Election cycles in the Philippines provide predictable but short-lived adrenaline shot to the economy, a spike in activity that risks leaving the national budget with long-term hangover, according to the government’s primary think tank.

In a discussion paper titled “Election-Year Stimuli and Economic Performance,” researchers at the Philippine Institute for Development Studies (PIDS) warned that the habitual surge in local activity accompanying the polls often comes at the expense of fiscal discipline.

While the influx of campaign cash and accelerated public works projects bolster the gross domestic product (GDP) in the short term, these gains typically evaporate once a new administration takes office, according to the report authored by Mark Gerald C. Ruiz, Ramona Maria L. Miral, and John Paolo R. Rivera.

The study finds that the lead-up to the vote triggers a sharp rise in private consumption and government outlays. Campaign-related spending creates a wave of temporary employment, while the government often rushes to complete projects before pre-election ban periods take effect.

Investment activity also tends to see moderate gains, though the think tank noted that these are frequently dampened by the "wait-and-see" approach of institutional investors wary of shifting policy regimes.

The PIDS researchers characterized these economic movements as “transitory and fiscally driven,” noting that the momentum inevitably cools as the government tightens its belt post-election and the private sector adjusts to the new political landscape.

This cycle, the report argues, distorts development priorities and threatens the country’s long-term fiscal health.

To mitigate these boom-and-bust cycles, the think tank is calling for an overhaul of how the state manages its finances during election years. PIDS recommended that government agencies be held to stricter limits on discretionary spending and that the Department of Budget and Management institutionalize more rigid medium-term expenditure frameworks.

Such measures would ensure that public funds are not diverted toward politically motivated projects that offer little long-term value.

Transparency remains a central concern for the researchers. They urged the Commission on Audit, the Commission on Elections, and the budget department to implement real-time monitoring of government disbursements.

Publicly disclosing infrastructure payouts and subsidy releases in the months leading up to a vote would serve as a deterrent against "opportunistic fiscal manipulation," the report said.

Furthermore, PIDS suggested that the Philippines should prioritize “capital-forming” investments—such as climate resilience and human capital—rather than short-term consumption.

The report also emphasized the need to insulate Public-Private Partnership projects from political transitions. By expanding exemptions for active PPPs from election-related spending bans, the government could maintain investor confidence and ensure that critical infrastructure work does not grind to a halt every six years.

Finally, the think tank called for the use of more granular, high-frequency data to track campaign-related activity. Integrating this data into the forecasting models used by the Bangko Sentral ng Pilipinas and other economic managers would allow for more accurate projections, helping the government navigate the volatile economic waters that define Filipino elections.