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THE PHILIPPINE ECONOMY <\/span>might experience a deceleration until early 2026 as the dispute regarding irregular infrastructure proj<\/span>ects diminishes government expenditures, Finance Secretary Ralph G. Recto stated on Tuesday.<\/p>\n During a Senate hearing for the Department of Finance budget, Mr. Recto mentioned that growth probably decreased in the third quarter as President Ferdinand R. Marcos, Jr. enacted reforms in light of the corruption scandal.<\/p>\n \u201cThis (deceleration) could extend until the first quarter of next year,\u201d he commented. \u201cThe recent flood control controversy could have overshadowed public spending, yet this marks the beginning of a cleanup, and we foresee improvements in the coming months.\u201d<\/p>\n In <\/span>July, Mr. Marcos brought attention to irregularities in flood control <\/span>initiatives and established the <\/span>sum<\/i><\/span>bongsapangulo.ph<\/i> website<\/span>, allowing citizens to report inadequate or nonexistent public projects. <\/span><\/p>\n \u201cThe President himself is the whistleblower in this matter. And his message is unequivocal: We will never ignore corruption,\u201d Mr. Recto remarked.<\/p>\n The corruption scandal ignited inquiries by the Senate, the House of Representatives, the Justice department, and the newly established Independent Commission for Infrastructure. It also revived scrutiny over the Department of Public <\/span>Works and Highways (DPWH), <\/span>restricted infrastructure spending, and prompted a P255-billion reduction in the DPWH\u2019s budget for 2026. <\/span><\/p>\n \u201cHad a portion of the budget not been lost to corruption, the economy might have been expanding by around 6% to 6.2%, and revenue collections from the BIR (Bureau of Internal Revenue) and BoC (Bureau of Customs) would have been higher,\u201d Mr. Recto noted.<\/p>\n Despite this, he remained optimistic that the economy would still achieve the lower end of the government\u2019s 5.5% to 6.5% growth target this year.<\/p>\n In the first six months of the year, the nation’s gross domestic product (GDP) growth averaged 5.4%.<\/span><\/p>\n The Finance chief also pointed out that weather-related disturbances influenced economic activity in the third quarter. <\/span><\/p>\n \u201cOur strategy is anticipatory and tactical, ensuring that available fiscal space is directed toward impactful, fast-disbursing projects to mitigate the potential growth slowdown and help maintain full-year GDP growth within the DBCC <\/span>(Development Budget Coordination Committee) <\/span>assumptions,\u201d Mr. Recto remarked.<\/span><\/p>\n Mr. Recto stated it could take the government two to three quarters \u201cat most\u201d to resolve the flood control issue, but infrastructure spending will \u201ccertainly decline next year.\u201d<\/p>\n Meanwhile, Economy Secretary Arsenio M. Balisacan mentioned that reaching the full-year growth objective has \u201cbecome more difficult\u201d due to a probable reduction in government expenditures and ongoing external challenges.<\/p>\n \u201cHowever, we\u2019ll await the publication of the third-quarter economic performance (in the first week of November) before the DBCC takes action,\u201d he communicated to BusinessWorld<\/i> via a Viber message on Tuesday. <\/span><\/p>\n The Philippine Statistics Authority will disclose first-quarter GDP figures on Nov. 7.<\/p>\n MORE RATE CUTS \u201cIt all hinges on monitoring inflation. For now, it appears to be within target, and we have already lowered interest rates. Ideally, another rate cut,\u201d he stated.<\/p>\n The Bangko Sentral ng Pilipinas (BSP) last week reduced its key policy rate by 25 basis points to 4.75% as it aimed to bolster economic growth <\/span>as <\/span>the corruption scandal clouds the outlook.<\/span><\/p>\n BSP Governor Eli M. Remolona, Jr. recently suggested the possibility of another reduction at the Dec. 11 meeting, with possibly more in the following year.<\/p>\n
\n<\/b>Mr. Recto, a member of the Monetary Board, observed that further rate cuts would be \u201cbeneficial for the economy.\u201d<\/span><\/p>\n