PHL infra spending needs to be better distributed, AMRO says

THE PHILIPPINES should direct its infrastructure spending towards less-developed regions, the ASEAN+3 Macroeconomic Research Office (AMRO) said.

“(H)igher local infrastructure spending significantly boosts economic growth, consistent with international evidence,” AMRO said in a report on Wednesday.

“In particular, targeting infrastructure spending toward less-developed regions would generate particularly high returns, while governance and implementation capacity constraints need to be carefully addressed,” it added. 

In 2025, the economy slumped after corruption allegations involving public works officials, legislators and private contractors forced extra scrutiny of many infrastructure projects.

The Department of Budget and Management (DBM) reported that infrastructure spending plunged 45.2% year on year to P48 billion in November.

Slow government spending, especially on infrastructure, as well as weak investments and household consumption caused gross domestic product (GDP) growth to slump to 3.9% in the third quarter and to 3% in the fourth quarter.

Over the full year, GDP expanded to a post-pandemic low of 4.4%.

AMRO noted that most infrastructure projects are in developed areas such as Metro Manila, Cebu and Davao, leading to “regional disparities.”

“This spatial imbalance reflects the enduring legacy of centralized planning and the tendency for investment decisions to favor (developed areas),” AMRO said.

“These patterns underscore the challenge of ensuring that the benefits of national infrastructure programs are equitably distributed and highlight the critical role of local governments in bridging infrastructure gaps across regions,” it added.

In a separate commentary, AMRO said governments in the ASEAN+3 region should spend more efficiently.

“As fiscal space narrows, governments will need to shift decisively from ‘spending more’ to ‘spending better’ by reallocating funds away from low-impact uses, prioritizing high-return investment, and strengthening the institutions that translate budgets into measurable outcomes,” AMRO Group Head and Lead Economist Seung Hyun Hong said.

“If executed effectively, this shift can help countries enter the next decade with stronger fiscal credibility and greater economic dynamism, raising potential growth, reducing fiscal risks, and rebuilding public trust — thereby reinforcing the state’s long-term financing capacity.”

The DBM wants infrastructure spending to account for 4.3% of GDP this year or about P1.3 trillion, lower than its earlier target of 5.1%. — Katherine K. Chan