaker-than-expected third-quarter growth, but noted there is a high chance of a rate cut at the central bank’s next meeting.

“I’m not sure about an ‘off-cycle’ cut, but there’s a good chance for a rate cut before the end of the year,” Mr. Recto told BusinessWorld on the sidelines of a Senate hearing on Thursday.

He said the Monetary Board is more likely to cut the key policy rate by 25 basis points (bps) at the Dec. 11 meeting.

Asked if there is a chance for a 50-bp cut, Mr. Recto said: “There’s always a chance. It all depends on what happens. But I think there’s a higher probability for a 25-bp cut.”

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Zeno Ronald R. Abenoja told BusinessWorld that they have not discussed any possible off-cycle monetary policy easing.

“I haven’t heard anything,” he said. “So, it’s probably just rumors. As far as I know, there are no discussions.”

In October, the BSP lowered borrowing costs by 25 bps to a three-year low of 4.75%. It has so far reduced the key policy rate by 175 bps since it began its easing cycle in August last year.

The slower-than-expected gross domestic product (GDP) growth in the third quarter and benign inflation give the BSP room for another rate cut in December.

The Philippine economy grew by 4% in the third quarter, the slowest growth seen in over four years or since the first quarter of 2021.

BSP Governor Eli M. Remolona, Jr. in October said they could cut rates by another 25 bps at the Dec. 11 meeting and potentially more in 2026 to support the economy amid a slowdown due to the ongoing flood control scandal.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort on Thursday said the third-quarter GDP data prompted speculation about an off-cycle interest rate cut.

Mr. Ricafort said it is “possible, but not 100% sure” for the BSP to cut rates before its scheduled meeting on Dec. 11.

“There have been rumors in the market since (Wednesday) about a possible off-cycle monetary easing, particularly a cut in large banks’ RRR (reserve requirement ratio), after the softer local GDP growth data (on Nov. 7),” he said in a Viber message on Thursday.

“Every (one) percentage point cut in large banks’ RRR is equivalent to about P180-billion additional liquidity infused into the banking system that could increase lending and other investments such as fixed income or bonds, among others,” he added.

On Feb. 21, the BSP cut universal and commercial banks’ RRR by 200 bps to 5%, which took effect in the week of March 28.

Meanwhile, Mr. Ricafort noted that the latest third-quarter GDP data have caused the yields on the PHP (Philippine peso) Bloomberg Valuation Service to decline slightly and the peso to slump to a fresh low against the US dollar.

On Nov. 12, the peso fell to a new record low after closing at PHP 59.17 versus the greenback, slipping by 18.5 centavos from its PHP 58.985 finish on Tuesday.

The BSP chief earlier said they will not intervene in the foreign exchange market unless the peso’s depreciation leads to inflationary pressures.

“I think the BSP intervenes just to make sure that the curve is not too wide,” Mr. Recto said.

“But I’m sure everyone knows that the BSP, to a certain degree, intervenes in the market just to flatten the curve.”

He also noted that the peso might not weaken further if both the BSP and the US Federal Reserve would cut in December.

“It all depends on what the Fed does,” Mr. Recto said. “If the Fed cuts rates also, then it would be the same.”

Last month, the Fed delivered its second 25-bp cut this year, bringing its interest rate to the 3.75-4% range. This brought its total cuts to 150 bps since September 2024.

However, December easing by the Fed remains uncertain as policymakers weigh concerns over economic data after US President Donald J. Trump ended the longest US government shutdown last week. — Katherine K. Chan

The investment outlook is expected to remain weak through next year unless reforms are implemented and those linked to the flood control scandal are jailed, economists said.

“If reforms and transparency improve, we could see a turnaround by mid-2026,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co. said in a Viber message to BusinessWorld on Nov. 13.

Geopolitical tensions, unpredictable policy shifts, and weak global demand may also risk further weighing on investor sentiment, he added.

