THE Marcos administration has expressed optimism that the country’s economy will regain momentum as the government accelerates spending and budget releases beginning in the second quarter of 2026.
In a statement, Palace Press Officer Undersecretary Claire Castro acknowledged the crippling impact of the flood control controversy, which led to the suspension of various infrastructure projects across the country.
However, she expressed hope that increased government spending would help spur economic recovery.
“With the government’s push for faster spending and budget releases starting in the second quarter and the third quarter, we hope that the economy can start to pick up as well,” she said.
Following his fourth State of the Nation Address (Sona) in 2025, President Ferdinand Marcos Jr. directed the Department of Public Works and Highways to temporarily suspend the bidding of locally funded infrastructure projects as part of efforts to review procurement processes and address alleged anomalies in flood control projects.
Marcos also ordered the cancellation or suspension of planned 2026 flood control projects while the investigation is underway. The funds were instead redirected to other priority sectors, including education, health, and agriculture.
Castro added that the country’s economic activity was also adversely affected by the conflict in the Middle East, which resulted in the closure of the Strait of Hormuz, a key route for global energy trade, and triggered a surge in fuel prices.
She also highlighted the government’s efforts to cushion the impact of the energy crisis through the creation of the Unified Package for Livelihoods, Industry, Food and Transport (Uplift), an initiative launched by Marcos to provide a whole-of-government response through targeted interventions aimed at protecting vulnerable sectors from higher prices and other economic shocks.
In its mid-year Philippine Economic Update, the World Bank projected the country’s gross domestic product (GDP) growth to slow to 3.7 percent in 2026 from 4.4 percent in 2025.
The World Bank also noted that the country’s GDP growth slowed to 2.8 percent in the first quarter of 2026.
It attributed the weaker economic performance to controversies surrounding flood control projects, which delayed public infrastructure spending, as well as rising fuel prices.
“Allegations of corruption led to increased scrutiny and audits of infrastructure projects from mid-2025, slowing public investment,” the World Bank said.
“This contributed to lower investment overall as private investors navigated growing global and domestic policy uncertainty,” it added (TPM/SunStar Philippines)