Palace optimistic about turnaround after infra scandal dents investor confidence 

THE GOVERNMENT is confident in a rebound following the infrastructure corruption scandal and a weak peso, with the economy being propped up by the business process outsourcing (BPO) and tourism industries and migrant worker remittances, the Palace spokesman said.

Press Officer Clarissa A. Castro said at a briefing:

“We remain confident that our government can overcome this, mainly because of the continued support from our BPOs, overseas Filipino workers and the tourism sector,” she said. 

Economic growth likely slowed to 5.3% last quarter as soft government spending, typhoons, and a corruption scandal weighed on growth momentum, according to a median estimate of 18 economists in a BusinessWorld poll.

The Philippine Statistics Authority will release third-quarter gross domestic product data on Nov. 7.

The heavy July rains caused many flood control projects to fail or exposed them as substandard, prompting the President to crack down on public works corruption in his State of the Nation Address.

Legislators and other government officials were allegedly colluding to steal billions of pesos in infrastructure funds.

The President has since ordered cost-cutting across all government agencies, with reductions as large as 50%.

The business community has called for the most egregious offenders to be made an example of after the scandal affected stock prices, with the peso dipping to a record low on Oct. 28.

Share prices fell 1.71% or 101.62 points to 5,828.06 on Monday, a seven-month low, with investors concerned the slowdown in public spending will cause the economy to lose momentum. The broader all-shares index slipped 1.23% to 3,548.90.

Analysts have expressed concerns about government underspending, with only P1.46 trillion of the P1.6 trillion in funding disbursed during the quarter.

Inflation is expected to rise slightly to around 1.8% in October from 1.7% in September, still within the Bangko Sentral ng Pilipinas’ forecast range of 1.4% to 2.2% and below its 2-4% target band. — Chloe Mari A. Hufana