Data from the Philippine Statistics Authority showed foreign investment pledges approved by investment promotion agencies slumped by 48.7% to PHP 73.68 billion in the third quarter.

Mr. Ravelas attributed this sharp drop in foreign investment approvals to the “shaken investor confidence” triggered by corruption concerns, policy delays, and global uncertainty.

“The message is clear: we need to restore trust and fast-track reforms to stay competitive,” he added.

The government’s sweeping corruption crackdown since August has hurt economic growth as well as consumer and investor confidence.

In the third quarter, gross domestic product (GDP) grew 4%, its weakest since 2021, as the corruption scandal slowed public spending. This brought the nine-month average to 5%, lower than the government’s 5.5-6.5% full-year target for 2025.

GlobalSource Partners Country Analyst Diwa C. Guinigundo said it would be difficult to invite a “reflow of foreign capital” without charging those involved in the flood control scandal with plunder and malversation of public funds.

“We need to restore public trust and confidence in the business outlook in the Philippines,” he told BusinessWorld in a Viber message.

Earlier this month, President Ferdinand R. Marcos, Jr. declared that business confidence in the Philippines has been “restored,” crediting his administration’s crackdown on government irregularities for bolstering trust in economic management.

Last week, Mr. Marcos said people linked to anomalous flood control projects will be jailed before Christmas.

However, Foreign Buyers Association of the Philippines (FOBAP) President Robert M. Young said the country is still “in the process” of regaining lost confidence.

Mr. Guinigundo blamed high business costs, corruption in infrastructure projects, and weak respect for contracts and the rule of law in the country for the slump in foreign pledges in the third quarter.

“Foreign investors remain skeptical about the country’s macroeconomic prospects after the weak third‑quarter showing,” Mr. Guinigundo said in a Viber message.

Amid global headwinds from higher tariffs and a fragmented trade system, Mr. Guinigundo said the Philippine government must slash red tape and bring down business costs.

Foundation for Economic Freedom President Calixto V. Chikiamco said weak investments will likely continue unless the administration undertakes major reforms.

“Possible headwinds: political instability due to failure to bring perpetuators of the public works fraud to justice and sharpening rift between the Marcos and Duterte factions,” he said in a Viber message.

Mr. Chikiamco said the “overvalued” peso and the “lousy” tariff deal with the US have also affected the investment outlook.

Meanwhile, Federation of Philippine Industries Chair Elizabeth H. Lee said that the peso’s slide to a new all-time low of P59.17 against the dollar reflects global and local challenges.

“Locally, unresolved corruption cases and stalled infrastructure projects have tested confidence and slowed growth,” she said in a statement over the weekend.

“The path forward is clear: we must resolve corruption cases with transparency and accountability,” she said, adding this will help “restore trust, attract investment, and unlock infrastructure spending.”

She said this will create the stability that manufacturers need “to expand production, safeguard employment, and drive growth.”

“By protecting jobs in manufacturing and showing that clean governance drives stability, we can shorten the peso’s weakness, rebuild confidence, and put the economy back on a stronger, more sustainable growth path,” she added.

Philippine Chamber of Commerce and Industry Chairman George T. Barcelon attributed the peso’s recent performance to rate cuts by the Bangko Sentral ng Pilipinas, “coupled with the higher demand of dollars due to foreign investors off-loading stock investments and buying dollars to remit their money.”

“Like many business and civic organizations, academy and church institutions, we are in solidarity with public sectors hoping for an unbiased resolution,” he said in a Viber message.

FOBAP’s Mr. Young said that the weaker peso does not benefit Filipino exporters much.

“Actually, there is no significant gain because we are importing most of the materials. When you import materials, of course you use dollars to pay,” he said in a phone interview. “So, if ever, there will be some gain, it will be a very, very small margin only.”

