The World Bank has identified the ongoing cleanup of corruption in the Philippines' flood control sector as a significant drag on economic growth, warning that the crackdown is spooking investors.
This development adds a new layer of domestic policy uncertainty to an economy already grappling with external headwinds.
The lender's midyear economic update highlights how governance issues are directly impacting market sentiment.
While the global spike in oil prices has strained the country's trade balance and inflation outlook, the domestic reaction to the anti-corruption measures in infrastructure spending is creating a secondary shock to investor confidence.
The combination of these factors has led the World Bank to lower its growth projections for the Philippines for both 2026 and 2027.
This marks a shift in the narrative surrounding the country's economic trajectory.