While election spending temporarily lifts the economy, experts warn that sustaining growth in 2026 will depend on strong institutions, consistent policy execution, and investment recovery, according to new research from the òòò½´«Ã½ (òòò½´«Ã½).
The Philippine economy traditionally experiences a short-term boost during election years, driven largely by heightened government spending and campaign-related activity, based on the study, “” presented at a òòò½´«Ã½ webinar on January 15.
Lead author, òòò½´«Ã½ Senior Research Fellow Dr. John Paolo Rivera, said government agencies often accelerate infrastructure and social program disbursements before the statutory pre-election spending ban.
Meanwhile, political campaigns inject liquidity into the economy through logistics, advertising, and temporary jobs, creating what the study calls “election employment.”
Sectors like services, transport, and construction see an estimated 2.7% jump in jobs during the early election quarters.
“Election years stimulate growth, but the effects are temporary,” he said.
He added that “the economy speeds up, then slows back down once the election ends,” highlighting the cyclical nature of election-driven activity.
Consumption and investment surge, then fade
The model shows that private consumption can surge by 8% to 18% in election quarters, while government consumption rises by 7% to 14% due to front-loaded spending.
Investment sees moderate gains, around 4% to 11%, though uncertainty around political transitions tempers long-term commitments.
Professor Marites Tiongco of De La Salle University, a webinar discussant, noted that the study clearly shows how election cycles influence fiscal timing.
“Elections can compress spending into pre-election windows… followed by post-election tightening. That pattern matters for macro volatility, public investment planning, and credibility,” she said.
Tiongco also emphasized that these surges are “short-run and demand-driven, not a permanent growth shift” and explained that institutional weaknesses—such as inconsistent implementation—can magnify these timing effects and limit the developmental impact of public spending.
Risks to fiscal discipline and long-term projects
The study cautions that election-driven spending may distort fiscal priorities, favoring short-term projects that are visible to voters over long-term infrastructure and Public-Private Partnership initiatives.
Rivera explained that this pattern can disrupt the continuity of public investment programs and complicate fiscal planning if not properly managed.
Such fluctuations, he said, reflect timing pressures rather than deliberate strategy, reinforcing concerns about the system’s ability to carry out multi-year investment commitments in a predictable way.
Economic conditions entering 2026: stable but vulnerable
Beyond election-related effects, Rivera also discussed during the webinar, drawing on their other study, “Macroeconomic Prospects of the Philippines in 2025–2026: Restoring Confidence amid Glocal Transitions.”
Inflation has eased, and financial conditions have stabilized, but investment recovery remains slow, limiting the economy’s ability to sustain growth without the temporary boost provided by election-period spending.
Rivera described the situation as one characterized not by crisis but by fragility.
“The Philippine economy is not weak, but it is vulnerable,” he said, emphasizing that growth prospects are now shaped by institutional credibility and execution capacity.
The study projects economic growth to edge up from 5.0% in 2025 to 5.3% in 2026, driven mainly by domestic demand, infrastructure spending, and continued expansion in the services sector.
Investment recovery depends on execution
Meanwhile, Chief Economist Alvin Joseph Arogo of the Philippine National Bank, another discussant, underscored concerns about the slow pace of investment recovery.
“The biggest risk right now is weak investment recovery. Everything else hinges on execution,” he said.
Arogo stressed that investor confidence depends heavily on consistency and follow-through in policy instruction and program delivery, especially after the temporary demand boost tied to the election season fades.
Strengthening institutions to sustain momentum
The speakers agreed that while election-year spending can temporarily lift activity, long-term progress hinges on credible policies, predictable fiscal management, and improved investment planning—especially in periods when election-driven stimuli are absent.
Rivera emphasized that sustaining growth in 2026 will require stronger institutions and steadier execution.
“Growth does not fail because we lack money. Growth fails because institutions fail to convert spending into outcomes,” he said.
Watch the webinar playback here: or download the full studies from and . ### — MJCG