However, he said that the benefits of the peso depreciation are only enjoyed by those who do not import their raw materials. — Aubrey Rose A. Inosante and Justine Irish D. Tabile, Reporters

April B. Elisteria wades through knee-deep water every time it rains in her neighborhood in Las Piñas City. The 39-year-old helper at a private elderly care home and mother of four has lived with floods for as long as she can remember.

“Sometimes the floodwaters are thigh-high near the entrance of our community,” she said in an Oct. 8 Viber interview. “I walk a fair distance to the entrance because no car can enter our place anymore,” she added in Filipino.

Her family has elevated their home to keep floodwaters from seeping in. “We’ve been here for so long, we already got used to the situation,” Ms. Elisteria said. “When I get home, I take a shower right away to avoid getting sick.”

Floods remain a part of daily life for many urban poor Filipinos despite decades of government projects meant to address them. Now, those projects themselves are under scrutiny.

Government investigators recently confirmed that 421 of roughly 8,000 flood control projects nationwide were “ghosts” — nonexistent despite being allocated funds. The revelations triggered the removal of PHP 255 billion (USD 4.4 billion) worth of projects from the proposed 2026 national budget, effectively cutting flood control allocations to zero.

As the scandal unfolds, public officials are looking to technology to restore trust, improve transparency, and curb corruption by design. Blockchain ledgers, livestreamed bidding and satellite mapping are now being tapped to track how every peso of public works spending moves — and whether something actually gets built.

The Department of Public Works and Highways (DPWH) has faced recurring questions over the integrity of its flood control program, a key infrastructure item in annual budgets. The “ghost” project revelations reinforced long-standing suspicions of systemic graft tied to infrastructure contracts.

Digitalization, automation and the removal of personal discretion create systems that make corruption more difficult, experts said.

The DPWH has begun livestreaming procurement activities, and on Sept. 30 launched “Integrity Chain,” a blockchain-powered transparency platform developed with the Blockchain Council of the Philippines (BCP).

The system aims to embed accountability into infrastructure workflows by maintaining immutable records that cannot be secretly altered.

The platform functions like a digital ledger, Mark S. Gorriceta, a founding BCP trustee, said in a Zoom interview. Every transaction, every data point is permanent once entered, and any tampering will be visible, he pointed out.

The Integrity Chain will initially cover foreign-assisted projects, which already follow stricter standards.

“Validation does not rely solely on the government,” Mr. Gorriceta said. “Independent validators from civil society, the academe, media, and nongovernment groups will check the data before it’s finalized.”

Public Works Secretary Vivencio “Vince” B. Dizon said during the platform signing that he welcomes private sector scrutiny. “Everyone should be watching,” he said.

Mr. Gorriceta said AI (artificial intelligence) would also be integrated to verify data accuracy. In three months, he expects the players to share the results from the pilot phase.

At least 10 blockchain-related bills are pending in Congress. But experts warn against seeing blockchain as a cure-all.

“Blockchain won’t prevent collusion among vendors and government officials,” Jeffrey Ian C. Dy, a former undersecretary at the Department of Information and Communications Technology, said in a Facebook post.

He also said the government’s lack of expertise could create dependence on proprietary systems “akin to graft.” Mr. Dy has suggested limiting blockchain to transactional data, defining clear rules on data use, and determining who should access it.

Watching from space

Beyond blockchain, agencies are turning to space-based monitoring to catch irregularities early. The Department of Human Settlements and Urban Development (DHSUD) is integrating satellite and geospatial data into its oversight systems.

Its Automated Land Use and Zoning Compliance Assessment and Monitoring (AutoCAM) tool uses remote sensing, machine learning and geographic information systems to track whether land use complies with local plans — and whether flood control projects are built in appropriate areas.

Ibani C. Padao, officer-in-charge director at the DHSUD’s Environmental, Land Use and Urban Planning and Development Bureau, said AutoCAM could detect zoning violations in real time.

“In protected agricultural zones, for example, if the tool detects that residential structures are being built, it will be tagged as not allowed or conditionally allowed,” he told BusinessWorld via Zoom.

