As organizations across the Philippines become increasingly dependent on cloud environments, digital platforms, APIs, and connected applications, cybersecurity has become a critical business priority. Through this partnership, VST ECS now offers Akamai’s security solutions — including application and API security, DDoS protection, Zero Trust security, microsegmentation, bot protection, DNS security, and cloud security — as part of its expanded enterprise solutions portfolio.

This addition allows VST ECS to support a wider range of industries: helping banks and financial institutions protect digital banking platforms and APIs, enabling retail and e-commerce businesses to safeguard online transactions and manage malicious bot activity, and strengthening the resilience of citizen-facing digital services for government and public-sector organizations. For enterprises operating hybrid and multicloud environments — including BPOs, telecommunications companies, and healthcare organizations — VST ECS can now also offer Zero Trust and microsegmentation capabilities that help strengthen access controls and limit the movement of threats across critical systems.

“Cybersecurity has become a fundamental business priority as organizations become increasingly dependent on digital platforms, cloud environments, and connected applications,” said Jimmy Go, President and CEO of VST ECS Phils., Inc. “Our partnership with Akamai gives our customers and partners access to technologies that can help protect critical digital assets, strengthen cyber resilience, and support the secure growth of their businesses.”

Through this appointment, Akamai’s portfolio of cybersecurity solutions becomes more accessible to organizations across the country, leveraging VST ECS’s expansive and highly diversified channel ecosystem.

“Strengthening our partnership with VST ECS in the Philippines as we continue to expand Akamai’s reach and support for customers and partners is important,” said Gordon Woo, Regional Sales Director, Akamai Technologies. “With organizations facing an increasingly complex security landscape, our channel ecosystem plays an important role in helping customers protect their applications, APIs, infrastructure, and digital experiences. Together with VST ECS, we lookforward to enabling our partners with the technology, expertise and support they need to address these evolving customer requirements and create new opportunities for growth.”

The partnership reflects VST ECS’s continued expansion of its enterprise portfolio to help organizations secure, build, and scale their digital operations, while reinforcing Akamai’s commitment to supporting the resilience and performance today’s connected environments require.

To learn more about VST ECS’s expanded cybersecurity offerings and how the Akamai partnership can support your organization’s digital security needs, contact Ven Mabanglo, Product Manager – Akamai, at vmabanglo@msi-ecs.com.ph.

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Appropriations Committee Chairperson and Nueva Ecija Rep. Mikaela Angela B. Suansing said House Bill (HB) No. 10858 or the General Appropriations Act was approved without amendments during an executive committee meeting.

Ms. Suansing is set to sponsor the budget bill on Tuesday, officially opening the plenary debates at the House of Representatives.

The House is targeting to approve HB 10858 on second reading on Oct. 5 or 6, and on third reading on Oct. 9.

Ms. Suansing told reporters the Budget Amendments Review Committee (BARC) has yet to convene to deliberate on proposed amendments to the budgets of some government agencies.

The BARC will discuss the amendment requests from government agencies in a meeting later this week or early next week, she added.

Ms. Suansing said there could be additional funding for education and agriculture programs.

Under the National Expenditure Program (NEP), the Department of Education (DepEd) has been allocated a P975.96-billion budget for 2027, while the Department of Agriculture (DA) has been allotted P198.45 billion.

Ms. Suansing said the DA budget could be augmented following Agriculture Secretary Francisco P. Tiu Laurel, Jr.’s concerns over the looming “Super El Niño.”

“(Secretary Laurel) mentioned the things that we need to focus on in the El Niño area. He mentioned fertilizer assistance, solar irrigation pumps, and the like. So, it’s possible to have amendments in the DA,” she said.

Bataan Rep. Albert S. Garcia, who is also the vice chairperson of the committee, said members of the minority led by Minority floor leader and Party-list Rep. Marcelino C. Libanan objected to the budget bill’s approval.

“Their understanding is, if you supported this, you won’t ask questions in the plenary because the understanding is you supported as is, in its current version, the budget,” Mr. Garcia told reporters.

Amendments would have to pass through the BARC before being taken up on the House floor, he said.

Mr. Garcia said the process differs from last year when the BARC had to act before plenary deliberations because of major changes to the budget, including the P255 billion in flood control allocations.

For his part, Mr. Libanan said the minority could not support the budget at this stage because doing so would compromise its role in scrutinizing the proposed allocations.

“We always have a duty to interpolate, to debate, to explore… For now, we cannot be sponsors of the budget,” he said. — P.J.Bacon

FUEL PRICES could rise further in the coming weeks as the intensifying conflict in the Middle East keeps global oil markets under pressure, analysts said, as Filipino motorists brace for another increase of more than P4 per liter this week.

In an advisory on Monday, the Department of Energy (DoE) said gasoline prices are set to increase by P5.68 per liter, diesel by P4.31 per liter, and kerosene by P4.62 per liter.

The increases will push pump prices in Metro Manila to more than P100 per liter, with gasoline reaching P107 per liter, diesel plus P111, and kerosene nearly P141.

The Philippines is highly vulnerable to price swings in the global oil market as it imports most of its fuel needs. About 98% of the country’s crude oil imports come from the Middle East.

Leo P. Bellas, president of Jetti Petroleum, Inc., said global oil prices are expected to increase as the Middle East conflict intensifies and threatens to disrupt supply.

“Asian prices can be affected by the consequent curtailment of refinery feedstock due to the supply disruption, and the constrained availability of refined products supply from the Middle East and Russia would cause diesel and gasoline to rise further,” Mr. Bellas told BusinessWorld.

“The continuing supply concern would lead to further volatility in prices with increasing upside risk for both crude and refined products globally,” he said.

Saudi Arabia shut down its East-West oil pipeline last week after drone attacks, threatening to worsen the global supply crunch.

Reuters on Monday reported Brent climbed almost 3% as new strikes on Saudi Arabia and on ships in the Gulf strained nerves, after an attack on a Saudi oil pipeline and an advance by Yemen’s Houthis threatened to worsen the wartime disruption to global energy supplies.

With shipping through the strait and the Bab el-Mandeb under threat, analysts fear oil prices could stay elevated for a lengthy period, stoking inflation globally.

Brent futures were last up 2.5% at $107.18 a barrel, having gained almost 9% last week, while US crude rose 2.6% to $102.62 a barrel.

“The shutdown of Saudi Arabia’s East-West pipeline adds another layer of pressure to an already tight global oil market, particularly because the pipeline has been an important alternative export route amid the disruptions in the Strait of Hormuz,” Top Line Business Development Corp. Senior Vice-President and Chief Operating Officer Brigitte Carmel Lapasaran Lim said.

Ms. Lim said the latest development could trigger upward pressure on domestic pump prices if the disruption persists.

SUSPENSION OF EXCISE TAXES?
Energy Secretary Sharon S. Garin confirmed that Dubai crude prices have already breached the threshold that could trigger a proposal to suspend fuel excise taxes.

“As of last week, Friday, actually, we have already officially communicated that the average has hit the limit already,” Ms. Garin said on the sidelines of an event on Monday.

“So that’s for them (Office of the President) to decide whether to do suspension — total or no suspension, or partial suspension,” she added.

The Department of Finance (DoF) can propose the suspension of the excise tax on LPG and kerosene if the 30-day average of Dubai crude price exceeds $80 per barrel.

Rino E. Abad, director of the DoE Oil Industry Management Bureau, said the 30-day trading yielded an average Dubai crude price of $99.41 per barrel as of Sept. 11.

The removal of the tax can result in a reduction of P3.36 per kilo for liquefied petroleum gas (LPG) and P5.60 for every liter of kerosene.

Arnel U. Ty, founder of LPG Marketers Association, Inc., said he has sent a letter to the Department of Energy and DoF to recommend the removal of excise tax on LPG, kerosene, diesel, and gasoline.

“It has not just exceeded $80 for four weeks but has now been above $80 per barrel for six weeks,” Mr. Ty said in a Facebook post in Filipino. — with Reuters

REPEATED and often blanket suspensions of face-to-face classes and government work due to typhoons and heavy rains are causing economic losses beyond missed work and school days, with daily-wage earners, small businesses and students bearing much of the impact, analysts said.

Sergio R. Ortiz-Luis, Jr., president of the Employers Confederation of the Philippines (ECoP), said blanket suspensions should be reconsidered because weather risks vary across locations.

“We can’t keep doing blanket suspensions one after another,” he told  BusinessWorld by telephone. “No formula can fit all, not all provinces, not all cities, not all barangays, not all schools. They have to find a better way to do it.”

The disruptions also hurt private businesses that depend on government transactions, he said.

“The problem is that many private businesses rely on their transactions with the government,” Mr. Ortiz-Luis said.

The Philippines also has more holidays than many of its neighbors in the region, he said.

“We are the only ones who, without hesitation, declare these things, as if nothing is lost,” he said. “So much is lost, so we have to find a better way to address climate change and the holidays. They should be reduced.”

The economic strain of suspensions is compounded by the impact on teachers, who must shift instruction online even when weather conditions also disrupt power and internet access, said Rene Luis M. Tadle, president of the Council of Teachers and Staff of Colleges and Universities of the Philippines.

“There is a certain irony in the way class suspensions can affect schools and teachers very differently,” he said in a text message. He noted that while schools might save on electricity, water and other costs when campuses close, teachers under “no work, no pay” arrangements can lose a day’s income.

The default shift to online classes when face-to-face instruction is suspended should also be reconsidered because the same weather that makes travel unsafe can disrupt power and internet access at home, he said.

“We must not confuse the completion of an activity with actual learning,” Mr. Tadle said. “A class suspension should not become a financial penalty for teachers, nor should safety become merely a change of venue from the classroom to Zoom.”

Alellie B. Sobreviñas, an associate professor of economics at De La Salle University-Manila, said sectors that depend on physical presence, including agriculture, construction, transport, retail, tourism, and food services tend to bear the brunt of disruptions.

Office-based industries such as business process outsourcing and information technology are comparatively insulated because of work-from-home arrangements, she said.

E-commerce and delivery services could see increased demand as households shift to online orders, although deliveries themselves are often hampered by the same weather, she said.

“Those workers who are paid daily may lose income that cannot easily be recovered, while those who can work remotely may experience little income disruption,” Ms. Sobreviñas said in an e-mailed reply to questions. “Poorer households without access to these may face greater losses.”

SIMILAR TO COVID
Former Socioeconomic Planning Secretary Karl Kendrick T. Chua urged the Palace to review the policy on blanket suspensions, citing the disruption to face-to-face learning.

In a letter to Executive Secretary Ralph G. Recto that he shared with BusinessWorld, Mr. Chua said the “total cancellation since Aug. 1 is around 11 days already out of 27 class days, for a 41% cancellation rate.”

“This rate is similar to cancellations during school years 2022 to 2026 and adds to the learning crisis that escalated during the two-year school closure during COVID,” he wrote, warning that “whatever gains we have in [the Programme for International Student Assessment] PISA will go down the drain with one month class suspensions.”

Mr. Chua asked the Palace to review the blanket suspension policy, strictly use Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) data in decision making, exercise oversight over local government suspensions and approve a proposed executive order allowing school-level, granular cancellations.

Council Majority Leader Julienne Alyson Rae V. Medalla also filed a resolution in Quezon City urging PAGASA to release weather advisories between 3 a.m. and 4 a.m. and again between 9 a.m. and 10 a.m., when local governments assess whether to suspend classes.

Quezon City Mayor Maria Josefina Tanya “Joy” G. Belmonte-Alimurung said the advisories would supplement the city’s weather-monitoring system and community reports, allowing suspension decisions to be “guided by the latest available information.”

The city said suspension announcements might still cover private schools and higher education institutions because weather conditions can change quickly, although such institutions are encouraged to adopt and clearly communicate their own suspension protocols.

The Philippines typically faces repeated weather disruptions during the second half of the year. PAGASA says an average of 20 tropical cyclones enter or develop within the Philippine area of responsibility (PAR) each year, with about eight or nine crossing the country. July to October is the peak of the typhoon season.

Five tropical cyclones entered or developed within the PAR in August, while the southwest monsoon also brought episodes of heavy rainfall that caused flooding and landslides in parts of the country.

Senate President Sherwin “Win” T. Gatchalian on Sept. 12 called for more localized and targeted class suspensions instead of blanket, system-wide declarations, warning that widespread disruptions risk aggravating learning loss.

His office said class suspensions had disrupted face-to-face learning in various parts of the country for at least 20 weekdays during the previous 30 days. Citing a study by the Second Congressional Commission on Education, or EDCOM II, Mr. Gatchalian also said an average of 30 to 50 class days out of the 180-day school calendar had been lost to suspensions over the past two years.

The Catholic Educational Association of the Philippines (CEAP) likewise called for more granular and calibrated suspension decisions.

It said decisions could consider location, level of risk, school conditions, time of day, grade level and the actual accessibility of learners and teachers, noting that schools within the same province or city could face different levels of risk.

Michael R. Jambalos, union president of the San Beda College Alabang Employees Association, said schools should not equate online classes with meaningful learning during severe weather.

“Learning continuity is not simply the continuation of instruction,” he said in a text message. “It is the continuation of meaningful, accessible and equitable learning. We must not confuse ‘there was an online class’ with ‘there was meaningful learning.’”

Ms. Sobreviñas said the effects of repeated suspensions could extend beyond the immediate disruption, with businesses, households and schools differing in their ability to recover.

“One important issue is how quickly households, businesses and schools can recover,” she said. “The ability to adapt is not equally available to everyone.”

Even if economic output eventually recovers, some businesses and households may not fully recover lost income.”

Ms. Sobreviñas said businesses with stronger capacity to adapt are likely to recover faster, while smaller firms may struggle because of limited resources.

“In addition, missed learning due to class suspension despite the alternative mode may have longer-term consequences for children’s human capital and future productivity,” she added.

The currency declined by 18 centavos to close at P62.86 versus the greenback from the previous record low of P62.68 last Friday, data from the Bankers Association of the Philippines’ website showed.

Year to date, the peso has depreciated by P4.07 or 6.47% from its P58.79 finish on Dec. 29, 2025.

Monday marked the sixth time the peso has hit a fresh record low so far in September.

The local unit opened Monday’s session weaker at P62.75 per dollar, which was also its intraday best.

Meanwhile, the peso’s intraday low of P62.875 also breached its previous record of P62.775 on Friday.

Dollars traded went down to $969.22 million from $1.139 billion.

“The dollar-peso closed higher near the new all-time (intraday) low of P62.875 but ended at P62.86 still on tensions in the Middle East with focus on higher oil prices,” a trader said by telephone.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message that the peso was still mainly driven by external factors, noting that global oil prices surged past $100 a barrel due to renewed turmoil in the Middle East.

The peso was also weighed down by US consumer inflation data that strengthened expectations of a rate hike by the Fed this week, a second trader said in a Viber message.

“These are particularly significant for the Philippines as an oil importer, since higher oil prices increase our dollar requirements and import bill,” Mr. Rivera added.

Market players see the peso testing the P63-per-dollar level this week.

A third trader said in a Viber message that the peso will remain under pressure amid elevated oil prices and continued local demand for dollars, but noted the currency may not stay at the P63-per-dollar level too long.

“At these levels, the BSP (Bangko Sentral ng Pilipinas) is likely to be increasingly watchful of any disorderly move, so the bigger question is whether P63 becomes a new trading range or simply another level the market tests,” the third trader said.

