POLITICAL tensions and growing instability in the Senate could weaken investor confidence and threaten the country’s long-term economic prospects, a former Bangko Sentral ng Pilipinas (BSP) official said.
“The Philippine economy could become the largest collateral damage,” GlobalSource Partners economist and former BSP deputy governor Diwa Guinigundo said in a commentary on Wednesday.
He expressed concern over recent developments in the Senate, which he said reflected deeper institutional strains that could eventually spill over into the broader economy.
“At stake is not merely the credibility of the Senate as an institution,” Guinigundo said, adding that “the deeper risk is the sustained erosion of public trust in democratic governance itself.”
He noted that political stability and institutional credibility were important components of a country’s economic environment, influencing both domestic and foreign investment decisions.
“When the Upper House, historically regarded as a stabilizing institution and a chamber of sober statesmanship, becomes consumed by factional maneuvering, shifting loyalties and narratives of political survival, confidence in the rule of law weakens alongside it,” Guinigundo said.
He also cautioned that deteriorating political conditions could raise the likelihood of stagflation — a combination of weak economic growth and elevated inflation — if uncertainty continues to dampen confidence and delay critical reforms.
“Markets do not respond only to economic indicators. They also respond to political coherence, institutional credibility and policy stability,” Guinigundo said.
“A Senate perceived as divided, reactive and vulnerable to political pressure creates uncertainty precisely when the country faces elevated fiscal pressures, persistent inflation concerns, weak productivity growth and growing external risks,” he added.
“Stagflation is increasingly becoming a likely scenario if this political dynamics further deteriorates.”
As this developed, a business group late on Tuesday again called on the Senate to do its duty.
“The Senate’s constitutional duties — lawmaking, oversight, and deliberation on matters of national importance — cannot be discharged if proceedings remain stalled,” the Financial Executives Institute of the Philippines said.
A coup last month led to a leadership change, but the new majority’s razor-thin membership edge led to walkouts that had prevented the chamber from conducting its business.
On Wednesday, one senator broke from the majority and attended the session, leading to another leadership change that gave the minority control of the chamber.
The turmoil has been linked to the looming impeachment trial of Vice President Sara Duterte and corruption investigations involving several senators. WITH A REPORT FROM CHYNNA GRACE ONG