DHSUD Assistant Secretary Mylene A. Rivera said the agency’s challenge lies in ensuring local governments use their approved land-use plans.

“After approval, these plans are often shelved and not used as a reference for development,” she said in the same Zoom call in Filipino. “Even diligent local governments learn about violations only after the fact because they don’t see everything.”

Ms. Rivera said AutoCAM could compare approved land-use maps with satellite images from the Philippine Space Agency (PhilSA). “If the plan doesn’t match what’s happening on the ground, the system flags it in real time,” she said. “That saves local governments a lot of time.”

The DHSUD will also launch a digital platform called PlanSmart for Sustainable Human Development on Nov. 17. It integrates hazard maps with planning data to help local governments make risk-informed decisions.

The initial rollout will cover 15 local governments per regional office, or about 200 nationwide. The target is for all local governments to have risk-informed plans by 2028. AutoCAM is slated for nationwide rollout by May 2026.

The Department of Budget and Management (DBM) has revived an older technology-driven project tracking system known as Digital Information for Monitoring and Evaluation, or DIME. First launched in 2017, it uses drones, geotagging, and satellite images to monitor major public investments. It was discontinued in 2021 and relaunched in 2023 through a partnership with the local space agency.

“The initial goal is to integrate PhilSA’s imagery with DBM’s platform,” Romer Kristi D. Aranas, information technology officer at the space agency’s High-Performance Computing and Information Systems Division, said via Zoom.

PhilSA expects project images to be publicly available through the DIME website by 2026.

“We are ready as far as technical capability and access to data are concerned,” Julius M. Judan, senior science research specialist at PhilSA’s Space Mission Control and Operations Division, said in the same Zoom interview.

He added that satellite data would be cross-validated with project timelines and milestones “to reach relevant conclusions.”

Beyond the tools

Both Mr. Aranas and Mr. Judan stressed that government capacity-building is critical. “We integrate the data processing know-how and what the technical requirements are so it would be self-sustaining, and they can do it themselves long term,” Mr. Judan said.

Ms. Rivera of DHSUD said some local governments still lack the resources and expertise to use such tools effectively.

“You can’t give solutions if you don’t understand the situation on the ground,” she said in Filipino. “The goal is to make planning easy for them, to give them a template they can adapt to local realities.”

Experts say the technologies being deployed — blockchain, AI and satellite monitoring — mark progress toward transparency. Yet they emphasize that digital systems cannot replace political will.

Science and technology can provide tools that enable desired social outcomes, William G. Padolina, chairman of the Science, Technology and Innovation Foresight Steering Committee of the National Academy of Science and Technology, said in an e-mailed reply to questions.

“But the choice to harness which of these tools can promote societal interests, especially to recover from shocks, remains a political decision,” he added.

Mr. Dy said flood control corruption starts with budget enactment, which no technology could capture. “Perhaps the stance should shift from ‘anti-corruption’ to ‘increasing transparency in government.’”

Transparency advocates have long argued that corruption thrives in discretionary budgeting — a point made clear by the “ghost” projects’ discovery. Oversight mechanisms are often activated only after projects have been funded and payments released.

Economists note that eliminating P255 billion in questionable allocations could improve fiscal discipline in 2026, but warn of gaps in actual flood mitigation if legitimate projects are also delayed.

State efforts to digitize oversight represent a rare convergence of science, policy and accountability. Whether these systems will outlast political cycles — and actually prevent “ghost” projects — remains to be seen.

For residents like Ms. Elisteria, though, the test of reform will be simpler: the day her street finally stays dry. “I just hope the floods stop becoming a fixture in our lives because it’s so hard.” — Patricia B. Mirasol, Multimedia Producer

Philippine President Ferdinand R. Marcos, Jr. on Thursday pledged to ramp up government spending in the fourth quarter, as a corruption scandal contributed to weaker-than-expected growth in the third quarter.