“The local currency might test the key P63 level from hawkish market expectation ahead of this week’s Fed meeting,” the second trader said.

Meanwhile, the first trader said the peso is unlikely to breach the P63 level this week as players remain cautious ahead of the US central bank’s policy meeting.

“The key is not the record-low level itself but whether depreciation becomes persistent and disorderly enough to generate additional inflationary pressures,” Mr. Rivera noted.

For Tuesday, the first trader sees the peso moving between P62.60 and P63 against the greenback, while the second trader expects it to range from P62.70 to P62.95.

MARCOS ON PESO
Meanwhile, President Ferdinand R. Marcos, Jr. blamed a war-driven oil shock for the peso’s slide to a record low and defended the Philippines’ rising debt, saying the economy remains fundamentally sound.

Speaking with reporters at a media roundtable in New Delhi following the 18^th BRICS Summit on Sunday, Mr. Marcos said the peso’s weakness was largely driven by forces beyond Manila’s control.

“You have oil at $100 [a barrel]. Because of the closure of the Strait of Hormuz, there is no prospect of any new oil. There is constant threat to oil supplies,” Mr. Marcos said, noting that attacks on the Saudi pipeline and the widening conflict in the Red Sea have left markets on edge.

“The Red Sea is also becoming a war zone. So, nobody wants to do anything. Everybody is afraid of what’s going to happen next. They’re not sure of what’s going to happen next,” he said.

Mr. Marcos said the administration had limited control over global oil prices but could act on domestic factors that affect inflation, particularly food supply.

“You can, however, do something about food. So, that’s what we’re trying to do,” he said, adding that core inflation is “okay.”

In August, inflation eased to a five-month low of 6.1% from 6.2% in July, as lower food and utility prices offset elevated transport costs. August marked the sixth month in a row that the headline print was above the central bank’s 3% target, bringing the year-to-date average inflation to 5.2%

Core inflation, which excludes volatile food and oil prices, also cooled for a second straight month to 4.1% in August from 4.2% in July. However, this was still faster than the 2.7% in August 2025.

“The peso to the dollar, it’s because of inflation, because of all the weaknesses that we are seeing. Unemployment went up. And that’s, again, because of lack of public spending. That’s the effect there,” Mr. Marcos said.

“What happened is also we are starting to increase again public spending so the growth rates kick up.”

At the same time, the President said the country’s debt-to-gross domestic product (GDP) ratio is “fine,” even as the National Government’s outstanding debt reached a record P19.07 trillion at the end of June.

“We are healthier than many, many, many, many other economies,” he added, arguing that debt sustainability should be assessed against assets and economic output.

The country’s debt-to-GDP ratio rose to 66% at the end of the second quarter, the highest in 22 years or since the 71.6% recorded at end-2004. — Aaron Michael C. Sy and Erika Mae P. Sinaking

Money sent home by overseas Filipino workers (OFWs) rose to its highest monthly level this year as it hit over $3.2 billion in July, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

Cash remittances coursed through banks grew by 1.9% year on year to $3.24 billion in July from $3.179 billion, preliminary central bank data showed.

This was the highest value of monthly remittances seen in seven months or since the $3.522 billion logged in December 2025.

In terms of growth, it was the fastest pace since the 2% in May.

Month on month, cash remittances rose by 6.6% from $3.039 billion in June.

“The United States remained the top source of inflows, followed by Singapore and Saudi Arabia, based on reported remittance transactions by origin,” the BSP said in a statement.

As of July, cash remittances from migrant Filipinos reached $20.389 billion, 2.3% higher than the $19.932 billion recorded in the comparable year-ago period.

Meanwhile, personal remittances, which include both cash coursed through banks and informal channels as well as in-kind remittances, climbed by 2% to $3.603 billion from $3.533 billion a year earlier.

This brought personal remittances to $22.726 billion in the seven months to July, up by an annual 2.3% from $22.206 billion a year ago.

The BSP expects cash remittances to grow by 2.7% annually to $36.6 billion this year, slower than the 3.3% to $35.6 billion in 2025.

The LPA was last located 3,185 kilometers East of Eastern Visayas and has a high chance of developing into a tropical depression within the next 24 hours, PAGASA said in its 10:00 a.m. tropical cyclone outlook.

“The LPA is extremely far, so it is unlikely to affect the country’s weather conditions today,” Aldzcar D. Aurelio, PAGASA weather specialist, said during a 5:00 a.m. press briefing in Filipino.

Meanwhile, Mr. Aurelio said fair weather is expected throughout the country because the southwest monsoon that caused heavy rainfall in many areas over the past few weeks is not reaching the country, as a tropical cyclone around China is steering its direction.

“So, we are expecting that the weather will be nice and fair in Luzon, as well as in Visayas and Mindanao,” he said.

But PAGASA warned of possible thunderstorms in Batanes and Babuyan Islands in the next 24 hours due to the effects of Easterlies, it said in a separate 4:00 a.m. weather advisory.

Localized thunderstorms may also affect Metro Manila and the rest of the country, posing a risk of flash floods and landslides during severe thunderstorms.

As of this writing, PAGASA has not issued a heavy rainfall outlook in any part of the country. — Edg Adrian A. Eva

INTERNATIONAL TRADE plays a key role in the Philippines’ economic development and poverty reduction. During the review period (2018-2025), trade in goods and services generally represented more than 60% of gross domestic product (GDP). Overall, the average wage for workers in export-oriented sectors in 2024 exceeded the national average by at least 50%. The growth in higher-paying jobs linked to trade has contributed to a burgeoning middle class, which now accounts for over 40% of the population. Concurrently, the poverty rate fell from 26.3% in 2015 to 15.5% in 2023.

The Philippines, with its archipelagic geography, faces high trade costs, particularly in logistics, which are estimated to account for 27% of retail prices. According to ESCAP-World Bank data, trade costs in the Philippines are 20% higher than the Association of Southeast Asian Nations (ASEAN) average. These elevated costs are largely attributable to inadequate infrastructure and regulatory inefficiencies. Also, as a net importer of energy and food, the Philippines remains susceptible to external shocks impacting the supply of essential commodities. Import price pass-through heavily weights on domestic inflation dynamics.

In response to these challenges, the Philippines has sought to implement several supply-side reforms aimed at reducing trade costs, fostering investment and boosting economic growth. During the review period, the Philippines increased investment in connectivity infrastructure and relaxed various foreign equity restrictions. The authorities also streamlined certain trade procedures, removed quantitative restrictions on rice importation, adopted a national competition policy, and reformed government procurement rules, among other economic reforms.

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OVERALL TRADE AND ECONOMIC PERFORMANCE
During the review period, the Philippine economy demonstrated remarkable resilience, with real GDP growing at an average annual rate of approximately 5%. In 2025, GDP per capita reached $4,279 (up from $3,280 in 2018), and approaching the World Bank’s threshold for upper-middle income economies. Economic growth was primarily driven by domestic factors, including robust private consumption supported by rising incomes in export-oriented sectors and capital deepening, particularly public investment in connectivity infrastructure aimed at reducing logistics costs. The latter is expected to continue in the near future, as the government targets capital spending on infrastructure at 5-6% of GDP annually from 2022 to 2028 under its “Build Better More” program.

The service sector remains a cornerstone of the economy, contributing 63% of GDP and 45% of total exports of goods and services in 2025. Services exports grew by 34% between 2018 and 2024, reaching $51.6 billion. The main driver of service exports is the information technology and business process management (IT-BPM) sector, which comprises telecommunications, computer and information services, as well as other business services. Exports of IT-BPM services, delivered predominantly through digital means, recorded a nearly 20% increase in revealed comparative advantage in 2021 compared with pre-pandemic levels. This increase underscores the sector’s enhanced competitiveness and pivotal role in driving the Philippines’ export growth. In addition, personal remittances from overseas Filipino workers, though not recorded in service trade statistics, represent the second-largest source of service export revenue, amounting to 8.5% of GDP in 2025.

Artificial intelligence (AI) presents potential job displacement challenges but also productivity gains for the IT-BPM sector. Although about 36% of BPM jobs have been estimated to be highly vulnerable to AI automation, the limited evidence to date suggests that AI has been augmenting rather than replacing employment. Market research also indicated that revenues in the BPO segment increased by up to 150% due to AI adoption.

Unlike the strong growth in service trade, merchandise exports expanded more modestly, increasing by 8% over the review period. Approximately 48% of Philippine merchandise exports are linked to global value chain (GVC) activities, supported by the Philippine’s participation in the Information Technology Agreement (ITA). The Philippines accounts for about 10% of global output in the testing and packaging (ATP) segment of the semiconductor industry. ITA-covered products made up more than 60% of the country’s goods exports in 2024, primarily electronic integrated circuits, semiconductor sensors, and memory media. The Philippines shows a revealed comparative advantage in manufacturing data storage devices, including memory modules, hard disks, and solid-state drives. Strong global demand, partly driven by AI-related investment, contributed to merchandise exports reaching $83.8 billion in 2025, representing a 15.2% year-on-year growth.

The United States is the largest market for Philippine exports, accounting for 16.6% of goods and 40.5% of service exports in 2024. The Philippines also maintains close trade relations with East Asian economies, including China; Hong Kong, China; Japan; the Republic of Korea; and Chinese Taipei. These relationships reflect the country’s participation in GVCs, particularly in ITA-related product manufacturing. About 80% of inputs used in the Philippine electronics industry are imported.

TRADE AND INVESTMENT STRATEGY
The Philippine Development Plan (PDP) 2023-2028 aims to create an enabling environment that supports “high levels of economic growth,” largely underpinned by trade and international investment. Specifically, the development plan highlights the importance of strengthening the country’s export sectors, attracting foreign investments to boost trade and upgrade skills, and reducing trade costs.

The Philippines recognizes that the rules-based multilateral trading system provides stability, which has supported its industrial development and benefited consumers through increased competition. It considers its expanding network of Regional Trade Agreements (RTA) complementary to existing WTO rules. Bilaterally, and together with its ASEAN peers, the Philippines negotiates RTAs with an emphasis on removing nontariff barriers. As of end-2025, the country was a signatory to 12 RTAs, including five new agreements and two updates concluded during the review period.

To mobilize additional private capital, the Philippines took measures to liberalize its investment regime. Notably, the amendment to the Public Service Act removed foreign equity restrictions for most infrastructure segments, except for seaports and basic telecommunication services. In addition, the public-private partnership (PPP) regime was overhauled in late 2023 to provide a unified and investor-friendly framework, including a structured mechanism for the submission of unsolicited proposals for infrastructure development.

Besides investment liberalization, the Philippines undertook legal and institutional framework reforms to facilitate investments and improve the business climate. Green Lane units were established across government entities in 2023 to fast-track strategic investment projects. A tacit approval principle for failure to act within a set timeframe on applications for permits and licenses was also implemented across government agencies. The Inter-Agency Investment Promotion Coordination Committee (IIPCC), established in 2022, integrates and strengthens efforts to attract foreign investment and screens foreign investments in strategic sectors that may pose risks to national security or public welfare.

The government pursues policies in support of micro, small and medium enterprises (MSME), which account for about 99% of businesses in the Philippines. Policies to support MSME growth introduced during the review period included fiscal incentives and domestic preferences. The reformed government procurement framework increased the domestic supplier preference margin to 25%, up from 15%. The Tatak Pinoy (Proudly Filipino) Strategy identified nine priority sectors eligible for domestic preferences over a 10-year period. The new PPP Code also includes provisions for domestic preferences. Furthermore, the export guarantee program supports MSME export operations, with microenterprises accounting for 89.1% of the 71,288 borrowers that benefited from guarantee facilities for the period between December 2020 and December 2025.

TRADE POLICY DEVELOPMENTS
During the review period, the Philippines abolished its longstanding quantitative restrictions on rice imports. The applied most favored nation (MFN) tariff on imported rice, initially set at 50%, was reduced to 35% in June 2021 and further to 15% in July 2024. With an aim to “stabilize the rice retail price, help Filipino farmer sell their palay at a fair and reasonable price, and ensure food security,” as from January 2026, the MFN tariff rate for rice is set in a range between 15% and 35%, on a countercyclical basis in relation to international prices, increasing or decreasing by five percentage points for every five-percent change in prices. Delays in issuing import permits (i.e. SPSICs) have been addressed by Republic Act No. 11032. In addition, exclusive import rights of rice by the National Food Authority have been discontinued since 2018. According to the authorities, these reforms contributed significantly to easing inflationary pressures.

Efforts to streamline customs procedures continued during the review period. The Philippines participates in the ASEAN Single Window initiative, enabling secure electronic exchange of trade documents, such as certificates of origin and phytosanitary certificates, with other ASEAN partners. Import and export declarations are submitted electronically, although hard copies of supporting documents are still required. The automated system now processes export declarations, advance rulings, transit permits, ATA carnets, and payments. The Authorized Economic Operator (AEO) program, introduced in 2017, complements the pre-existing Super Green Lane facility. Mutual recognition arrangements for AEO programs have been concluded with ASEAN partners, as well as with China and Hong Kong, China. Regular consultations between customs officials and the private sector were formalized in 2024 through the Customs-Industry Consultative and Advisory Council.

Overall, approximately 64% of all Philippine tariff lines are bound, including all WTO-defined agricultural tariff lines, with the exception of those related to rice. The simple average bound tariff rate is 23.5%, some 17 percentage points above the average applied MFN rate. Other duties and charges are bound at zero.

The 2026 applied MFN tariff schedule is entirely ad valorem, with a simple average rate of 6.5%, down from 7.6% in 2018. There are no seasonal tariffs, while variable tariff for rice imports took effect on Jan. 1, 2026. Compared with 2017, the number of tariff rates increased from 15 to 16, adding further complexity to the schedule. Liberalization was most pronounced in transport equipment and, to a lesser extent, in vegetable products, machinery, and precious stones.

Tariff quotas continue to apply to agricultural products, covering 95 tariff lines. For 53 of these lines, in-quota and out-of-quota rates are identical. The quota allocation mechanism is applied only in the event that a special safeguard measure is imposed on out-of-quota import volumes.

During the review period, new excise taxes were introduced on invasive cosmetic procedures, heated tobacco products, and vapor products, while tax rates were increased for sweetened beverages, tobacco products, fermented liquor, and distilled spirits. Excise tax exemptions were granted in 2018 for pickup trucks (until July 1, 2025) and electric vehicles, alongside a 50% reduction for hybrid vehicles.

Imports and exports of regulated goods are subject to licensing or approval requirements, generally for security, safety, health, and environmental reasons. Imported goods subject to standards and technical regulations, as well as sanitary and phytosanitary measures, are administered in a manner similar to licensing. The legal framework for regulated goods is fragmented, with multiple agencies responsible and, in some cases, multi-agency approvals required. The Philippine National Trade Repository, operational since August 2017, provides tariff-line information on regulatory requirements. According to the authorities, regulated goods accounted for approximately 33% of all tariff lines as of end-January 2026. With effect of the East of Doing Business and Efficient Government Service Delivery Act, the authorities indicate that most of regulated goods were subject to automatic licensing requirements. Fees for certain export licenses (e.g. CITES export permits for fauna) are levied on an ad valorem basis.

