When the World Economic Outlook (WEO) for Fall 2025 was released by the International Monetary Fund (IMF), it confirmed what many feared: global growth is slowing, and risks remain “tilted to the downside.” Despite easing trade tensions, volatility persists, demanding complex, globally minded responses.
For emerging economies like the Philippines, these global forces — slowing growth, inflation risks, and geopolitical instability — pose real threats. Yet the deeper question is one of capacity: how can we pursue sophisticated global strategies when our domestic foundations are so fragile?
THE IMPERATIVE OF GLOBAL STRATEGYThe IMF’s prescriptions are not abstract theory but pragmatic defenses against global turbulence. The call is clear: rebuild fiscal buffers, pursue real fiscal consolidation, and restore market confidence through transparent, sustainable policy.
Equally vital are growth-enhancing structural reforms to raise productivity and long-term potential. Central bank independence must be protected as a bulwark against political interference and inflationary populism. Industrial policy, while valid, must be carefully weighed to avoid crowding out private initiative and imposing more fiscal burden.
These are not optional ideals but strategic blueprints for economic survival. To dismiss them is to court self-inflicted crisis. The real test lies not in strategy, but in execution.
THE LOCAL DRAG: WEAK GROWTH AND WEAKER TRUSTThe Philippine economy’s recent performance exposes the cost of chronic execution failure. To be announced by the Philippine Statistics Authority today, growth likely slowed again in the third quarter, missing the 5.5-6.5% target. This broadsheet’s poll result indicates forecasts of a low of 4.7% and a high of 5.9%. But market signals — soft equities, weak sentiment indices, and a cooling Purchasing Managers’ Index — all point to loss of momentum.
Even if global conditions justify monetary easing by the Bangko Sentral ng Pilipinas (BSP), domestic transmission is blunted by eroding public trust and deepening political uncertainty. This undermines investor confidence, drives capital outflows, weakens the peso, and fuels inflation.
Economic Planning Secretary Arsi Balisacan had to admit candidly, “I am not as optimistic as I used to be.” Such candor reflects reality; no economy can thrive when political uncertainties deepen and confidence in governance is in question.
URBAN PLANNING: THE NEGLECTED FOUNDATIONThe starkest proof of domestic dysfunction is not in macroeconomic tables and charts but in flooded homes and submerged streets.
We routinely blame climate change, torrential rainfall, or informal settlers for urban flooding. These are real pressures — but the root cause is governance failure and the absence of coherent urban planning.
In Cebu, for example, recent floods were not “acts of nature” but “the product of years of rapid urbanization, loss of forest cover, and weakened natural drainage,” as local officials admitted. Villages have sprawled into mountainsides; forests are stripped bare; and natural waterways destroyed, all with official consent or neglect.
Regulatory enforcement remains hollow. Mining and quarrying proceed without adequate erosion control, reforestation, or water management. The poor ultimately pay the price for institutional decay — families stranded on rooftops, vehicles swept away, livelihoods destroyed. There have been at least 85 fatalities while hundreds of thousands lost their homes and their lives. These are not natural tragedies; they are policy failures.
ACCOUNTABILITY IN INFRASTRUCTURE: THE CRUMBLING CORENothing illustrates governance failure more starkly than the collapse of basic flood control systems — projects funded precisely to prevent such disasters. Cebu’s admission that existing infrastructure “did not do its job” reveals a systemic rot. Reports of abandoned projects, substandard materials, and flawed designs that blocked waterways point to more than incompetence; they expose corruption and impunity.
When public funds for essential infrastructure are diverted or plundered, we lose more than money. We forfeit classrooms, hospital equipment, and the physical backbone of a functioning economy.
This is why ongoing investigations by the National Bureau of Investigation (NBI) and the Independent Commission for Infrastructure (ICI) are indispensable. They must not only expose wrongdoing but lead to prosecution and conviction. Short of these, we cannot expect our people to own public policies and much less to support them.
Transparency and accountability are not moral luxuries. They are the most vital structural reforms a developing economy can undertake. Without integrity in public spending, fiscal consolidation is hollow, and every global opportunity is squandered.
ACTIONABLE REFORMS: BRIDGING GLOBAL AMBITION AND LOCAL REALITYTo escape this cycle of dysfunction, is it too much to demand of the Philippine government to pursue immediate, integrity-centered reforms that could bring local execution up to some best practices?
We need to reform the whole procurement process. Quality and transparency should be upheld over the lowest bid. “Disaster-proofing” clauses should be integrated in all major contracts, requiring independent third-party monitoring for critical projects, and blacklisting contractors found guilty of using substandard materials, not completing projects, and not doing the project at all. As we advocated in the past, the ICI should have real investigatory and punitive powers to deter systemic graft.
We should depoliticize the budget process. Flood control and environmental funds must cease being political slush. Budgeting must be science-based, with fund releases tied to rigorous, publicly disclosed feasibility studies by independent experts. Disaster risk reduction should be embedded in the national budgeting process, making environmental and urban planning prerequisites for major development permits.
Local governance and accountability must be upheld at all costs. It is about time that we stopped using climate change as an excuse for poor governance. Local Government Units (LGUs) must enforce environmental and zoning laws — reforestation, river protection, and waste management — without exception. Violations that cause public harm, such as the denudation of protected areas, must invite swift and severe penalties. For all public officials, the Statement of Assets, Liabilities, and Net Worth (SALN) must be fully transparent, and unexplained wealth must trigger automatic investigation and prosecution. Public service must again mean public accountability.
Environmental management should be strengthened. Responsible resource extraction must be the rule, not the exception. Pre-operation audits and independent verification of erosion control should be enforced. Reforestation and water management plans should be required for mining and quarrying firms. Non-compliance should lead to suspension and financial penalties commensurate with environmental damage.
These are not aspirational ideals — they are minimum requirements for credibility and competence.
REFRAMING THE CHALLENGE: FROM EXCUSE TO DEMANDThe Philippines cannot continue in a cycle where governance failure cancels out every global opportunity. Global markets set the tempo, but our ability to participate and adapt depends on the integrity and robustness of our political, economic and justice systems.
Former IMF economic counsellor, now Harvard professor, Kenneth Rogoff recently echoed former US Treasury Secretary John Connally’s statement in his new book title: Our Dollar, Your Problem. It captured America’s global economic dominance. For us, the phrase should provoke introspection and reform.
We can no longer live with “Our Corruption, Your Disaster.” The demand must now be: “Our Governance, Our Prosperity.”
The Philippines has the talent, resources, and the policy roadmaps offered by global institutions. What it lacks is the political will and moral discipline to translate plans into results. Economic policy begins not in boardrooms or multilateral summits, but in the basics: sound infrastructure, honest governance, and dry feet.
Until we secure these basic minimums, every ambitious global strategy and domestic policy will remain a house built on floodwater.
Diwa C. Guinigundo is the former deputy governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.