“We have implemented many measures because public spending will now be increased to make sure that by the end of the year, the spending levels are aligned with our original plan — so we can recover what was lost in the third quarter,” Mr. Marcos said in mixed English and Filipino during a press briefing in Malacañang.

The Department of Budget and Management (DBM) earlier said it has programmed PHP 1.31 trillion for disbursement during the October-to-December period to boost economic growth.

In the third quarter, the Philippine gross domestic product (GDP) growth slowed to a four-year low of 4% from the 5.5% expansion in the second quarter and 5.2% a year ago.

The sharp economic slowdown was mainly attributed to the corruption mess that dampened government spending and affected consumer and investor confidence.

For the first nine months of the year, GDP growth averaged 5%, slower than 5.9% in the same period last year, and below the government’s 5.5-6.5% full-year target.

The government is probing a multibillion-peso corruption scandal involving public works projects, where government officials allegedly colluded with private contractors to inflate costs and approve ghost infrastructure. It has affected investor confidence in the Philippines, weighing on the stock market and the Philippine peso.

Mr. Marcos vowed to put the culprits behind bars before Christmastime.

“They won’t have a Merry Christmas. Before Christmas, they will be jailed,” he said.

Mr. Marcos said the slowdown in economic activity in the third quarter can be partly blamed on the string of typhoons.

“There really was a downturn in economic activity. You have to remember that it’s not only because of these problems. Because of the typhoons, we lost working days in the economy,” he said.

Mr. Marcos also attributed the slower growth to the trade uncertainties, which are also affecting the global economy.

“We are not the only ones suffering the shocks that come from the new trade structure that has been imposed on the rest of the world. And so, we are all adjusting to that,” he added.

Since Aug. 7, the US has imposed a 19% duty on many goods from the Philippines, Cambodia, Malaysia, Thailand and Indonesia.

DBCC to review targets

Meanwhile, the Development Budget Coordination Committee (DBCC) is set to review its macroeconomic assumptions and targets next week, Senate Committee on Finance Chairman Sherwin T. Gatchalian said.

During the plenary debates for the 2026 national budget, Mr. Gatchalian said he is certain there will be revision in the growth targets.

“Next week the DBCC will once again meet and talk about this, possibly a revision in terms of our 2025 economic growth, and also the succeeding years 2025-2028,” Mr. Gatchalian said.

This was in response to Senator Risa N. Hontiveros-Baraquel’s question if the weak third-quarter growth will prompt a revision of the DBCC targets.

“We will also have a slightly lower economic growth forecast for the end of the year, about… 4.7-5%, Mr. President. And then our debt to GDP will still be at 63%,” Mr. Gatchalian said.

In June, the DBCC tempered its growth forecast to 5.5-6.5% for 2025 and 6-7% for 2026, mainly due to “heightened global uncertainties” arising from the Middle East conflict and US tariffs.

Mr. Gatchalian said there are a lot of factors that have affected the growth outlook, such as the series of typhoons and recent earthquakes.

Last week, Economy Secretary Arsenio M. Balisacan warned that hitting the low end of the 5.5-6.5% growth target would be “very challenging,” with more storms expected this quarter.

For next year, Mr. Gatchalian flagged external headwinds such as US trade policies that will have a negative impact on growth.

At the same time, Mr. Gatchalian said restoring public trust requires accountability, stressing that those involved in the flood control corruption scandal must face charges and be jailed before yearend.

“That’s why all of this flood control issue is giving us a lot of headache in terms of outgrowing debt. But still, that’s why the administration is really bent on holding people to account by putting them to jail, and that will bring back confidence and in turn revive our economic growth in the next quarter,” he said.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said the slowdown in economic growth is also due to the government’s lack of a “coherent” growth strategy.