The authorities state that the Philippines did not grant or maintain any export subsidies during 2018-2025. In 2018, multiple state export guarantee operations previously administered by five facilities and agencies were consolidated into a single state-owned corporation, the Philippine Guarantee Corp. (PhilGuarantee). Since Aug. 31, 2019, PhilGuarantee has been the sole provider of trade-related state guarantees. This consolidation introduced a standardized risk management framework and improved exporters’ and MSMEs’ access to financing, thereby strengthening support for trade-related projects.

In response to the COVID-19 pandemic, the standard corporate income tax rate was reduced to 25%, and a harmonized fiscal incentives system was introduced through the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act in 2021. The triennial Strategic Investment Priority Plan sets out the terms and conditions for granting fiscal incentives to priority sectors identified in the Philippine Development Plan, including a matrix of eligible business activities and location-based criteria. While foreign equity and export orientation thresholds were removed, more favorable incentives are envisaged for enterprises with significant export sales and large-scale investments (above P15 billion, approximately $244 million). In 2024, the CREATE Act was amended through the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act to enhance the predictability and global competitiveness of the incentives system.

The government retains full or partial ownership in a wide range of enterprises. Government-owned and -controlled corporations (GOCC) remain active across multiple sectors, including finance, trade, tourism, education, energy, mining, agriculture, fisheries, food processing, transport, utilities, broadcasting, postal services, healthcare, and real estate. As of end-2025, 130 GOCCs were operational; several were operating on non-commercial basis and funded through budget appropriations, while others held minority shares in private companies. During the review period, state support was provided to 43 GOCCs.

The Philippines has been an observer to the Agreement to Government Procurement since June 2019. The government procurement regime was modernized during the review period, with the New Government Procurement Act entering into force in August 2024. The new framework adopts a fit-for-purpose approach, positioning public procurement as a strategic tool to support national development and environmental sustainability while ensuring value for money. Two new award criteria have been introduced. Whereas contracts were previously awarded primarily to the lowest-priced bidder, the “most economically advantageous responsive bid” criterion now emphasizes the quality-price ratio, taking into account lifecycle costs. In addition, procuring entities are permitted to use a wider range of procurement methods, including “competitive dialogue” and “unsolicited offers with bid matching.” The authorities consider that this would help address rigidities inherent in the previous regime and enhance adaptability to technological change.

The intellectual property regime remained largely unchanged, except for the introduction of a framework for geographical indications in November 2022. The government promotes innovation as a means of improving total factor productivity and supporting long-term economic growth, through publishing the National Innovation Agenda and Strategy Document in September 2023. In addition, an Innovation Fund has been in place since 2021. By end-2025, the Fund had accumulated P600 million and approved P309.6 million in grants for 59 innovation projects. Partly reflecting these efforts, patent registrations by domestic inventors doubled between 2018 and 2025.

SECTORAL DEVELOPMENT
The Philippines remains a net importer of agricultural products, with both exports and imports increasing during the review period. Production remains concentrated in a limited number of commodities, notably rice, maize, bananas, coconuts, and sugarcane, with value growth over the review period driven mainly by prices rather than output. Structural constraints, such as fragmented landholdings, declining farm sizes, and high exposure to natural hazards, continue to limit productivity. Applied MFN tariffs on agricultural goods (WTO definition) averaged 10.1% in 2025 (ranging from 0% to 65%), with tariff quotas in place for 14 products and varying utilization rates. Domestic support has shifted towards a more market-oriented and resilience-based framework, remaining below the de minimis threshold and relying on input subsidies, credit, insurance, and Green Box measures.

The Philippines ratified the Agreement on Fisheries Subsidies in 2023. In September 2024, the Philippines reinforced its framework targeting illicit traders and importers of agricultural and fishery products with the enactment of the Anti-Agricultural Economic Sabotage Act. A newly created Anti-Agricultural Economic Sabotage Council was tasked with establishing a comprehensive oversight system for agricultural commodity value chains and directing the speedy investigation and prosecution of all crimes punishable under the act.

The manufacturing sector remains primarily domestically oriented, with electronics as the main export segment. Although value added increased between 2018 and 2024, the sector’s share in GDP declined, reflecting a structural shift towards services. Production is highly concentrated in food processing, followed by chemicals, and electronics, while traditional subsectors such as apparel have declined. Manufactured goods dominate trade, with rising exports alongside increased imports of intermediate inputs. The applied MFN tariff on manufacturing goods averaged 6.5% in 2025, with higher protection in food processing and lower rates in technology-intensive sectors. Although investment incentives have been strengthened under the CREATE Act, productivity spillovers remain constrained by supply chain and financing constraints.

The energy sector continued to rely heavily on imported fossil fuels. In 2024, fossil fuels accounted for about 70% of total primary energy supply, with renewables contributing around 30%. Dependence on imported coal, oil, and gas exposes the economy to external price volatility, underscoring the need for diversification. In November 2022, the Philippines removed restrictions on foreign investment in most renewable energy resources, reflecting the policy priorities to expand renewable energy, enhance energy security, and promote investment.

Environmental sustainability and resilience have become central to energy policy. Key measures include a moratorium on new coal-fired power plants, expansion of renewables through auctions and portfolio standards, and promotion of emerging technologies. Demand-side measures, including energy efficiency programs and incentives for low-carbon technologies, complement supply-side reforms.

The financial services sector has expanded, supported by digitalization and regulatory reforms aimed at enhancing competition and financial inclusion. Digital financial services, including electronic payments and mobile banking, have grown rapidly. A dedicated digital banking framework is expected to encourage the entry of digital-only banks under tailored prudential requirements, fostering innovation and expanding access, particularly in underserved areas. Regulatory efforts have focused on strengthening supervision, consumer protection, and cybersecurity in digital finance. Nonetheless, access to finance by SMEs remains limited and financial inclusion across regions uneven.

Telecommunications infrastructure improved significantly during the review period, supported by increased private investment. The sector is classified as critical infrastructure, with foreign equity capped at 50% unless reciprocal rights are granted to Philippine investments overseas. With the Konektadong Pinoy Act (KPA), which came into effect in August 2024, the regulatory framework for telecommunication services was updated to keep pace with technological developments. The KPA introduced a new category, Data Transmission Industry Participants (DTIP), which includes service providers that can build and operate their own data transmission networks. DTIPs no longer need to obtain a “legislative franchise” from Congress but are required to register with the relevant regulatory authority. The KPA also eased restrictions on satellite services for broadband connections. It also established a comprehensive framework for open access and infrastructure sharing, supporting the growth of the passive infrastructure subsector.

Following amendments to the Public Service Act, the aviation sector has been significantly liberalized. Air transport service providers can now have up to 100% foreign ownership. As a result, airlines with majority foreign equity incorporated in the Philippines are considered domestic carriers and can operate on domestic routes, provided they maintain a principal place of business in the country. The authorities state that the Philippines will not seek substantial ownership restrictions in future bilateral air service agreements and will pursue amendments to the designation clauses in existing agreements. During the review period, private sector participation in airport operations expanded, including foreign investment through public-private partnership projects.

WAYS FORWARD
During the review period, the Philippines has taken solid steps to reduce trade costs, attract investment, and promote the development of MSMEs. To maintain this momentum, it is essential to advance trade facilitation reforms, such as improving the onboarding of the National Single Window, establishing non-preferential rules of origin, and reviving the Unified Logistic Pass initiative. These actions would further strengthen the trade regime, reduce trade costs, enhance competition, and enable the Philippines to fully realize the benefits of trade.

Miguel Chanco, chief Emerging Asia economist at United Kingdom-based think tank Pantheon Macroeconomics, said the country’s current account deficit may reach around -4% of gross domestic product (GDP) this year. 

“I think there will almost certainly be a widening of the current account deficit this year versus last, and we’re looking at something close to -4.0% of GDP,” Mr. Chanco told BusinessWorld in an e-mail.

“The biggest factors to blame are the jump in oil prices since the Iran war started, which has exerted a lot of upward pressure on the import bill, while remittances growth continues to slow quite materially,” he added.

If Pantheon Macroeconomics’ forecast is realized, the current account as a share of GDP will widen from last year’s -3.3%, when the deficit stood at $16.3 billion.

In the second quarter, the Philippines’ current account gap ballooned to $8.968 billion or -7.3% of GDP, based on the latest data from the Bangko Sentral ng Pilipinas (BSP). 

This was 60.69% wider than the $5.581-billion deficit (-4.5% of GDP) seen a year ago.

The second-quarter figure brought the country’s first-half current account gap to $15.436 billion or -6.4% of GDP, 51.66% larger than the $10.178 billion in the same period last year.

“The current account deficit widened mainly on account of a larger trade-in-goods deficit,” the central bank said in a statement late on Friday.

According to the BSP, the country’s goods exports posted “solid growth” during the period, but imports continued to outpace it.

“Merchandise exports recorded solid growth, largely volume-driven, supported by higher shipments of electronic products, gold, and machinery and transport equipment amid sustained external demand,” the BSP said.

“However, imports continued to grow at a faster pace, primarily reflecting higher import bills, with growth concentrated in telecommunications equipment, electrical machinery, manufacturing inputs, and fuel products that supported domestic investment, production, and energy requirements,” it added.

The central bank noted that the country’s import bill inflated as supply disruptions from the Middle East war pushed up global oil prices.

In June, the country’s trade-in-goods deficit widened by 12.3% to $4.94 billion from $4.4 billion a year earlier, increasing the first-half gap by 25.85% to $30.81 billion.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., likewise sees a wider current account gap this year.

“The current account deficit should remain wide in 2026, but its financing remains comfortable,” he said in a Viber message.

The current account measures the country’s trade in goods and services, as well as primary and secondary income.

Primary income refers to flows of labor and financial resources between resident and nonresident institutional units, while secondary income accounts for transfers between the country and abroad, such as remittances from overseas Filipino workers. 

WEAK PESO RELIEF
Mr. Chanco noted that the peso’s recent depreciation against the dollar could help the Philippines in narrowing its current account deficit.

“This is ultimately what exchange rates are for; a natural balancing tool for when external deficits (or surpluses) become excessive and unsustainable relative to the size of the economy,” he said.

“Essentially, a weaker peso will make imports more expensive and exports cheaper (from the perspective of overseas buyers), helping to naturally manage the size of the trade deficit,” he added.

Earlier this year, BSP Governor Eli M. Remolona, Jr. said a weaker peso is not inherently disadvantageous for the Philippines as it could also benefit exporters and narrow the country’s current account deficit.

On the other hand, Mr. Ravelas noted that while a weaker peso could provide some relief, the country’s heavy reliance on imports may continue to widen the gap.

“The weaker peso helps at the margins, though the country’s import-intensive growth model will continue to keep the external gap elevated,” he said.

Since the Middle East war erupted in late February, the peso has hit record-low closing levels against the dollar on 24 separate trading days.

On Friday, the local unit plunged to a fresh low of P62.68 versus the greenback after global oil prices blew past $100 per barrel anew, losing 14.5 centavos from its P62.535 close on Thursday.

This broke its previous historic trough of P62.625 seen on Sept. 8, according to Bankers Association of the Philippines data.

Year to date, the peso has slumped by P3.89 or 6.21% from its P58.79 finish on Dec. 29, 2025.

In its latest balance of payments outlook, the BSP said the country’s current account may remain under strain amid its weak export performance and as subdued domestic demand weighs on imports growth.

For 2026, the central bank expects the current account deficit to widen to $18 billion or -3.6% of GDP. — Katherine K. Chan

THE BANGKO SENTRAL ng Pilipinas (BSP) kept further rate hikes on the table amid lingering price pressures, but hinted it could begin easing next year if inflation falls faster than expected.

In its August Monetary Policy Report, the BSP said its “low-inflation scenario,” where inflation falls below its central projections, could create room for policy rate cuts to support economic growth.

“The low-inflation scenario shows elevated headline inflation in 2026, although marginally lower than in the central scenario,” it said. “Some policy tightening in 2026 is still necessary to contain high inflation, although a policy reversal in 2027 could become possible in response to weakening economic prospects.”

Under this scenario, inflation will move closer to its 3% target by the second quarter of next year.

The BSP’s central projections show inflation could breach its target for three straight years at 6.1% this year, 5.4% in 2027, and 3.3% in 2028.

On the other hand, inflation remaining above its target for an extended period could warrant additional rate hikes, the BSP noted.

“The high-inflation scenario pushes headline inflation further above the 3% target over the forecast horizon,” it said. “This suggests the need for a tighter monetary policy stance to help contain sustained cost-push shocks from further broadening into the CPI (consumer price index) basket.”

At its August meeting, the Monetary Board raised its key policy rate by 25 basis points (bps) for a third straight meeting to an over one-year high of 5% as it sought to preemptively rein in lingering and emerging inflationary pressures.

This brought its cumulative hikes to 75 bps since it began tightening in April.

Based on the BSP’s survey of external forecasters (BSEF) for August, nearly 70% of the 21 analysts polled anticipate further tightening this year before the BSP returns to easing next year.

“Almost 70% of analysts expect the BSP to raise the policy interest rate by 25-75 bps for the remainder of 2026 and to ease policy settings in 2027,” the central bank said.

This came as the latest BSEF yielded a median headline inflation forecast of 5.3% for the year ahead, slower than the 6% estimate in June.

Their forecast for the next two years also dipped to 4% from 4.1%, while their outlook for the next three years is down to 3.3% from 3.4%.

“Results from the August 2026 BSP Survey of External Forecasters (BSEF) show that analysts’ inflation forecasts have shifted lower, reflecting easing global commodity prices despite uncertainty surrounding the ongoing Middle East conflict,” the BSP said. “Average inflation is projected to decline steadily over the next 12-36 months, eventually settling within the tolerance range by 2028.”

The central bank also noted that analysts’ projection for the three years ahead indicate that long-term inflation expectations remain anchored.

Meanwhile, the analysts polled also see core inflation breaching the BSP’s target at 4% for the year ahead, 3.4% for the next two years, and 3% over the next three years.

“Analysts are also monitoring core inflation, which remains elevated,” the BSP said. “Moreover, additional wage adjustments and the potential impact of El Niño conditions on agricultural production are likely to add to inflationary pressures.”

In August, headline inflation eased a five-month low of 6.1% from 6.2% in July amid lower food and utility prices, the latest Philippine Statistics Authority data showed.

However, it stayed above the central bank’s 3% target for a sixth straight month, bringing the year-to-date average inflation to 5.2%.

Core inflation, on the other hand, cooled for a second month in a row as it settled at 4.1% in August from 4.2% in July.

NEGATIVE OUTPUT GAP
Meanwhile, the central bank said in its report that the Philippines may see a wider output gap this year as the economy grapples with weak household consumption and investments.

“The negative output gap is projected to widen in 2026 due mainly to subdued private consumption and lower investment,” it said.

“Adverse economic sentiment is expected to weigh further on investment. Household consumption is likewise seen to remain muted in the near term, reflecting weaker income growth and elevated inflation,” it added.

Last month, BSP Governor Eli M. Remolona, Jr. said the economy continues to suffer from a negative output gap especially after domestic growth slowed for a fourth straight quarter.

In the second quarter, the economy posted a new post-pandemic low growth of 2.3%, weaker than 2.8% in the first quarter and 5.4% a year ago.

