Watching and waiting

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With our country seemingly on course toward ungovernability and economic decline, a pall of gloom has descended on the business community. Local business risk takers are losing their nerve in the face of the reality they are seeing.

If you ask some taipans for attribution how they feel, they are still officially optimistic. But in private, they confess their fears about the country’s future. They will watch and wait until things clear up before making significant new investments.

Watching and waiting will put our economy in a standstill. The smaller entrepreneurs who constitute the bulk of local business are worried about survival. They are feeling the consumer pulling back on spending other than for necessities.

Most are no longer sure the Christmas season will bring comparably good sales to past Christmases. The failure of consumers to spend enough to prevent the decline in our GDP last quarter is a premonition.

Deutsche Bank AG forecast the Philippine peso could weaken to P60 against the US dollar, its weakest-ever level, citing flagging business sentiment rooted in the shock and disgust over the massive corruption in the government.

Taipans as well as medium and small entrepreneurs are also angry over the humongous corruption scandal. Like everyone else, the business folks are also largely cynical that BBM will be able to deliver on his promise of “big fishes” in jail by Christmas. It’s just an aspiration, like the 21-peso-a-kilo rice.

Nothing less than jailing big time congressmen, bureaucrats and DPWH contractors will rekindle trust in BBM and the government he leads. The resignation of Babes Singson because ICI has no teeth and no budget to do its job confirms doubts people have about ICI being a moro-moro.

Some local and foreign analysts still point out that we are one of the fastest growing economies in the region. But that could be wishful thinking. Their optimistic predictions for 3Q GDP growth were well off the mark.

The general outlook for 2026 is cautiously optimistic but its fragility is obvious. A mid-five percent growth (say 5.5 to 5.8 percent), is being predicted by some but only if domestic demand holds up. That depends on how BBM manages to make his family and friends in the government accountable.

In other words: governance and investor confidence are the wild cards or unpredictable factors.

If corruption investigations lead to greater transparency and faster, cleaner public-works implementation, the economy could bounce back. If not — and if investment and FDI remain depressed — growth may remain modest and below potential.

Will domestic demand (household consumption, remittances, services) save the day in our consumer-driven economy? It stumbled in the 3Q this year.

Beyond economic fundamentals (inflation, wages, jobs), governance and trust in institutions also matter for consumption —  especially for non-essential spending or long-term purchases (home, durable goods, education, investments).

Even as consumers try to be optimistic about income, jobs, inflation in the next 12 months (per the Q3 2025 BSP CES), persistence of political uncertainty or new scandals could easily undermine confidence.

Nomura has lowered its 2026 growth forecast for the Philippines to 5.3 percent from 5.6 percent previously, cautioning that rising political uncertainty is weighing on public spending, investor sentiment and the country’s near-term recovery prospects.

Nomura’s downgrade puts the Philippines among ASEAN economies expected to underperform next year.

Singapore’s DBS Group Research: “Building in our forecast for a subdued fourth quarter, 2025 growth is likely to average 4.7 percent versus our earlier forecast of 5.3 percent,” DBS said. The bank expects growth to improve slightly to five percent in 2026.

The Organization for Economic Cooperation and Development has also downgraded its growth forecasts for our economy to 4.7 percent this year and 5.1 percent in 2026.

Karl Kendrick Chua, former economic planning secretary, thinks Philippine GDP growth is performing at par with regional standards, but is slowing down and low, relative to our potential.

“Consumption driven growth is the easy part. How can investment, government and exports do better?”

Our history does not give much reason for hope. Karl reminds us that in terms of per capita income in US dollar terms, the Philippines went from the top to the bottom in 50 years. Wow! That’s our generation’s failure.

It’s clear our rotten politicians are dragging our economy down. But the idiots among us keep voting for them.

The small turnout in the Nov. 30 rally does not mean an imminent political crisis has eased. Public anger over what is now broadly seen as systemic corruption remains high.

While surveys show the anger is broadly based, the primarily middle-class civil society groups leading the rallies have been unable to translate that anger into broader mobilization.

There is a risk that the diminished protest momentum will make implicated legislators and senior officials, including BBM, think they can resist reforms, close ranks and buy themselves time.

In self-defense, BBM is pointing to Congress as the scandal’s epicenter and he is the only hope for reform. But BBM and his son had already been implicated by former congressman Zaldy Co, the scandal’s chief architect and operator now hiding in Europe.

Given his record, Co is probably not telling the whole truth. But his confession of direct participation (which makes him culpable) by supposedly taking orders from BBM and former speaker Martin Romualdez makes his revelations sound credible.

Unless BBM delivers quickly on his promise of jailing big crooks before Christmas, public disillusionment will increase. More people may begin looking for political alternatives well before the 2028 elections. BBM’s authority could be greatly weakened, prematurely making him a lame duck.

If we had a better Vice President than Sara Duterte, BBM’s goose might have been cooked a few weeks ago. Ironically, it is the prospect of Sara’s succession that is making people reluctantly support BBM.

After all, if Sara can’t run DepEd, what makes anyone with half a brain think she can run the country?

Boo Chanco’s email address is [email protected]. Follow him on X @boochanco