Palace Eyes Economic Boost as Government Spending Accelerates

Malacañang on Wednesday said it is hopeful the Philippine economy will improve as government spending accelerates. This statement comes after the World Bank, in its mid-year update, pointed out that corruption had slowed the country's economic growth. In a message to GMA News Online, Palace Press Officer Undersecretary Claire Castro acknowledged the World Bank's assessment. She said that infrastructure projects were affected by the exposure of an alleged corruption scheme in flood control projects in 2025. "This suspension has obviously led to significantly reduced government spending, especially starting in the fourth quarter of last year," she said. Castro also stated that while the private sector remained productive, economic activity was affected by the oil crisis stemming from the conflict in the Middle East and the closure of the Strait of Hormuz. However, she maintained that the government responded promptly through the Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) program, which she described as the government's comprehensive assistance program for affected families and individuals. "With the government's push for faster spending and budget releases starting in the second quarter and [continuing in] the third quarter, we hope that the economy can start to pick up as well," Castro said. The government is set to release second-quarter Philippine economic growth data on Friday. The Philippine economy, over the past few years, has been supported by increased investment in infrastructure development and robust private consumption. However, corruption issues have led to delays and increased costs in public projects, posing a concern for attracting foreign direct investment (FDI). The World Bank's assertion suggests that this long-standing issue continues to be a hindrance to economic progress. The escalation of tensions in the Middle East and the resulting surge in oil prices could lead to higher transportation costs, thereby increasing inflationary pressures domestically and potentially reducing consumers' purchasing power. This poses a risk of negatively impacting private consumption, a crucial driver of the Philippine economy. The government aims to mitigate these effects and ensure the stability of people's livelihoods through social protection and economic assistance measures like the UPLIFT program. However, the effectiveness and sustainability of these initiatives will be evaluated by future economic indicators and the actual living conditions of the populace.