This was the economy’s worst performance since it contracted by 3.8% in the first quarter of 2021. It likewise marked the slowest nonpandemic gross domestic product (GDP) growth in over 16 years or since the 1.8% in the fourth quarter of 2009.

The latest slowdown came as cautious spending and investment following last year’s flood control scandal weighed on public construction, while elevated inflation amid the ongoing Middle East conflict squeezed household spending.

Investments, measured by the gross capital formation, dropped by 9.2% in the second quarter. This was steeper than the 3.1% contraction in the previous quarter and marked a reversal of the 0.91% climb a year ago.

Meanwhile, household spending growth eased to 2.8% in the second quarter from 3% in the first quarter and 5.2% in the same period last year.  This was the weakest since the 4.8% decline in the first quarter of 2021.

In the first half of the year, the country’s GDP expanded by an average of 2.6%.

According to the BSP, the output gap is a summary indicator of the relative demand and supply conditions in the economy, which it uses to assess the degree of demand-based inflation pressure.

An economy posts a negative output gap when its actual output is less than its full potential, which leads to falling prices amid weak demand.

On the other hand, a positive output gap, where the economy produces more than its potential, results in rising prices because demand is strong.

Weak consumer and business sentiment may continue to weigh on the country’s investment climate, making its near-term growth prospects “less favorable,” according to the BSP.

The central bank also noted that a tighter monetary policy will widen the country’s negative output gap.

“The negative output gap widens further under a more restrictive monetary stance,” it said.

However, the BSP said the government’s planned catch-up spending on infrastructure could boost its overall consumption, easing some pressure on the output gap in the second half of the year.

“The output gap is thus seen to narrow in 2027, as investment and trade recover, and household consumption improves,” it added.

THE PHILIPPINES is pinning its hopes on its new upper middle-income status and solid fundamentals to position itself as a major investment and supply chain hub in Southeast Asia.

However, with growing competition from regional peers, the Philippines must look beyond well-intentioned reforms and directly confront persistent bottlenecks, such as corruption, regulatory uncertainty, and high energy costs, to win foreign capital.

Trade Secretary Maria Cristina A. Roque said attempts to attract foreign capital hinge on positioning the Philippines as the region’s premier hub for globally competitive, innovative, and sustainability-driven industries.

“Through a strategic convergence of policy reforms, investment incentives, strategic partnerships, and regional leadership, the government is positioning the country to move up global value chains and emerge as the preferred ASEAN (Association of Southeast Asian Nations) destination for high-tech investments,” she said in an e-mail to BusinessWorld.

The ambitions align with the Philippines’ recent upgrade to upper-middle income status, the Department of Trade and Industry (DTI) said.

“This upgraded classification is set to strengthen the country’s credit profile, boost investor confidence and signal to global enterprises that the Philippines is stable and primed for manufacturing, innovation and regional expansion,” it said in July.

The Philippines was reclassified as an upper-middle income country (UMIC) by the World Bank this year, after it posted a gross national income (GNI) per capita of $4,850 in 2025 — falling within the lender’s $4,636 to $14,375 GNI per capita range for UMIC status.

The Philippines had been stuck in the lower-middle income bracket since the World Bank began tracking the metric in 1987.

The Board of Investments said the higher income classification, coupled with the Philippines’ strategic location and human capital, makes it a unique investment destination in Southeast Asia.

“While other UMIC peers compete on scale, manufacturing depth or income levels, the Philippines stands out as ASEAN’s growth story powered by a young, English-speaking workforce, a large and expanding consumer market, and its geostrategic location,” it said in an e-mailed reply to questions.

Compared with its UMIC peers in the region, the BoI said the Philippines “benefits from a balanced growth model anchored by domestic consumption, services exports and manufacturing expansion in future-ready industries.”

The World Bank reported that Malaysia ($12,380), Thailand ($7,690), Indonesia ($5,120), and Vietnam ($4,970) are also UMICs, while Singapore ($81,760) is a high-income country.

Philippine foreign direct investment (FDI) inflows hit medium-term lows last year and with Southeast Asian economies growing, how can the country better position itself as the region’s preferred investment destination?

The Bangko Sentral ng Pilipinas (BSP) reported that FDI net inflows slumped to a five-year low of $7.791 billion in 2025, the worst since the pandemic. The 2025 total also marked a 17.1% drop from 2024, the BSP said.

Reaching UMIC boosts the Philippines’ economic credibility, but it won’t instantly guarantee new capital, according to Marco de la Rosa, Kearney senior partner, Philippines country head and APAC Communications, Media & Technology lead.

“Upper-middle income status gives the Philippines a seat at the table, but it doesn’t automatically make us more competitive,” he said in an e-mail interview.

While the milestone signals readiness to global markets, Mr. de la Rosa said the key challenge is ensuring economic progress also translates to everyday gains for the population.

“We’re only at the lower end of the upper-middle income range, so there’s still significant room to grow,” he noted.

“More importantly, higher national income doesn’t automatically mean every Filipino is better off,” Mr. de la Rosa added.

As an UMIC, the Philippines can position itself as a strategic partner for European companies seeking to further expand in Southeast Asia, the European Chamber of Commerce of the Philippines (ECCP) said.

“Investors will view this milestone not only as a recognition of past progress, but also as a call to sustain reform momentum,” the ECCP said in an e-mail.

“The Philippines’ new status as an upper-middle income country is overall a positive signal to global investors, reflecting the country’s economic progress and strong potential as a destination for investments,” Johan Lennefalk, Trade Commissioner of Sweden to the Philippines, said in an interview.

To attract investors, the government is building on its incentives and investment promotion efforts, Ms. Roque said.

In particular, the DTI is leveraging its Strategic Investment Priority Plan, which expanded fiscal incentives for cutting-edge technologies.

These include artificial intelligence (AI) and data science, quantum technologies, cybersecurity, electric vehicles (EVs), and energy technologies like hydrogen and nuclear.

She noted the targeted investment missions, the “green lane” for strategic projects, and its ASEAN chairmanship would help pitch the Philippines to foreign investors.

Ms. Roque also cited the government’s reforms for targeted industries that would help attract investment in high-value manufacturing.

These include the Electric Vehicle Incentive Strategy, which seeks to incentivize the domestic production of EVs, and the Semiconductor and Electronics Industry Roadmap, which targets $110 billion in chip-related exports by 2030.

Other priority sectors include information technology-business process management, smart agriculture, critical minerals, and renewable energy, the DTI said.

FALLING BEHIND
While the economic fundamentals fiscal incentives, and targeted reforms are falling into place, it continues to lag its regional and peers in attracting global capital.

The Philippines ranked 18^th out of 25 markets in Kearney’s 2026 FDI Confidence Index, making it among the lower priorities for global investors.

Within ASEAN, the Philippines lagged Thailand (6^th), Malaysia (7^th), Indonesia (13^th) and Vietnam (16^th).

The index, which came out earlier this year, noted that investors are aware of the Philippines’ long-term potential, talent, and natural resources. However, it remains weak in infrastructure, governance, and ease of doing business, Mr. de la Rosa said.

The United Nations Conference on Trade and Development (UNCTAD) 2026 World Investment Report indicated that Philippine FDI inflows stood at $9 billion in 2025, trailing ASEAN markets like Singapore ($150.9 billion), Indonesia ($21.44 billion), Vietnam ($20.35 billion), Thailand ($19.1 billion), and Malaysia ($15.39 billion).

Amelia U. Santos-Paulino, Investment Research Section Chief at UNCTAD’s Division on Investment and Enterprise, said regulatory and administrative constraints could affect investor confidence in the Philippines despite its higher income status.

“While important policy reforms have been introduced and streamlined (transparency) and investment facilitation measures put in place (e.g. single investment window and one-stop shop), businesses may still face lengthy investment-business permitting processes, from overlapping regulatory requirements,” she said in e-mailed reply to questions.

Ms. Paulino cited the need to address congestion in transport and logistics networks, which increase operating costs, delay production, and reduce supply chain reliability. Limitations in digital infrastructure and connectivity can also constrain the development of higher-value services and knowledge-intensive industries, including AI, digital deployment and data analytics development, she added.

According to business groups, the country’s potential to become ASEAN’s preferred investment destination is hindered by governance issues, regulatory uncertainties, slowed infrastructure spending, high power costs, and logistical bottlenecks.

The ECCP also noted that European firms have become more deliberate when investing.

“European investors will continue to compare the Philippines not only with its own past performance, but also with peer economies in ASEAN that may offer faster processes, stronger infrastructure, more predictable regulation, and more integrated supply chains,” the ECCP said.

It noted that European investors are concerned about red tape, permit delays, and inconsistent implementation of rules across the range of national agencies and local government units.

Investors are also burdened by regulatory uncertainty, tax policy and administration concerns, infrastructure gaps, high energy costs, customs and trade facilitation concerns, and skills mismatches, the ECCP said.

British Chamber of Commerce of the Philippines Executive Vice Chairman Chris Nelson said UMIC status is a “good sign” for UK investors. It also reinforces the country as “a core market” in the region.

“But we need to keep that momentum going forward by reducing red tape and pushing for reforms to strengthen digital payments and open financing,” he said via telephone.

While liberalizing foreign investment laws helped attract FDI, unresolved corruption issues linked to the government’s flood control scandal continues to dampen investor confidence, according to John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies (PIDS).

“We’re making significant developmental strides after enacting liberalization laws. But we also have to work on projecting an image that the ecosystem we have in the Philippines is actually worth the entry,” he said in a video interview.

Reforms to reduce dependence on imported oil should also be a key strategy, Mr. Rivera said, noting how the Middle East conflict showed how external energy shocks can disrupt businesses and industry.

UNCTAD’s Ms. Paulino said the Philippines should further embed itself in production and supply chain networks within ASEAN and other regional value chains, including the 15-member Regional Comprehensive Economic Partnership (RCEP).

“The Philippines could consider positioning itself as a key node connecting regional production networks, digital trade, business services, and innovation ecosystems within ASEAN and RCEP,” she said.

ADVANTAGES
Analysts said the Philippines has the fundamentals to become a regional investment hub, if it is supported by ease of doing business and regulatory certainty.

Kearney’s Mr. de la Rosa said the Philippines’ young, English-speaking workforce remains a key driver of foreign investment.

“As many of Asia’s largest economies face aging populations, the Philippines has a longer runway for workforce growth and domestic consumption,” he said.

Mr. Lennefalk said that Swedish investors have cited the country’s talent pool, strong consumer market, and infrastructure opportunities.

The Philippines has been pursuing multi-country partnerships to help build transport, energy and digital infrastructure that align with its development goals.

These include the Luzon Economic Corridor — backed by 11 partner countries — that seeks to boost logistics, rail freight, clean energy, and semiconductor infrastructure throughout key growth areas like Manila, Subic, Clark, and Batangas.

The Philippines’ participation in the Washington-led Pax Silica bloc is also expected to draw investment in semiconductors, battery technology, and AI manufacturing.

However, the government has yet to fully address criticism that Pax Silica-related developments may compromise environmental protections, deplete natural resources, and be inimical to the national interest.

The Philippine Economic Zone Authority (PEZA) said its economic zones (ecozones) are well-positioned to streamline foreign locators’ operations. Ecozones provide investment facilitation, fiscal incentives, customs support, infrastructure, utilities, and a talent pool that’s investment ready, it said.

PEZA cited the need to develop more investment-ready and specialized ecozones outside traditional industrial centers, while ensuring they are connected to ports, airports, and reliable power and digital infrastructure, it said.

“The country should avoid competing with Vietnam, Indonesia, Malaysia, or Thailand solely through lower labor costs, cheaper industrial land, or the size of its domestic market. Our differentiation must be based on the quality and reliability of the investor experience and the strength of the ecosystem surrounding each investment,” PEZA said in e-mailed reply to questions.

The agency expects future ecozones to focus on strategic industries like semiconductors, EVs, aerospace, medical technologies, green industries, advanced logistics, and other AI-enabled services.

PEZA said it is working to reduce logistics and operating costs, improve trade facilitation, expand access to international markets, upskill the workforce, and improving government agencies’ interoperability.

Its priorities also include boosting digitalization, expediting permitting, making regulations more predictable, strengthening intellectual-property protections, and establishing training programs to help support locator requirements, PEZA added.

“The Philippines doesn’t need to compete on scale alone. It should compete where it can be distinctive,” Mr. de la Rosa said.

“But those opportunities depend on faster execution and a more predictable investment environment. That’s ultimately what will separate the Philippines from its regional peers,” he added.

Ultimately, the Philippines’ bid to become ASEAN’s preferred investment hub and while being an UMIC will be measured by its ability to generate better-paying jobs, lower food and energy costs, and strengthen purchasing power, PIDS’ Mr. Rivera said.

THE PHILIPPINES, over the past year, faced shock after shock that has tested its strength. From a flood control corruption scandal that shackled state spending, to geopolitical issues overseas that caused a global energy shock that continues to feed into domestic prices, these put in focus the structural vulnerabilities that continue to plague the economy.

Gross domestic product (GDP) growth slowed to 4.4% in 2025 from 5.7% in 2024 as the graft scandal weighed on confidence, dragging public and private investments in the second half of the year.

Growth weakened to 2.8% in the first quarter of 2026, and then further to 2.3% in the second quarter as the Middle East conflict added to an already long list of economic concerns.

The government has already lowered its full-year 2026 growth target to 3.5%-4.5% from 5%-6%, while expecting the economy to recover and expand by 5%-6% annually from 2027 to 2030.

It now also expects inflation to average 6%-7% this year under its updated macroeconomic assumptions, well above the Bangko Sentral ng Pilipinas’ (BSP) 2%-4% tolerance band, as elevated global fuel prices and supply disruptions squeeze household consumption and investment.

At the same time, the government is trying to support growth while pursuing its fiscal consolidation agenda following a borrowing surge during the coronavirus pandemic. It expects to post a budget gap of 5.4% of GDP this year, which it wants to gradually narrow to 3.5% by 2030.

The darkening outlook underscores a central question for the Philippine economy: whether the resilience that allowed it to withstand earlier crises is enough to deliver sustained growth in an era when shocks have become more frequent and unprecedented.

“We are already living in an age where disruption is the norm, not the exception,” Kearney Senior Partner and Philippines Country Head Marco de la Rosa said in an e-mailed response to BusinessWorld.

“While the Philippines has remained resilient, some characteristics of our economy make us more exposed to external shocks.”

According to Mr. de la Rosa, the country’s heavy reliance on imported energy makes it vulnerable to global price volatility and geopolitical events.

The risks from imported energy have become more apparent amid the conflict in the Middle East, which has pushed up fuel prices and raised the cost of construction materials, transportation, and food.

The Philippines has been under a state of national energy emergency since March to address energy supply and price risks arising from the conflict involving the United States, Israel and Iran.

Inflation averaged 6.1% from March to July, as rising global oil prices fed into transport, electricity and food costs, with the BSP expecting it to continue breaching the tolerance band until next year, showing that the war’s impact is not expected to ease any time soon. This has also forced the central bank to tighten its policy stance anew to ensure price stability.

Apart from being a net importer of oil, the country also relies heavily on remittances and receipts from the information technology and business process management (IT-BPM) industry, “both of which could face increasing disruption from artificial intelligence (AI), changing global demand, and geopolitical shifts,” Mr. de la Rosa said.

