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

​​One would think that the flood control corruption scandal that erupted in 2025 would spawn enough anger among the Filipino people — in the same way that massive Gen-Z protests swept Nepal, Indonesia, Madagascar, and other countries.

Why, then, did public anger fail to translate into larger and more disruptive protests?

One reason, I think, is that the Philippine economy is in no danger of collapsing, massive corruption notwithstanding.

Sure, multilateral agencies like the IMF and the World Bank have downgraded their growth projections for the Philippines this year (to a level just above 5% per year). But we’re still talking about growth: economic collapse involves negative growth, which is far from happening.

Growth of about 5% is still respectable, if disappointingly low compared to our pre-pandemic trend and other neighbors’ comparable figures. (Vietnam, for instance, reported a whopping 8% growth in 2025, the year US President Donald Trump slapped tremendous tariffs on our neighbor.)

But with 5% growth, the incomes of the vast swath of working Filipinos are in no danger of collapsing. Indeed, massive and sustained protests tend to happen when governance is so bad that it leads to a “balance-of-payments crisis” — similar to what happened in the few years leading up to the EDSA People Power Revolution in 1986.

A balance-of-payments or BOP crisis occurs when, essentially, the government runs out of dollars and international currencies to pay for its foreign obligations.

Sri Lanka’s 2022 protests, which saw the storming of the presidential palace and the resignation of prime minister Mahinda Rajapaksa, were essentially the culmination of a BOP crisis. Massive imports, unsustainable foreign borrowings (especially from the Chinese), and a collapse of tourism contributed to a depletion of their international reserves. This was worsened by a desire to prop up the rupee and make it stronger than it needed to be. With nothing to pay imports with, the people went hungry and took to the streets.

Happily, the Philippines is far from experiencing such a crisis. By end-2025, the Bangko Sentral ng Pilipinas reported that our reserves amounted to more than $110 billion, ensuring that we have enough to pay for our debts and imports. This is a far cry from the gross mismanagement of Ferdinand E. Marcos during Martial Law (1972–1986), which saw a record depletion of our reserves, led by the Central Bank itself which, at that time, was not independent of Marcos Sr.

Even if we’re far from any sort of economic collapse in the short run, I’m more concerned with our long-run prospects.

If we want to truly prosper, I’m afraid that 5% growth is not something we should settle on. We need to find new growth drivers for the economy. But at the same time, we need to ensure that higher growth cascades to the masses, and is felt by them genuinely.

One thing I realized from the flood control scandal, and the subsequent slowdown of growth to 4% in the third quarter of 2025, is that we’ve been living a lie. Economic growth, to a substantial extent, appears to have been driven by distorted and corruption-ridden public works spending. When government infrastructure spending slowed down, so did the investment growth figures.

Of course, the spending slowdown was a much-needed course-correction on the part of the Marcos administration. This was reminiscent of what had happened with the Benigno Aquino III administration, in the early 2010s, when the government pulled back on spending, too, to rid it of corruption. I recall that economic growth also stalled for some time. But growth soon zoomed to above 6% per year, boosted by restored investor confidence and credible governance reforms. The growth dividend of that administration’s anti-corruption crusade was quite large.

I’m not sure the present Marcos administration can replicate that success. Everyone is on wait-and-see mode. The Filipino public is still waiting for “big fish” to be questioned or even prosecuted, among them the President’s own cousin, former House speaker Martin Romualdez, who allegedly masterminded the budget shenanigans in the past few years. The Filipino people are also awaiting the return of key personalities who have fled abroad, including former congressman Zaldy Co (reportedly in exile in Portugal with a golden visa), as well as former public works secretary Manuel Bonoan (who never came back from alleged health procedures).

Investors, meanwhile, are awaiting the resolution of the corruption scandal before putting in more money into the Philippines. No investor in their right mind will pour billions of dollars into a country where the rule of law is more of a suggestion than a reality. Already, the Bangko Sentral reported that from January to October 2025, foreign direct investments fell by 25%. In October alone, they fell by 40%.

Foreign investments, of course, are not the end-all and be-all of growth. But it’s a quick way to boost our domestic industries and generate decent, well-paying jobs. Vietnam’s growth today can be attributed in large part to significant foreign direct investments by big tech and manufacturing companies decades back. Vietnam is reaping the benefits of openness to this day, positioning itself as the fastest-growing economy in ASEAN.

It was recently announced that Google will be assembling Chromebooks in Camarines Sur, in a new economic zone. But this feels like the exception rather than the norm. We need to sort out, in the first place, the reasons why big companies are not choosing us as a top priority investment destination. We’re turning them off in general, and we need to turn them on (so to speak).

Sadly, I don’t believe anymore that President Marcos will see transformation of the economy as a priority in his last 2.5 years in office. Even in 2025, politics seems to have preoccupied him, at the expense of key reforms that will benefit the country in the long run.

About 3.5 years in office, he spent much of his time rehabilitating the family name and legacy, and downplaying previous governments’ efforts to recover his family’s ill-gotten wealth. (I’m wondering why this line of attack isn’t being used by the Duterte camp.)

Anyway, welcome to the Wait-and-See Economy, where everyone is waiting with bated breath for reforms that they will likely never see happening. – Rappler.com

Dr. JC Punongbayan is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he received The Outstanding Young Men (TOYM) Award for economics. Follow him on Instagram (@jcpunongbayan).