“The main reason why our GDP growth is below target is that the current administration does not have a coherent growth strategy, and worse has allowed or enabled policies and activities that undermine growth (diversion of pub-lic funds to Maharlika, revenue-eroding measures, transfer of PDIC (Philippine Deposit Insurance Corp.) and PhilHealth (Philippine Health Insurance Corp.) funds to National Government, ‘most corrupt budget,’ massive corruption, etc,” he said in a Viber message. — Chloe Mari A. Hufana and Aubrey Rose A. Inosante

The Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) is seeking government support for the sector as it loses its competitiveness amid new US trade deals with Southeast Asian neighbors.

SEIPI President Danilo C. Lachica said the Philippines lost its edge when the US reciprocal tariff rates on other electronics exporter-countries were lowered.

“What you’re up against is the power cost, the logistics cost, the water cost, and the aggressiveness of the government,” he told BusinessWorld on the sidelines of the PASIAWORLD 2025 Annual Supply Chain Conference on Thursday.

“Our edge was the reciprocal tariff. But now, it’s a level playing field in terms of the tariff,” he added.

In August, the US began imposing a 19% tariff on most goods from the Philippines, Malaysia and Thailand, while a 20% tariff is charged on Vietnam.

Asked if the final agreements between the US and other members of the Association of Southeast Asian Nations (ASEAN) could further impact the competitiveness of the country, he said that it will remain “business as usual” until new rates are announced for the Philippines.

“Well, what we tell our (SEIPI) members for now is to take that as gospel truth. For now, that’s our reciprocal tariff. If that changes because of the US Supreme Court decision that challenges its legality, or Trump announces a new tariff, then we respond,” he said.

“You can’t afford to have analysis paralysis, and you will not do anything. So, just do your normal business,” he added.

For now, semiconductors and some electronics manufacturing services products are exempt from the reciprocal tariff.

“Am I secure with our 0% tariff for now? Yes, but I’m not going to hold my breath. Like I said, it just depends on how the wind blows in Washington, DC, but we’ll see,” he said.

“I think by the first or second quarter we should have some resolution there, and hopefully it’s favorable for the Philippines,” he added.

However, he said that there is a need for the Philippines to find new markets for its exports amid the US reciprocal tariff.

“We really need to look at new markets… whether it is ASEAN, African, or European. Especially in Europe, not many have heard of the capabilities of the Philippines,” he said.

“The interesting thing is, Latin American countries like Panama are inquiring, and Canada is also inquiring, so we really have to diversify our markets,” he added.

Mr. Lachica said that the Philippines must already establish its own wafer fabrication facility to remain competitive.

“If we don’t do this, we are probably just going to compete with Timor-Leste or Laos, while our more advanced neighbors are still going to grow their semiconductor and electronics industry,” he said.

Despite the challenges faced by the sector, he said recent trade numbers show the possibility that the exports of semiconductors and electronics will have modest growth.

“It’s becoming clearer that we will exceed flat growth. You would be pleasantly surprised. It is doing better than we expected,” he said. “What is driving it is artificial intelligence and the internet of things, so it is really advanced technology.”

In the first nine months, the country exported USD 33.52 billion worth of electronic products, up 9.5% from USD 30.6 billion a year prior.

Meanwhile, Mr. Lachica said that the corruption scandal has been sending a bad signal to multinational companies.

“As you know, multinationals don’t tolerate that kind of problem. If ever there’s anything uncovered, they fire the executive,” he said.

In particular, Mr. Lachica said some companies are seeking assurance from local partners on how they can be shielded from the effects of corruption.

“There is interest. Continuous? I hope. Significant? I hope. But there are also major concerns,” he added.

Mr. Lachica said businesses want to see the results of the Independent Commission for Infrastructure’s (ICI) probe on the alleged graft and corruption in government projects.

“The problem is, the ICI investigation has been going on for months, but no one is convicted. The credibility and sense of urgency, I don’t see it. I hope we get some conviction soon because it sends a bad message,” he said. — Justine Irish D. Tabile, Reporter