Despite the Middle East conflict, cash remittances have remained resilient, growing by 2.5% in the first five months to $14.11 billion from $13.77 billion in the same period a year ago, with inflows from the Middle East rising by 3.6% to $2.49 billion from $2.41 a year prior.

On the other hand, AI and competitiveness challenges are clouding the outlook for the IT-BPM industry. The IT and Business Process Association of the Philippines now projects revenues to reach $43.3 billion by 2028 under a worst-case scenario, down 26.6% from its previous projection of $59 billion. This scenario took into account policy uncertainty, the depth of the country’s talent pool, infrastructure quality and ease-of-doing-business constraints.

Under the best-case scenario, the industry could generate $50.5 billion in revenues, down 14.4% from its previous projection.

Mr. de la Rosa added that longstanding problems involving infrastructure, governance and policy execution continue to weigh on the country’s ability to attract investments.

ENERGY SECURITY
The country’s exposure to volatile oil prices has also raised questions about how the government should manage fuel prices and secure supplies during external disruptions.

University of Asia and the Pacific School of Economics Dean Peter L. U said a proposal for the Department of Energy to announce a single fuel price adjustment instead of a range could pressure oil companies to follow the government’s figure, effectively creating a “soft price ceiling.”

“If I am an oil company, I would not want the negative optics of setting a price above what the government announced,” he told BusinessWorld in a Viber message.

“In the short run, the oil companies can probably live with this additional ‘soft regulation.’ It remains to be seen if they will find it attractive to continue operating or expanding in the industry.”

Beyond fuel price monitoring, Mr. U said the government could maintain strategic petroleum reserves, although these should primarily cover the requirements of the armed forces and other critical government operations.

Commercial oil supply should remain largely in the hands of private companies, which have an incentive to maintain adequate inventories, he said.

“No company wants to be caught out of stock with nothing to sell when a profit can be made.”

The government could instead negotiate with other countries to ensure that Philippine oil companies retain access to supplies during disruptions, he added.

Such measures could help manage immediate supply risks, but they would not shield the broader economy from the investment and fiscal consequences of a prolonged energy shock.

Ateneo Center for Economic Research and Development Senior Research Fellow Ser Percival K. Peña-Reyes said higher global oil prices and geopolitical uncertainty could further fuel inflation, raise the cost of imported fuel and construction materials, and weaken private investment.

FISCAL SUPPORT
At the same time, the government has limited fiscal space as it continues to manage a relatively large budget deficit and elevated public debt compared with pre-pandemic levels.

“Under these conditions, every peso of public spending has to generate the highest possible economic and social return,” Mr. Peña-Reyes said via Facebook Messenger.

“The priority should, therefore, be not simply to spend more, but to spend better.”

He said the government should protect high-multiplier investments, particularly infrastructure projects that are “shovel-ready” and have undergone rigorous cost-benefit analysis.

“Delaying well-prepared projects often imposes larger economic costs than the savings generated from postponing them,” he said.

This is particularly important following the flood control controversy, which weakened confidence in public infrastructure spending and prompted closer scrutiny of government projects.

In the January-to-May period, infrastructure spending declined by 42.9% to P269.4 billion from P471.5 billion a year ago, which the Department of Budget and Management attributed to enhanced governance measures and stricter review of infrastructure projects.

Mr. Peña-Reyes said spending should focus on projects that reduce the country’s vulnerability to future disruptions, including energy infrastructure that diversifies power sources, irrigation and logistics facilities that improve food security, properly designed and independently monitored flood control systems, and digital infrastructure that raises productivity.

Improving governance would be just as important as determining which projects receive funding.

“A peso lost to corruption or inefficiency is more costly today because fiscal resources are scarce,” he said.

Strengthening project evaluation, digital procurement, real-time monitoring and independent auditing could ensure that public funds translate into actual infrastructure and services rather than leakages, he added.

At the same time, Mr. Peña-Reyes said the government should avoid across-the-board spending cuts that could weaken productive investment and further slow the economy.

“Such measures may improve headline fiscal numbers in the short run but can weaken growth if they reduce productive public investment,” he said.

“Instead, expenditure rationalization should distinguish between spending that generates long-term economic returns and spending that is poorly targeted or of low value.”

Targeted and temporary support should be maintained for lower-income households that bear a disproportionate share of higher food and fuel prices, he added. Aside from cushioning vulnerable groups, such assistance could help sustain household consumption, which remains the Philippine economy’s main growth engine.

STRUCTURAL CONCERNS
Beyond the immediate fiscal response to crises, economists said the country must also address weaknesses in infrastructure, human capital, the business environment, and capital markets.

The Philippines’ transition to upper-middle income status in July after remaining a lower-middle income economy since 1987 reflects decades of progress, but World Bank Lead Economist Gonzalo Varela said much work still needs to be done despite the significant reforms and growth achieved over the past 15 years.

Better connectivity could generate large economic gains by allowing goods and workers to move more efficiently across the country, Mr. Varela said. It could also narrow regional disparities by helping low- and middle-income regions grow faster and create more opportunities outside major urban centers.

Human capital is another pressing concern, from early childhood development to the skills of workers already in the labor market.

Mr. Varela said the full implementation of the Enterprise-Based Education and Training Framework Act would be crucial to improving workforce skills by making it easier for companies to provide on-the-job training.

“This is an important reform. Fully implementing that reform is going to be crucial to increase the skills of the workforce of the Philippines,” he said at a media briefing on Aug. 3.

Such reforms have become more urgent as AI transforms industries and changes the kinds of skills required by employers.

The business environment must also become more conducive to the entry and expansion of firms, which could generate jobs and strengthen competition.

“If we want more firms to come in to create competitive pressures on incumbents, if we want more jobs to be created, then we need a business environment that is conducive to that,” he said.

“Simplifying business registration processes is an agenda in which the Philippines can learn from what other countries have done,” he said, citing the one-day processing in Singapore. “It’s something that can be done, and that is going to help the economy become more competitive and more dynamic.”

The Philippines must also deepen its capital markets, which remain relatively shallow. As the economy moves toward more innovation-driven growth, firms will require greater access to capital to finance new technologies and business models.

External shocks should provide greater impetus for these reforms rather than become a reason to postpone them, World Bank Division Director for the Philippines, Malaysia and Brunei Zafer Mustafaoğlu said.

“When we talk about external shocks and when things get difficult abroad, it’s really important to do more reforms at home,” he said.

“The question is how to counterbalance, not accommodate — in the sense of not accepting it — so that you can still continue growing.”

Countries that respond to crises by implementing reforms could emerge stronger and grow faster over the long term, Mr. Mustafaoğlu said.

Despite the risks, he said the Philippines continues to benefit from a young population, a strategic location, and strong connections to the global economy.

The challenge is to use these advantages while improving efficiency, policy execution, and the allocation of resources, he said.

Building on these advantages, Mr. de la Rosa said the government should pursue three priorities to strengthen economic resilience over the next decade: invest in infrastructure and energy security, improve governance and regulatory predictability, and diversify the economy while preparing businesses and workers for AI.

These reforms would allow the country to build on its talent pool, natural resources and established global services industry while reducing its dependence on a narrow set of growth drivers.

Ultimately, resilience should not simply mean enduring one crisis after another. It should mean using each disruption to correct structural weaknesses before the next one arrives.

Doing so will require the government to maintain fiscal discipline without sacrificing productive investments, Mr. Peña-Reyes said.

“Fiscal discipline and growth are complements, not substitutes,” he said.

“In a constrained fiscal environment, success will depend less on the amount the government spends than on whether it spends on the right priorities — and whether those projects are delivered efficiently and transparently.”

Philippine cuisine is more than a collection of dishes. It is a reflection of the country’s diverse regions, traditions, communities, and stories. Building on its commitment to champion Philippine culinary heritage, SM Hotels and Conventions Corporation (SMHCC) advances its “Gateway to Gastronomy” campaign through Conrad Manila’s Filipinas, a culinary experience that brings the flavors and stories of the archipelago to the table through the artistry of seven Filipina chefs.

Launched by SMHCC, “Gateway to Gastronomy” is a group-wide campaign that positions its hotels as immersive destinations where guests can discover the culture, history, and communities behind Filipino food. The campaign supports the Department of Tourism’s Food and Gastronomy Tourism Roadmap 2024–2029, which seeks to position the Philippines as a leading gastronomic destination in Southeast Asia by promoting regional cuisines, strengthening hospitality partnerships, championing local ingredients, and creating meaningful culinary experiences for travelers.

“Filipinas demonstrates how Gateway to Gastronomy can translate our country’s rich culinary heritage into an experience that is both deeply rooted in tradition and relevant to today’s diners,” said Leah Magallanes, SMHCC Vice President for Food & Beverage, Quality, and Sustainability. “By bringing together regional ingredients, Filipino culinary stories, and the creativity of our chefs, we are not only showcasing what makes our cuisine distinct. We are creating opportunities for guests to understand the people, places, and traditions behind every flavor. This is how we see our hotels contributing to the continued appreciation and promotion of Philippine gastronomy.”

At the heart of Filipinas is a seven-course chef’s table experience at Brasserie on 3, available exclusively on September 12, 2026. Created by seven female chefs from Conrad Manila’s culinary team, the menu takes guests on a gastronomic journey through the Philippines, with each course representing a different chapter in the story of Filipino food.

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“With Filipinas, we wanted to give our guests a deeper appreciation of Filipino cuisine by presenting familiar ingredients and traditions through a fresh and contemporary lens,” said Rupert Hallam, General Manager of Conrad Manila. “What makes this experience particularly special is the creative voice of our seven Filipina chefs, whose interpretations bring together the diverse flavors of the archipelago while honoring the stories and heritage behind them. It is our way of inviting guests to experience the Philippines through a dining experience that is distinctly Filipino, thoughtfully crafted, and deeply personal.”

The experience opens with simula (beginning), a contemporary interpretation of tokwa’t baboy featuring tofu skin, etag from the Cordilleras, coconut vinegar, and soy gel. Pagbukas (opening) follows with tuna kinilaw, incorporating batwan from Western Visayas, while paglago (growth) presents kabute at keso ravioli with local kesong puti, mushroom duxelles, salted egg crème, smoked corn, and tarragon foam.

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A refreshing calamansi sorbet marks sandali (pause), before the menu moves into its main courses. Direksyon (direction) interprets flavors associated with Central Luzon through maya and alugbati, black heirloom rice from Negros Island, and chicken tinapa, while lakas (strength) draws from the culinary traditions of Bicol through beef tenderloin, burnt coconut, labuyo pearls, and creamed taro leaves. The journey concludes with pamana (legacy), a dessert inspired by Davao’s identity as the Cacao Capital of the Philippines, bringing together guyabano, cacao, pili, and San Nicolas cookie.

Beyond the one-day chef’s table, Filipinas will also be available at Brasserie on 3 beginning Sept. 12, through a four-course set menu, allowing more guests to experience its interpretation of Filipino cuisine. Guests may choose from a selection of appetizers and main courses, including tokwa’t baboy, tuna kinilaw, maya maya at alugbati, baka at laing, and kordero at piyanggang, alongside vegan selections. The meal concludes with halo-halo, reimagined through elements such as ube, leche flan, macapuno, langka, buko-pandan, and pinipig.

Through Filipinas, Conrad Manila expands the reach of Gateway to Gastronomy by bringing together culinary traditions from across the archipelago within a single dining experience. Its menu highlights how Filipino cuisine can be elevated through contemporary culinary techniques without losing its connection to the ingredients, flavors, and cultural influences that define each region.

This approach reinforces SMHCC’s broader role in advancing gastronomy tourism: using its properties as gateways to the destinations they represent, while creating opportunities to preserve culinary traditions, celebrate local producers and communities, and introduce Filipino flavors to both local and international guests. Across the SMHCC portfolio, this approach is reflected in destination-led culinary initiatives that range from Taal Vista Hotel’s heritage journey inspired by Filipino heroes to Pico Sands Hotel’s focus on local ingredients and fishing communities, as well as regional culinary experiences across Central Luzon, Western Visayas, Negros Occidental, and Mindanao.

As SMHCC continues to advance Gateway to Gastronomy, each property becomes more than a place to stay. It becomes a place where guests can experience the Philippines through its food, meet the stories behind its flavors, and gain a deeper appreciation of the heritage that continues to shape Filipino cuisine.

For more information on Filipinas at Conrad Manila, guests may call +632 8833 9999 or email ConradManila@ConradHotels.com.

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The nearer LPA was located 1,040 kilometers west of Southwestern Luzon, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said in its 10:00 a.m. tropical cyclone formation outlook.

The LPA has a medium chance of developing into a tropical depression within the next 24 hours. PAGASA said the LPA may steer the southwest monsoon away from the country, causing less rainfall over the mainland.

The farther and more recently developed LPA was located 2,875 kilometers east of Eastern Visayas and is unlikely to develop into a tropical depression within the next 24 hours.

The LPA may enter the Philippine Area of Responsibility (PAR) over the weekend and may even move near Luzon.

Meanwhile, the southwest monsoon is expected to affect fewer areas in the next 24 hours, based on PAGASA’s 11:00 a.m. advisory.

Heavy downpours, or rainfall between 50 and 100 millimeters, are only expected in Pangasinan, Zambales and Bataan until Saturday noon.

The southwest monsoon may also cause thunderstorms in Metro Manila, the rest of Luzon, Western Visayas, and Northern Samar in the next 24 hours, PAGASA said in its 4:00 a.m. weather forecast.

PAGASA no longer issued a heavy rainfall outlook for the weekend. — Edg Adrian A. Eva

CUSTOMERS of Maynilad Water Services, Inc. and Manila Water Co., Inc. will pay slightly higher water bills starting Oct. 1 after the regulator approved quarterly adjustments reflecting foreign exchange movements.

The Metropolitan Waterworks and Sewerage System Regulatory Office (MWSS RO) approved an increase of P0.08 per cubic meter (cu.m.) for Manila Water and P0.24 per cu.m. for Maynilad, the agency said in a statement on Friday.

Manila Water customers in the east zone who consume 10 cu.m. or less will see their monthly bills increase by P0.34. Those consuming up to 20 cu.m. and 30 cu.m. will pay an additional P0.75 and P1.53, respectively.

Maynilad customers in the west zone who consume 10 cu.m. or less will see their bills increase by P0.67. Those consuming up to 20 cu.m. and 30 cu.m. will pay an additional P2.54 and P5.19, respectively.

The tariff increases will have a smaller impact on low-income households covered by the enhanced lifeline programs of Manila Water and Maynilad.

The adjustments were approved under the foreign currency differential adjustment (FCDA), a tariff mechanism that allows water concessionaires to recover losses or return gains arising from movements of the peso against foreign currencies.

Manila Water serves the east zone of Metro Manila, covering parts of Marikina, Pasig, Makati, Taguig, Pateros, Mandaluyong, San Juan, portions of Quezon City and Manila, and several towns in Rizal province.

Maynilad serves parts of Manila, Quezon City, and Makati, as well as Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, and Malabon. It also supplies water to Cavite City, Bacoor, and Imus, as well as the towns of Kawit, Noveleta, and Rosario in Cavite province.

Metro Pacific Investments Corp., the majority owner of Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., alongside Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.

In a statement on Friday, Meralco said its overall rate declined by P0.0409 per kilowatt-hour (kWh) to P14.7424 in September from P14.7833 per kWh in August.

