Election spending, along with falling inflation, is expected to give the Philippine economy a boost as the campaign for the midterm polls in May goes into full swing, according to Unicapital Securities Inc. (USI).

“All-out election spending, both on the local and national scale, coupled with easing inflation, will boost household spending and ultimately favor the economy’s growth this year,” said Wendy Estacio-Cruz, USI Research head.

“As seen in the past, election years and spending have a direct impact on the low- to middle-income bracket, driving short-term economic activity,” she pointed out.

USI is the securities brokerage arm of the Unicapital Group, a top independent financial services provider and investment house.

Even before the 90-day election campaign period started last Feb. 11, billboards and banners of candidates have been widely seen around the country. Certain candidates and party list nominees have been giving away bags of groceries, sacks of rice, and t-shirts and other promotional items, while TV and radio ads have flooded the airwaves. 

Local and national candidates spent more than P4 billion in advertisements in the broadcast media from January to September 2024, according to a report by the Philippine Center for Investigative Journalism, citing data from Nielsen Ad Intel. The rise in public gatherings contributed to increased spending on fast-moving consumer goods. Candidates were reportedly feeding thousands of supporters and attendees in campaign rallies and Christmas parties. 

Now, during the campaign period, bags of rice, canned goods and other basic commodities are also being distributed to households.

“For the past 20 years, it’s been shown that during midterm election years, annual growth of HFCE (household final consumption expenditure) increased by an average of 5.2%. This surpasses the 3.6% average growth in non-election years,” Estacio-Cruz said. 

Similarly, she said, “we saw an average GDP (gross domestic product) growth rate of 5.6% during midterm election years, which also exceeded the 3.4% growth in non-election years.”

The Philippines is expected to be among the fastest growing countries in Southeast Asia this year. Unicapital projects a 6.3% growth in GDP, or the total market value of the goods and services produced and rendered in a country, fueled by higher consumption and lower inflation. 

An estimated P9.14 trillion (US$158 billion) has been allocated for 185 flagship projects under the government’s “Build Better More” initiative. This is seen to create more jobs and expenditures, and to contribute to increased household consumption and spending.

The Strategy Report of USI Research estimates that Philippine inflation is projected to fall below the Central Bank’s 4% target ceiling. 

According to HSBC, Vietnam will achieve higher growth at 6.5% in 2025. Standard Chartered pegs Vietnam’s growth at 6.7%.

Estacio-Cruz said the continued easing of key policy rates should provide an uplift to growth due to the potential increase in consumption and investment activity. “Lower borrowing costs may encourage businesses to expand, households to spend more on goods and services, and private sector investments to rise, further stimulating economic momentum,” she said.

The recently signed Create More Law (or Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) remains a strong driving force for the improvement of the Philippine equity market, powering further growth for domestic and foreign capital inflows.

Despite some uncertainties in 2025 such as the changing political and economic landscape in the United States, the continuing war in Ukraine, and the May elections, the Philippines is expected to maintain its position as one of the fastest-growing economies in Southeast Asia, USI reported.

Read more: Candidates aired P4B worth of TV, radio ads before filing