CONTENT:
The Philippine economy continued to struggle in the third quarter, with a public works corruption scandal causing both spending and confidence to plummet. According to the latest data from the Philippine Statistics Authority, the country's gross domestic product (GDP) grew at a rate of 3% during the period, marking the weakest expansion since the second quarter of 2006, outside of the pandemic.
In South Korea, the government announced measures to fast-track the production of new housing units in the Greater Seoul area to address the ongoing rally in apartment prices. The latest data from the Ministry of Land, Infrastructure, and Transport revealed that housing prices in the capital region have increased by 11.2% year-on-year as of September 2021.
The Philippine economy's dismal performance can be attributed to the public works corruption scandal that has shaken investor confidence. President Rodrigo Duterte's administration has been embroiled in the controversy since late 2020, when the Commission on Audit flagged irregularities in the awarding of contracts for infrastructure projects. The scandal has led to a decline in public spending, which has in turn affected private sector investment.
Meanwhile, in South Korea, the government's earlier attempts to curb speculative demand for apartments, such as increasing the minimum down payment for second homes and imposing stricter mortgage lending rules, have proven insufficient. As a result, the government has turned to increasing the housing supply to help bring down prices. The new measures include expediting the approval process for new housing projects and increasing public housing construction.
The Philippine Central Bank, meanwhile, has acknowledged the impact of the corruption scandal on the economy and has kept its benchmark interest rate unchanged at 2.25% to support growth. In a statement, Bangko Sentral ng Pilipinas Governor Felipe Medalla said, "The current economic situation requires continued support from monetary policy."
In South Korea, the Bank of Korea has raised its policy interest rate by 25 basis points to 1.25% in response to inflationary pressures. However, the central bank noted that the housing market remains a concern and that it will closely monitor the situation.
Despite the challenges, both the Philippine and South Korean governments remain committed to addressing the issues plaguing their economies. The Philippine government has vowed to continue its anti-corruption efforts, while South Korea's latest measures are expected to yield results in the coming months.
Sources:
"Philippine Growth Slumps to 3% on Scandal; Stocks Decline," Reuters, October 29, 2021, https://www.reuters.com/world/asia-pacific/philippine-growth-slumps-to-3-on-scandal-stocks-decline-2021-10-29/
"South Korea to Fast-Track Housing Supply in Seoul to Cool Prices," Bloomberg, October 28, 2021, https://www.bloomberg.com/news/articles/2021-10-28/south-korea-to-fast-track-housing-supply-in-seoul-to-cool-prices