The adjustment translates to a P8 reduction in the monthly bill of a household consuming 200 kWh. Customers consuming 300 kWh, 400 kWh, and 500 kWh will see their bills fall by P12, P16, and P20, respectively.

“This follows a rate decrease Meralco implemented last month, and we hope that this will somehow provide relief to our customers,” Meralco Vice-President and Head of Corporate Communications Joe R. Zaldarriaga said.

Meralco attributed the decline mainly to lower ancillary service charges collected by the National Grid Corp. of the Philippines (NGCP) and lower taxes.

Ancillary service charges, or the cost of procuring power reserves to maintain balance in the power grid, fell by P0.3344 per kWh due to lower charges from the reserve market.

Taxes and other charges posted a net decrease of P0.1657 per kWh.

The lower overall rate came despite a P0.4232-per-kWh increase in the generation charge, which Meralco attributed mainly to the weaker peso and higher fuel costs following the recent escalation of the conflict in the Middle East.

On Aug. 28, the peso weakened by P1.025 to close at P62.265 against the dollar from P61.24 on July 31, according to data from the Bankers Association of the Philippines.

The increase in the generation charge was partly offset by lower charges from the Wholesale Electricity Spot Market (WESM), which Meralco attributed to weaker demand in the Luzon grid.

Two refunds being implemented by Meralco totaled P1.0139 per kWh.

Meralco’s distribution charge, meanwhile, has remained unchanged since a P0.0360-per-kWh reduction for a typical residential customer took effect in August 2022.

Meralco is the country’s largest private electric distribution utility, serving more than 8.2 million customers in Metro Manila and nearby provinces, including Bulacan, Cavite, Rizal, and parts of Laguna, Batangas, Pampanga, and Quezon.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of MediaQuest Holdings, Inc., which is a subsidiary of the PLDT Beneficial Trust Fund, has an interest in BusinessWorld through the Philippine Star Group, which MediaQuest controls. — Sheldeen Joy Talavera

The Organisation for Economic Co-operation and Development (OECD) PISA 2025 study showed that socio-economically advantaged students, representing the top 25%, outperformed those in the bottom 25% by 76 score points in science.

“Between 2018 and 2025, the gap in science performance between the top and the bottom 25% of students in terms of socio-economic status remains stable in the Philippines, as well as across OECD countries on average,” the report said.

The 76-point gap is similar to the OECD average of 85 score points.

It also noted that during the period, performance improved to a similar extent among both advantaged and disadvantaged students.

To determine the socio-economic status of test-takers, the OECD computes an index of economic, social and cultural status that allows students from all participating countries to be placed on a single common scale.

This index is derived from parameters such as parental education, parental occupational status, and home possessions, allowing researchers to categorize students into distinct brackets, such as the top 25% most advantaged students and the bottom 25% most disadvantaged students.

In the latest PISA, the largest share of Filipino students, at 51%, belonged to the bottom international quartile of the socio-economic scale, meaning they were among the most disadvantaged test-takers in 2025.

Their average score in science was 354 points. Students from similar socio-economic backgrounds in global standouts such as B-S-J-Z (Beijing, Shanghai, Jiangsu and Zhejiang) in China and Türkiye scored significantly higher, the report said.

This was lower than the Philippines’ overall average of 373 points in science, which saw an improvement of 17 points from the 2022 study.

However, the score remained below the OECD average of 482 in science and ranked last among eight Southeast Asian peers, with Singapore scoring the highest at 560 points.

The report said that socio-economic status accounted for 13% of the variation in science performance among Filipino students in PISA 2025, slightly higher than the 12% OECD average.

Also, 11% of disadvantaged students in the Philippines scored in the country’s top quarter of science performers, qualifying them as academically resilient.

PISA is an OECD-led international assessment that seeks to measure the knowledge, skills, and attitudes of 15-year-old students. It also measures how they can solve complex problems, think critically, and communicate effectively.

More than 760,000 students from 91 countries and economies participated in PISA 2025, of which 8,072 students from 208 schools in the Philippines completed the assessment. This represents about 1.75 million 15-year-olds, or an estimated 82% of the country’s 15-year-old population. — Edg Adrian A. Eva

The trough, or extension, of the LPA may cause thunderstorms over the Ilocos Region, Cordillera Administrative Region, and Cagayan Valley, PAGASA said in its 4:00 p.m. weather forecast.

PAGASA warned of possible flooding and landslides due to moderate to occasionally heavy rains.

The LPA affecting these areas was last located 1,005 kilometers (km) west of Southwestern Luzon as of 2:00 p.m. and still has a medium chance of developing into a tropical depression within the next 24 hours.

Another LPA is also being monitored outside the Philippine Area of Responsibility and is located 3,035 km east of Eastern Visayas.

PAGASA earlier said that the LPA has a chance of entering PAR over the weekend and is also not ruling out the possibility that it may move near Luzon.

Meanwhile, the prevailing southwest monsoon is also expected to bring thunderstorms over Metro Manila, the rest of Luzon, Western Visayas, and Northern Samar in the next 24 hours.

PAGASA also warned of flooding and landslides over these areas.

The rest of the country may also be affected by localized thunderstorms, despite the effects of the southwest monsoon being expected to weaken.— Edg Adrian A. Eva

In a regulatory filing on Thursday, the food company said it is working with external financial advisers on a broader restructuring framework that may include debt restructuring, operational initiatives, asset sales, shareholder support, and other capital measures.

DMPL said the performance of its core Philippine business, Del Monte Philippines, Inc. (DMPI), would not be sufficient on its own to address the group’s liabilities and negative equity. It added that no equity raising by itself is expected to restore DMPL to positive equity.

As of July 31, the group had negative equity of $578.5 million, improving from a $589.9-million deficit at the end of April. Its current liabilities exceeded current assets by $609.7 million, mainly due to revolving loans historically extended by local partner banks.

DMPL said it is also exploring the divestment of certain assets to simplify its business structure and generate liquidity. Any transaction would be subject to appropriate approvals, including from minority shareholders where required.

“In light of the existing negative equity, DMPL does not expect to declare and pay dividends to its shareholders while the capital deficit remains outstanding,” the company said.

The group had net debt of $969.7 million as of July 31, down from $977 million at the end of April, mainly due to debt settlements. Current borrowings stood at $577.6 million.

Cash and cash equivalents declined to $4 million from $8.1 million at the end of April, which the company attributed mainly to the timing of payments.

The balance-sheet pressure comes despite an improvement in earnings.

Attributable net profit nearly tripled to $16.1 million in the three months ended July 31 from $5.5 million a year earlier. Revenue rose 9% to $222.1 million, while gross profit increased 13% to $74.7 million.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 25.7% to $49.3 million, while operating profit increased 14.1% to $41 million. Gross margin improved to 33.7% from 32.5%.

DMPL said the improvement in net profit reflected stronger sales, gross-margin expansion, improved operating income, and lower financing costs.

International sales rose 21.4% to $118 million, led by higher volumes of fresh pineapple, packaged products, and not-from-concentrate juice. Fresh pineapple sales increased 20.3%, while packaged pineapple sales rose 23.3%.

Asia-Pacific sales increased 5.8% to $195.1 million, supported by higher export volumes, particularly to China and South Korea, and higher prices for S&W Deluxe Pineapple.

Philippine sales rose 2.2% in peso terms but fell 6.9% in US dollar terms to $82.6 million due to peso depreciation. The company also cited softer volumes in its core segments.

Sales in Europe rose 71% to $19.5 million on higher packaged pineapple sales, while sales in the Americas declined 6% to $7.5 million.

DMPL said it expects the business to remain profitable in fiscal year 2027, although the operating environment remains challenging. It said volatility in fuel, fertilizer, and tinplate costs, as well as uncertainty surrounding El Niño, could affect performance.

At the local bourse on Thursday, DMPL shares fell 5.41% to P3.50 apiece. — Alexandria Grace C. Magno

THE EUROPEAN UNION (EU) and Spain have formally joined the Luzon Economic Corridor (LEC) initiative, strengthening the Philippines’ efforts to attract high-value investments and position the country as a hub for maritime industries and advanced manufacturing.

“Today, we made history with the addition of two more partners in the Luzon Economic Corridor, which brings us to 13 countries in total,” Finance Secretary Frederick D. Go said during the inaugural LEC Investment Forum on Thursday.

“Their participation brings additional expertise, technology, capital, and global business networks that can help accelerate investments and develop the infrastructure to support the Philippines’ growth,” he said.

The LEC Investment Forum brought together hundreds of investors as the government seeks to attract investment to projects under the corridor, which is intended to link economic hubs Subic Bay, Clark, Manila, and Batangas.

The LEC is a multi-country partnership launched in 2024 by the Philippines, the United States, and Japan. In May, it was expanded to include Australia, Canada, Denmark, France, Italy, the Republic of Korea, Sweden, and the United Kingdom.

The EU’s participation in the LEC builds on its established trade relationship with the Philippines, said EU Ambassador to the Philippines Massimo Santoro.

“The addition of the EU and Spain further deepens Europe’s engagement with the corridor and expands the network of expertise, technology, financing, and business opportunities available to LEC projects,” the Department of Finance (DoF) said in a separate statement.

Spanish Ambassador to the Philippines Miguel Utray Delgado said Spain is looking to pursue projects in railways, modular infrastructure, aviation, shipbuilding, air-navigation management, and renewable-energy connectivity within the LEC.

“We stand ready to advance the corridor’s goals through technical assistance, private sector partnership and financing,” he said during the forum.

The DoF noted that the EU is aligning its €60-million Green Economy Programme and €20-million Digital Economy Package, the bloc’s initiatives to promote green investments and infrastructure, with its LEC priorities.

This is expected to help support renewable energy and energy efficiency, support green and circular development, secure digital connectivity, innovation, and skills development in the country, it added.

The Philippines is pitching around 38 investment-ready projects in the LEC across energy, water, transport, logistics, digital connectivity, and advanced manufacturing.

Around 18 of these projects carry a combined value of $20 billion, while the government has yet to determine the value of the remaining 20 projects.

According to a copy of the LEC dealbook, key LEC projects seeking private capital include the $6-billion Subic Clark Natural Gas Ecosystem and the $4.1-billion Sangley Point International Airport.

It is also eyeing private sector funding for the operations and maintenance (O&M) of the North South Commuter Railway Project (valued at $4 billion) and the Metro Manila Subway Public-Private Partnership O&M ($3 billion).

The Philippines and the US are pursuing partnerships in energy generation and transmission to attract investors to the corridor.

“We’re hoping that this would create an ecosystem where more investors will want to come and invest in the Philippines,” Heather Variava, US senior advisor for economic, energy, and business affairs ambassador, told reporters on the sidelines of the forum.

JOB GENERATION
Meanwhile, President Ferdinand R. Marcos, Jr. said the Philippines wants foreign-backed projects to generate jobs, technology transfers and local business opportunities in addition to bringing capital into the country.

Speaking at the forum, Mr. Marcos said the government’s aim in courting foreign investment for the corridor is to build local capabilities alongside infrastructure.

“We want investment that strengthens our economy and expands Filipino capability,” he said at the livestreamed event. “We want companies to establish long-term operations, transfer knowledge and technology, develop Filipino talent, and work with local suppliers.”

Mr. Marcos said he wants the Philippines to move beyond its existing role in semiconductor and electronics production toward design, research and engineering. He also cited shipbuilding, ship repair, marine engineering and critical minerals processing as areas where more value could be created locally.

“Our ambition goes beyond extracting and exporting raw resources,” he said. “We want more value to be created here through domestic processing, manufacturing, research, innovation, with strong environmental safeguards and clear benefits for affected communities.”

Edmund S. Tayao, president and chief executive officer of Political Economic Elemental Researchers and Strategists, said the Philippines could gain more from the LEC if foreign investors are required to develop local talent and work closely with domestic suppliers.

“Most fundamental would be requiring locators to rely on local talents,” he told BusinessWorld in a Facebook chat, adding that having Filipino management and technical personnel would allow workers to learn on the job and demonstrate the capabilities of Filipino professionals.

Mr. Tayao said the country’s infrastructure would also need upgrades to meet the requirements of technology-intensive investments, while local service providers should work closely with foreign companies operating in the Philippines.

At the same time, the Philippines is capable of hosting many of the LEC and Pax Silica investments being discussed,”Jose Enrique “Sonny” A. Africa, executive director of think tank IBON Foundation, said, noting that the country is already the ninth-largest exporter of semiconductors and a major assembly, testing and packaging (ATP) hub.

He said developing Filipino firms that can compete in ATP and move into higher-value segments is key to building an autonomous Philippine industrial base.

“Technology transfer doesn’t happen just because high-technology foreign corporations are present,” he said, adding that it “has to be negotiated, induced and even legally mandated” through Filipino equity and joint-venture requirements, local content and procurement targets, and technology-transfer agreements.

In a report dated Sept. 8, BofA Global Research kept its gross domestic product (GDP) forecasts for the Philippines at 2.5% in 2026 and 3.5% in 2027.

For 2026, this projection puts the Philippines on par with Thailand as the slowest-growing economies among the Association of Southeast Asian Nations (ASEAN) members included in the report. 

The two countries are expected to trail Vietnam (8.2%), Indonesia (5.3%), Malaysia (5.2%), and Singapore (5.1%) this year.

If BofA’s forecasts hold, the Philippines will miss its growth target for five straight years. Economic managers are targeting 3.5%-4.5% GDP growth this year and 5%-6% in 2027-2030.

“In second half of 2026, we see GDP growing 2.5% with gentle gains in consumption and the bottoming of investment spending,” BofA China & Asia Economist Helen Qiao and Asia Economist Ting Him Ho said.

“Government spending may help mitigate the effects of the oil shock by aiming subsidies at consumer and transport groups most affected,” they added.

The Philippine economic growth slumped to a post-pandemic low of 2.3% in the second quarter, bringing first-half growth to 2.6%. Economic managers said that last year’s flood control corruption scandal continued to weigh on public construction and investments, while the Middle East war-driven energy shocks dampened household spending.

“Domestic demand grew only 0.9% in 2Q26 with net trade providing the lift to overall GDP,” the BofA economists also noted. “Within domestic demand, private consumption slowed, investments shrunk, and government spending was unable to fully cushion.”

For its part, Oxford Economics said political risks may weigh on Asia’s growth prospects for next year.

“The political backdrop for 2027 is mixed, with risks less favorable in emerging Asia than in developed Asia,” Oxford Economics Head of Asia Economics Louise Loo said in a separate report on Thursday.

She added that the Philippines remains exposed to “procurement, guarantees, and Vice-President Sara Duterte’s impeachment proceedings.”

The Philippine economy still benefits from overseas Filipino workers’ remittances, which continue to fuel household incomes, Ms. Loo noted.

Meanwhile, BofA sees the BSP ending its tightening cycle earlier than its regional peers due to its sluggish growth.

This also came as it noted that the expected inflation peak later this year may be softer than anticipated.

“Slower growth and inflation peaking at a lower level may restrain the Bangko Sentral ng Pilipinas (BSP) from aggressive monetary tightening,” Ms. Qiao and Mr. Ho said.

Still, the BofA economists cautioned against inflation risks from renewed oil price spikes, rising rice prices, and the potential 12% minimum wage increase.

