PRICE TAG: How corruption slows down economic growth

Corruption in movies and in the Philippines has something in common — money exchanged in the dark, moving in ways that seem too extreme to be real. The only difference is that, unlike in films, corruption in the Philippines is something real and not fictional.

What makes it even more disturbing than movies is not just how large the amounts are. It is what happened afterwards. When public funds are stolen, hidden, and delayed, it stops doing what it is supposed to do — support jobs, build infrastructure, and keep the economy moving.

And over time, corruption stops being just a moral failure or a legal issue. It becomes a drag on the country’s future.

What marks the slowdown of economic growth

According to the World Bank’s January 2026 Philippines Monthly Economic Developments report, the economy lost momentum in the second half of 2025 as both public and private investments slowed down, following the corruption allegations involving flood control projects. Because of this, many projects were halted for review, while others were delayed or dropped entirely, leading to a decline in government capital spending.

By the 3rd quarter of 2025, the economy was growing more slowly at 3.9%. However, in the last quarter of the year, growth slowed even more, dropping to 3%, contrary to the past years, where the final months are the strongest period in the Philippine economy, since spending and business activities are usually higher in this quarter.

This slowdown was not driven by inflation or exports, which remained relatively steady. Instead, World Bank pointed out that the main drag came from investments. 

The World Bank further stated that Foreign Direct Investment (FDI) fell sharply in the late 2025 as investors adopted a cautious, “wait-and-see” method amid governance concerns, which refers to “waiting” and “observing” for any economic progress or regress before investing in the country.

This is backed by Bangko Sentral ng Pilipinas’ data, which reveals that the FDI inflows dropped by nearly 40% year-on-year in October 2025 alone.

Moreover, Fitch Solutions warned that corruption issues could continue to lessen investment through 2026. For investors, corruption signals uncertainty. This loss of trust makes it even harder for the economy to recover.

The burden of rising debt

This is why when public funds are held back, misused, or lost to corruption, they stop doing their job. They do not reach workers, suppliers, and communities anymore. They do not generate spending or confidence. Rather than moving through the system, that money is removed from circulation — leaving growth weaker than it should have been.

In simple terms corruption chokes the channels that allow money to circulate and for growth to happen.

The flood control scandal is only the latest chapter in a longer story. Over the past decade, corruption is estimated to have drained about P8.8 trillion from the Philippine economy — an amount even larger than the entire 2026 national budget of P6.793 trillion.

Since so much money has been lost, the government has relied more heavily on borrowing money from the World Bank. The country’s debt is also projected to hit P19 trillion by the end of 2026, and nearly 28% of the 2026 budget is now set aside for just paying debts alone instead of appointing them to developmental projects that could improve the country’s overall state.

Unequal costs in an unequal system

While corruption hurts the economy overall, it does not impact everyone equally. Money diverted from projects does not disappear but accumulates among those with access to budgets, contracts, and political protection. Meanwhile, Filipinos face fewer jobs, weaker public services, and slower and lesser wage growth instead of the progress that were promised to them during elections 

This is why corruption is not just an obstacle but a system that also rewards a small group while holding the rest of the country back. Growth becomes unequal, benefiting only those at the top or those with power while leaving most people behind.

Stolen funds, stolen future

As long as corruption remains in the government, growth will stay weak and progress will only continue to benefit a few instead of all. 

Until then, corruption will continue to not just steal money but also time, opportunities, and a future that remains just out of reach for many.