“Inflation may still peak in the fourth quarter of 2026 but at a rate lower than previously feared,” they said. “Nonetheless, inflation may still be vulnerable to resurgent oil prices, gradually increasing rice prices, and upward pressure that may come from a 12% increase in minimum daily wages.”

In August, headline inflation eased to a five-month low of 6.1% from 6.2% in July amid lower food and utility prices.

However, August was also the sixth month in a row that inflation breached the central bank’s 3% target, bringing the average headline figure to 5.2% to date.

For Ms. Qiao and Mr. Ho, the BSP’s third consecutive 25-basis-point (bp) hike last month may have marked the end of its tightening cycle.

At its Aug. 27 meeting, the Monetary Board tightened for a third straight meeting in a preemptive move to rein in inflation risks from the looming severe El Niño, wage hike, and volatile global oil prices. 

It raised its key policy rate by 25 bps to an over one-year high of 5%, bringing its cumulative hikes to 75 bps since it first tightened in April.

Following its August policy review, the BSP said inflation will likely peak in the fourth quarter this year as the “Super El Niño” may disrupt agricultural production, which could ripple to food prices. It likewise flagged risks from volatile oil prices and the now-suspended wage hike. 

The BSP sees headline inflation exceeding its target over the next three years at 6.1% this year, 5.4% in 2027, and 3.3% in 2028.

Meanwhile, Oxford Economics’ Ms. Loo said the BSP, alongside the Bank Indonesia, will likely return to policy easing next year.

“To be sure, regional central banks have delivered around 350 bps of cumulative tightening in 2026, and — with the probable exception of the Philippine and Indonesian central banks — are unlikely to unwind much of it next year,” she said. — Katherine K. Chan

WEAK FOUNDATIONAL SKILLS among Filipino students could undermine the competitiveness of the future workforce and force businesses to spend more on training future employees, an industry group said.

Management Association of the Philippines (MAP) President Donald Patrick L. Lim said the improvement in the mean scores of Filipino 15-year-olds in the 2025 Programme for International Student Assessment (PISA) is encouraging but should not be celebrated too early.

“If only 21% of our students meet minimum proficiency in math, and around a third in reading and science, then we have a serious future workforce problem,” he told BusinessWorld in a Viber message.

“These are the same students who will enter our companies in a few years. If the fundamentals are weak, businesses will end up spending more time retraining people, and that affects our competitiveness,” he added.

The Organisation for Economic Co-operation and Development’s (OECD) PISA 2025 study showed mean scores of Filipino students rose to their highest levels since the country joined the assessment in 2018.

However, most Filipino students still failed to meet the minimum proficiency benchmark across all three subjects.

Only 32% of Filipino students reached at least Level 2 proficiency in science, well below the 74% average across OECD countries. In mathematics, just 21% reached the minimum proficiency level, compared with 65% across the OECD. In reading, 31% attained at least Level 2 proficiency, versus the OECD average of 69%.

PHINMA Education Country Head for Philippines Christopher “Happy” A. Tan said the latest PISA results showed that the learning crisis remains unresolved, with Philippine scores still well below OECD averages.

“Being significantly below the OECD average tells us the learning crisis in the Philippines hasn’t been solved, only slightly eased. This also means that the country is moving in the right direction but from a very low starting point,” Mr. Tan told BusinessWorld in an e-mail.

He said the government should prioritize early childhood development, nutrition, foundational literacy and numeracy, as well as early assessment, targeted remediation and teacher and tutor capacity.

“We need to know not only how many students participate in remediation, but how many actually move to the right proficiency levels,” he added.

Mr. Lim said the results point to the need to strengthen basic skills such as reading comprehension, mathematics, science, communication, and problem-solving.

“We also need much stronger industry-academe collaboration. For MAP, employability should be a key outcome of education, and industry should play a bigger role as a co-educator,” he added.

American Chamber of Commerce of the Philippines (AmCham) Human Capital and Resources Committee Chair Ernie Cecilia said the results suggest that government interventions are moving in the right direction, but Filipino students remain behind their OECD peers.

“There is much work to be done in reforming the policies, standards, and practices in education and training in the Philippines in order for the Filipino workforce to be more globally competitive,” he told BusinessWorld in a Viber message.

He called for an “all-of-government and all-of-society approach” to education reform, including greater private sector engagement and benchmarking against other countries.

PISA ‘NOT THE ONLY MEASURE’
Mr. Cecilia said PISA scores should not be the sole measure of the competitiveness of Filipino workers.

“Tests are generally good indicators of performance, but there is other proof,” he said, pointing to more than 12 million Filipino professionals working overseas and Filipino talent employed by multinational companies.

“In the Philippines, many large multinationals depend on Filipino talent to manage and run their businesses. This is also a testament to the competitiveness of the Filipino talent that is not shown by assessments of human potential, like the PISA,” he added.

Benjamin B. Velasco, an assistant professor at the University of the Philippines Diliman School of Labor and Industrial Relations, said PISA has faced criticism as a measure of educational attainment.

“PISA as an institution for educational assessment must be critically examined. Yet even without PISA, it is fair to say that there is consensus that the education system in the country does need reform and education outcomes of students has to be improved,” Mr. Velasco told BusinessWorld in a Viber message.

“Filipino workers do not really compete with the labor force in other Southeast Asian countries as the regional labor market is very limited.

Still, Mr. Velasco said better-educated and highly skilled graduates would benefit the domestic economy because education and skills generally correlate with productivity.

The Philippines ranked last in science and sixth in mathematics and reading among eight Southeast Asian countries included in the PISA 2025.

Mr. Velasco said education and skills are only some of the factors considered by employers and global companies when deciding to hire or invest in the Philippines.

“Skill and education, including basic literacy and numeracy, of the labor force is just one factor among a variety of considerations by employers in hiring and also by global corporations in investing in the Philippines,” Mr. Velasco said.

Despite this, Mr. Velasco said educating the next generation remains both an economic and human development priority.

He also pointed to systemic challenges hounding the education sector, citing the lack of teacher representation in the Second Congressional Commission on Education 2.

“Putting resources and attention to education will definitely solve a lot of problems from lack of books to gadgets and classrooms. But even with a larger budget, if corruption is not rooted out, the added funds do not lead to intended outcomes,” he said.

“Reforms cannot be confined strictly with the education system but are bound up with other systemic problems,” he added.

Foreign direct investment (FDI) net inflows to the Philippines jumped by 35% year on year in June, even as they fell to a two-month low, central bank data showed.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) released on Thursday showed FDI net inflows climbed by 35.1% to $447 million in June from revised $331 million in the same month last year.

This was the second month in a row that FDI net inflows posted annual growth.

Month on month, it declined by 29.9% from the revised $638-million inflows in May.

June saw the lowest FDI net inflows in two months or since the $264 billion in April.

In the first half of the year, FDI net inflows stood at $3.382 billion, dropping by 17.8% from the revised $4.116 billion a year ago.

“Foreign direct investment net inflows fell in the first half of 2026 compared to the same period last year,” the central bank said in a statement.

“The decline was driven by the decreases in both foreign net investments in debt instruments, which indicated lower intercompany borrowings, and reinvestment of earnings,” it added.

FDIs refer to cross-border investments in which a nonresident investor holds at least 10% equity in a resident enterprise. These may take the form of equity capital, reinvestment of earnings and intercompany borrowings.

For 2026, the central bank sees FDI net inflows sliding to $7 billion from the estimated $7.8 billion last year.

THE GOVERNMENT may need to revise its long-term energy and water development plans to account for the growing resource needs of artificial intelligence (AI) data centers, the Department of Economy, Planning, and Development (DEPDev) said.

DEPDev Undersecretary Rosemarie G. Edillon said the government must account for the significant energy and water requirements of AI data centers as it ramps up the use of AI in monitoring and evaluation (M&E).

Ms. Edillon said the issue will be addressed in the AI Governance Framework that DEPDev plans to present to President Ferdinand R. Marcos, Jr. within the month.

“It’s very important that we safeguard not just the sovereignty but also the long-term sustainability of the Philippine economy and society,” she told a panel at the 13^th M&E Network Forum on Wednesday.

“And in terms of the strategies that we have identified in the governance framework, we have actually included the part that we should now be incorporating the AI infrastructure and actually all these emerging technologies,” she added.

Ms. Edillon said the government’s long-term strategy includes factoring in the infrastructure needs of AI and other emerging technologies into its energy and water development plans.

“Going forward, it’s really about revising our Philippine Energy Development Plan and also our Water Resource Development Plan,” she added.

The DEPDev official said AI infrastructure, which includes data centers, is among the projects being incentivized by the government through the Strategic Investment Priority Plan.

“With respect to the data centers, they are also provided with incentives, provided that they have their own power source and that a certain percentage, I forgot the amount, but a certain percentage has to be through renewable energy. So, right now, that is our framework,” she added.

Meanwhile, Department of Information and Communications Technology Assistant Secretary Maria Victoria C. Castro said the agency is exploring new energy sources for data centers, including renewable energy as a backup source.

“There are emerging technologies that are now underway that were not considered before… Something that we are incorporating in our plans because we recognize that we need to watch out for the sustainable development part,” she said.

Ms. Castro said the department is also looking at nuclear energy and other emerging technologies as potential sources of power for digital infrastructure.

“Hopefully, the nuclear technology that is forthcoming and that we will be exploring can be a possible source also,” she said.

Department of Science and Technology (DoST) Director and Chief Information Officer Cesar R. Pedraza said the country already has the regulatory framework in place to utilize nuclear energy.

Signed into law last year, Republic Act No. 12305, or the Philippine National Nuclear Energy Safety Act, provides a framework for the peaceful, safe and secure use of nuclear energy and establishes the Philippine Atomic Energy Regulatory Authority.

“We already have the regulatory capability, and it’s now being built as an agency, which is a prerequisite to implementing a full atomic power generation facility,” Mr. Pedraza said.

“The trajectory is there, and we are looking to implement the use of atomic energy, and the DoST has provided its stand for the safe use of atomic energy,” he added.

Mr. Pedraza said that new technology for cooling systems would help address the large energy needs of sustaining a data center in a tropical country like the Philippines.

“As of last month, a breakthrough technology, particularly done by Japan, has established room-temperature AI machinery, meaning the advent of newer and newer technologies may make less of a problem when it comes to power in the near future,” he added.

Economy Secretary Arsenio M. Balisacan said that AI use has changed how information is collected, processed, analyzed and communicated.

“For M&E, it can help the government monitor programs more frequently, process field information more quickly, recognize patterns across large and complex data sets, and identify implementation concerns earlier,” he said in his keynote speech.

“Used well, these capabilities can shorten the distance between evidence and action. An early warning can prompt a timely course correction. Information drawn from multiple sources can help decision makers see where implementation is lagging and why,” he added.

Mr. Balisacan said the use of AI can also help address fragmented reporting, uneven data quality, manual processing, and delays in delivering information seen in many government M&E systems.

However, he warned that AI-supported systems can reproduce errors and biases, highlighting the need for a meaningful human review.

“We must assess whether AI-supported systems achieve their intended outcomes, work under actual operating conditions, perform fairly across groups and locations, and deliver benefits that justify their costs and risks,” he added.

United Nations Development Program Resident Representative in the Philippines Christophe Bahuet stressed that although AI can be used to strengthen national evaluation systems, better connect planning and budgeting, and help hasten government response, the government should consider the risks as well.

“The first one is that AI is not a panacea. AI cannot compensate for incomplete or wrong data, fragmented systems, or even weak institutional capacity,” he said in his keynote speech.

“The second reservation is that… faster analysis, predictive tools, or even automated dashboards do not by themselves turn evidence into action… Evidence still needs to be interpreted by officials. They need to be recognized by institutions and reflected in the process through which policies and priorities are set,” he added.

ELECTRICITY CONSUMERS in the Visayas and Mindanao could face higher bills this month after spot market prices in both grids surged to record highs of nearly P20 per kilowatt-hour (kWh).

The Visayas and Mindanao grids remain under strain as multiple power plant outages tightened supply and triggered red and yellow alerts.

Data from the Independent Electricity Market Operator of the Philippines (IEMOP) showed the system-wide average price in the Wholesale Electricity Spot Market (WESM) increased by 11.8% to P9.29 per kWh in August from P8.31 per kWh in the previous month.

The market operator attributed the increase in spot market prices to supply constraints caused by plant outages in the Visayas and Mindanao.

Mindanao posted the highest WESM rate, surging by 88.2% to P19.56 per kWh in August from P10.39 per kWh in July as power supply fell by 7.3% to 3,045 megawatts (MW), while demand rose by 5% to 2,195 MW.

Spot prices in the Visayas also climbed to a record P18.59 per kWh in August, up 64.9% from P11.29 per kWh in the prior month. Demand inched up by 0.7% to 2,094 MW, while supply declined by 2.6% to 2,201 MW.

In contrast, Luzon’s WESM rate declined by 34.2% to P4.80 per kWh in August from P7.30 per kWh in July, as the supply margin widened. Supply slid by 3.7% to 14,493 MW, while demand fell by 10.4% to 9,650 MW.

The latest adjustments in the WESM will be reflected in consumers’ September electricity bills.

“Since we started the market, these are the highest spot prices we’ve seen in the Visayas, particularly in Mindanao,” Isidro E. Cacho, Jr., IEMOP’s vice-president for trading operations, said at a media briefing on Wednesday.

The WESM began commercial operations in Luzon in 2006. The Visayas and Mindanao grids were subsequently integrated into the WESM in 2010 and 2023, respectively.

It serves as a market where power firms can buy electricity when their long-term supply contracts fall short of meeting customer demand.

Mr. Cacho said the grids relied on more expensive power plants to fill the supply shortfall caused by offline coal-fired power facilities.

Power plant outages continue to strain the Visayas and Mindanao grids, triggering frequent yellow and red alerts. Since the start of the year, the Visayas has recorded 98 yellow and 35 red alerts, while Mindanao has logged 14 yellow and five red alerts.

“The combined impact of major generation outages and increased reliance on oil-based and battery generation contributed to the elevated market prices observed during the billing period,” Rica O. Cagnayo, trading operations for market simulation and analysis staff at IEMOP, said.

Data from IEMOP showed that coal’s share in the WESM generation mix declined to 56% from 59.1%, while the share of oil-based generation nearly doubled to 2.4% from 1.4%.

Although the secondary price cap (SPC) was triggered, it was only applied during limited intervals as it considers prices across Luzon, the Visayas, and Mindanao. Lower prices in Luzon pulled the average below the roughly P12-per-kWh threshold needed to activate the cap.

SPC is a mechanism designed to limit the price spikes in the WESM. Under the rules, the SPC is set at P7.423 per kWh and is triggered when the 72-hour average electricity price exceeds P12.413 per kWh.

“One of the things we’re currently studying is the application of the SPC on a regional level instead of evaluating it on a system-wide level because of the significant disparity in prices,” Mr. Cacho said.

THE PHILIPPINE BANKING sector’s nonperforming loan (NPL) ratio worsened in July as elevated inflation and higher borrowing costs drove up bad debts, preliminary Bangko Sentral ng Pilipinas (BSP) data showed.

Banks’ gross NPL ratio climbed to 3.35% in July from 3.29% a month earlier but eased from 3.4% in the same month last year.

This was the highest bad loan ratio in two months or since 3.44% in May.

In July, banks reported P585.081 billion in nonperforming loans, 9.27% higher than P535.448 billion recorded a year ago.

Month on month, soured loans inched up by 0.02% from P584.971 billion.

Loans are considered nonperforming once they are unpaid for at least 90 days after the due date. These are deemed as risk assets since borrowers are unlikely to pay.

Analysts said bad loans increased as rising consumer prices and interest rates strained borrowers’ repayment capacity and dampened banks’ lending expansion.

“The increase in nonperforming loans in July reflects pockets of financial stress among some households and businesses after an extended period of high borrowing costs and elevated inflation,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said in a Viber message.

“While the economy continues to grow, not all sectors and borrowers are recovering at the same pace, which is affecting repayment capacity in certain segments,” he added.

Since the Middle East war broke out, inflation has sizzled above the central bank’s 3% target, squeezing consumers’ purchasing power to record lows.

In July, inflation stood at 6.2%, marking the fifth straight month that the headline print exceeded the BSP’s target. This brought the country’s seven-month inflation average to 5%.

Inflationary pressures have also prompted the BSP to tighten benchmark borrowing costs, delivering a total of 50 basis points (bps) in hikes to bring the policy rate to 4.75% as of July. It raised the key interest rate by another 25 bps in August to an over one-year high of 5%.

“At the same time, as bank lending expands, a modest rise in NPLs is a normal part of the credit cycle,” Mr. Ravelas added.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said slower loan growth amid the Middle East conflict also pushed up the NPL ratio, as bad loans increased faster than banks’ overall loan portfolios.

“Relatively slower loan growth since the war on Iran/Middle East started reflects cautiousness by lenders in managing credit risks, amid a pickup on NPLs due to reduced ability to pay by some borrowers given higher prices and slower economic growth,” he added in a Viber message.

Separate BSP data showed big banks’ outstanding loans grew by an annual 10.4% to P14.98 trillion at end-July from P13.574 trillion.

The total loan book of Philippine banks stood at P17.448 trillion in July, slipping by 1.88% from P17.781 trillion in the prior month. However, it went up by 10.63% from the P15.771-trillion portfolio it had in July 2025.

Meanwhile, past due loans fell by 1.94% to P738.766 billion in July from P753.385 billion in June. On an annual basis, it went up by 7.44% from P687.588 billion.

Past due loans accounted for 4.23% of the industry’s total loan portfolio in July, down from 4.24% in June and 4.36% a year earlier.

Restructured loans, on the other hand, rose by 1.81% to P341.954 billion in July from P337.96 billion in the previous month. It likewise went up by 3.73% from P329.643 billion a year ago.

This brought the restructured loan ratio to 1.96%, climbing from 1.9% in June but easing from 2.09% last year.

BSP data also showed banks’ loan loss reserves edged down by 0.06% to P540.895 billion in July from P541.238 billion in June but grew by 5.63% from P512.061 billion a year earlier.

Loan loss reserves accounted for 3.1% of the system’s total loan portfolio as of end-July, a tad higher than 3.04% in June but lower than 3.25% in the prior year.

Meanwhile, banks’ NPL coverage ratio, which gauges the allowance for potential losses due to bad loans, slipped to 92.45% in July from 92.52% in the previous month and 95.63% a year ago.

Still, Mr. Ravelas noted that the uptick does not indicate a systemic problem as banks continue to hold manageable NPL ratios.

“The good news is that this does not point to a systemic banking issue,” he said. “Philippine banks remain well-capitalized and adequately provisioned, while the NPL ratio remains manageable by historical standards.”

However, Mr. Ricafort said persistent inflation could drive demand for loans, particularly from lower income households, which could also lead to more NPLs.

He also warned that the upcoming “Super El Niño” could drive bad loans higher as weather disruptions take a toll on the agriculture sector and the overall economy.

The BSP earlier said that inflation may peak by the fourth quarter as strong El Niño conditions push food prices higher, with the full-year print likely to end at 6.1%.

Mr. Ravelas said better economic and financing conditions may boost borrowers’ repayment capacity in the coming months.

“Moving forward, the key will be continued economic growth, easing inflation, lower interest rates, and prudent credit risk management to help improve borrowers’ debt-servicing capacity,” he said.

The list was transmitted by the Palace to the Cultural Center of the Philippines which administers the award, on Sept. 2. The official proclamation has yet to be released. President Ferdinand Marcos, Jr. issued Proclamation No. 1414 s. 2026 naming the 10 new National Artists.

The artists are: Rafael “Nonoy” Froilan for Dance; Maria Beatriz “Patis” Tesoro for Design; Nicanor Tiongson for Literature; Alfredo Buenaventura for Music; Imelda Cajipe Endaya for Visual Arts; Nunelucio Alvarado for Visual Arts; and posthumously, Gabriel Formoso for Architecture, Armando “Bing” Lao for Film and Broadcast Arts, Gregorio Brillantes for Literature, and Teodoro Hilado for Theater.

The date of the awarding ceremonies is yet to be announced.

Dancer and choreographer Nonoy Froilan, often referred to as the “King of Dance,” helmed and performed in many productions with Ballet Philippines.

Fashion designer Patis Tesoro, known as the “Grande Dame of Philippine fashion,” has been instrumental in the preservation of the art of piña weaving and the promotion of Filipiniana through her designs.

Composer Alfredo Buenaventura is recognized for his operas, symphonic poems, vocal works, and chamber music. A composer and conductor, he was the Dean of the CEU Conservatory of Music for 30 years and was one of the founders of the Pambansang Samahan ng mga Banda sa Pinas.

Writer and academic Nicanor Tiongson has played a huge part in cultural studies, having authored books on Philippine cinema and art, and plays and dance librettos anchored in Philippine history.

Visual artist Imelda Cajipe Endaya — the first woman National Artist for Visual Arts — has created prints, social realist paintings, mixed media works, and installation art which advocate for women and reference Philippine history and culture.

Meanwhile, visual artist Nunelucio Alvarado from the Visayas has been recognized for his progressive, socially conscious artworks. Among his many accolades was the CCP’s 13 Artist Award.

Architect Gabriel Formoso is known for designing structures such as the Bangko Sentral ng Pilipinas and Lepanto Building in Manila, and The Peninsula Manila and Asian Institute of Management in Makati.

Screenwriter Bing Lao pioneered the Found Story school of filmmaking, which aims to capture the essence of Filipino reality by drawing inspiration from real-life objects and phenomena. Among his many scripts were those of Brillante Mendoza’s Kinatay, Jeffrey Jeturian’s Kubrador and Pila Balde, and Chito S. Roño’s Suntok sa Buwan.

Fiction writer, author, and essayist Gregorio Brillantes published numerous short stories which tackle themes of estrangement from family, society, and self.

Teodoro Hilado, considered the father of lighting design in Philippine theater, was technical director of the Cultural Center of the Philippines and theater director of the Folk Arts Theater.

The National Artist Award is jointly administered by the National Commission for Culture and the Arts (NCCA) and the Cultural Center of the Philippines (CCP) by virtue of Proclamation No. 1390.

In 1972, the Order of National Artist was established under Proclamation No. 1001. It is the highest national recognition conferred upon Filipinos who have made distinct contributions to the development of the Philippine arts and culture.

The National Artists receive a gold-plated medallion minted by the Bangko Sentral ng Pilipinas and a citation.

The conferment to living National Artists also comes with privileges including a minimum cash award of P200,000 (net of taxes); a minimum lifetime personal monthly stipend of P50,000; medical and hospitalization benefits not exceeding P750,000 annually; coverage with a life insurance policy by the Government Service Insurance System and or/ private insurance companies; and a state funeral. Meanwhile, posthumous awardees are given a one-time minimum cash award of P150,000 (net of taxes), payable to the legal heir/s. — Brontë H. Lacsamana

Rainfall in Zambales may range between 100 to 200 millimeters (mm), potentially causing numerous flooding events and landslides, the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) said in a 5:00 a.m. advisory.

Heavy downpours, or rainfall between 50 to 100 mm, are expected in 18 areas, including Pangasinan, La Union, Benguet, Isabela, Nueva Vizcaya, Quirino, Aurora, Bataan, Tarlac, Pampanga, and Nueva Ecija.

It is likewise expected in Bulacan, Metro Manila, Rizal, Cavite, Batangas, Oriental Mindoro, and Occidental Mindoro.

PAGASA warned of localized flooding and landslides, especially in the same high-risk areas.

The southwest monsoon will also cause thunderstorms in Visayas, the rest of Luzon, Zamboanga Peninsula, and Northern Mindanao, PAGASA said.

Generally fairer weather is expected in large parts of Mindanao, with a chance of localized thunderstorms.

PAGASA is not monitoring any tropical cyclones, but a low-pressure area is expected to develop in the next few days, which may weaken the effects of the southwest monsoon by the weekend. — Edg Adrian A. Eva

Banks’ gross NPL ratio rose to 3.35% in July from 3.29% a month earlier, but eased from 3.4% in the same month last year.

This was the highest bad loan ratio in two months or since 3.44% in May.

Banks saw P585.081 billion in nonperforming loans at end-July, 9.27% higher than the P535.448 billion recorded a year ago. Month on month, soured loans inched up by 0.02% from P584.971 billion as of June.

Loans are considered nonperforming once they are unpaid for at least 90 days after the due date. These are deemed as risk assets since borrowers are unlikely to pay.

The total loan book of Philippine banks stood at P17.448 trillion as of July, down by 1.88% from P17.781 trillion in the previous month. However, it went up by 10.63% from the P15.771-trillion portfolio it had in July 2025.

BSP data also showed banks’ loan loss reserves edged down by 0.06% to P540.895 billion from P541.238 billion in June but grew by 5.63% from P512.061 billion a year earlier.

Loan loss reserves accounted for 3.1% of the system’s total loan portfolio as of end-July, higher than the 3.04% in June but lower than 3.25% the prior year.

Banks’ NPL coverage ratio, which gauges the allowance for potential losses due to bad loans, slipped to 92.45% in July from 92.52% the previous month. This was also down from 95.63% a year ago. — Katherine K. Chan

PHILIPPINE BUSINESS leaders must treat economic headwinds as an operating reality rather than a temporary disruption and adopt strategies that can withstand structural shifts, top executives said.

“For years, the objective was optimization. Today, the objective is adaptability,” Management Association of the Philippines (MAP) President Donald Patrick L. Lim said during the 24^th MAP International CEO Conference on Tuesday.

Alma Rita R. Jimenez, chairman of the MAP CEO Conference Committee, said businesses have no choice but to operate in the age of “flux,” driven by major shifts across industries.

“The landscape may change or evolve, but the common truth remains: leaders are operating in a world characterized by continuous changes, overlapping disruptions, and increasing complexities,” said Ms. Jimenez, who is also the chief executive officer (CEO) of Health Solutions Corp.

About 83% of CEOs and business leaders are optimistic about their industry’s prospects over the next year “amid an unpredictable business environment,” according to a survey by Isla Lipana & Co./PwC Philippines in partnership with MAP.

Philippine CEOs said their top concerns in the next few months include regulatory uncertainty (93%), climate change (93%), geopolitical conflict (92%), and technology disruption (85%).

Rising energy costs, slower economic growth, and the Philippines’ transition toward upper-middle income status are affecting corporate strategies, SM Investments Corp. President and CEO Frederic C. DyBuncio said.

“These are not just economic indicators. They shape the decisions we make in our boardrooms, where we invest, how we manage risk, and how we prepare for what comes next,” he said in a video message.

Mr. DyBuncio said that today’s challenges require a focus on long-term investments, urging businesses to look outside traditional growth hubs such as Metro Manila.

For First Philippine Holdings Corp. President Francis Giles B. Puno, companies should start building resilience long before disruptions occur.

“Perhaps we have misunderstood inflection points. We think of them as moments that happen to us — a geopolitical shift, a changing market, but perhaps the real inflection point is the moment leaders choose to act before the world leaves them with no choices,” he said in a video message. 

BusinessWorld President and CEO Miguel G. Belmonte said economic disruptions are pushing business leaders to adapt to structural shifts while pursuing sustainable growth, transformation and long-term value creation.

“Flux is not a temporary disruption to be managed, it is the environment in which we operate,” he told the forum.

As the region faces geopolitical headwinds from US-China tensions, ASEAN+3 Macroeconomic Research Office Senior Economist Catharine Kho said the Philippines must diversify its economic ties to build resilience against external shocks.

“The best way to handle that is to build on our resilience [and] ensure that we’re sufficiently diversified, such that if there’s any shock coming from any derailment of the relationship between the bigger powers, we’re not affected that significantly,” she told the forum.

Ms. Kho also said that continued investments in human capital and infrastructure development would help economies weather any disruption.

Global uncertainties are also heightening cybersecurity risks, especially telecommunications firms, Singapura Finance Ltd. Independent Director Lionel Yeo said.

“It’s an imperative because we are living in such an insecure world now. We know from developments in the world that we are up against some very serious threat actors,” he told the forum.

BDO Capital & Investment Corp. President Eduardo V. Francisco said high interest rates and the weaker peso continue to affect investor hesitancy.

“CEOs are still on a wait-and-see, and it’s hard to make investments because we’re still expecting interest rates to go up, and the peso has depreciated,” he told BusinessWorld on the sidelines of the forum.

“I’m still optimistic because, I think, well, except for the war, but other than that, we were already managing inflation, it was on the way down.”

The Monetary Board on Aug. 27 hiked its benchmark interest rate by 25 basis points to 5%, as a preemptive move needed to address inflation risks from the super El Niño and wage hikes.

Mr. Francisco also noted that sustained anti-graft measures, as well as the recent arrest of former Speaker Ferdinand Martin G. Romualdez for plunder, would help improve business sentiment.

“It’s a good sign to the foreign investors that this government is serious in fighting corruption,” he said.

THE PHILIPPINES saw improved scores for reading, mathematics and science in the latest Programme for International Student Assessment (PISA), but most 15-year-old Filipino students still had below baseline proficiency in all three subjects.

The Organisation for Economic Co-operation and Development’s (OECD) PISA 2025 study showed mean scores of 15-year-old Filipino students rose to 373 in science, 371 in mathematics, and 367 in reading.

Compared with the 2022 study, Filipino students’ mean scores increased by 17 points in science, 16 points in mathematics, and 20 points in reading.

Education Secretary Juan Edgardo “Sonny” M. Angara said these were the Philippines’ highest scores since joining PISA in 2018.

“This is a significant achievement for our learners and for the entire Philippine education system. But more than the numbers, we are seeing evidence that our learners are capable of making real and meaningful progress,” he said in a statement.

Still, the Philippines remained below the OECD average scores of 482 in science, 463 in mathematics and 461 in reading.

The results put the Philippines at 76^th out of 90 participating countries and economies in science, 73^rd out of 89 in mathematics and 71^st out of 89 in reading.

OECD Directorate for Education and Skills Director Andreas Schleicher said the gains reflected broader efforts to strengthen the education system.

“I do think it is an example of a country that got its act together, put education first, and achieved remarkable improvements,” Mr. Schleicher said in a press conference on Tuesday.

“They come down to an education system that has given education its priority, that has focused on building strong foundations, that has invested a lot in helping struggling students catch up, including after the pandemic,” he added.

PISA is an OECD-led international assessment that measures the knowledge, skills and attitudes of 15-year-old students, including how well they can solve complex problems, think critically and communicate effectively.

More than 760,000 students from 91 countries and economies participated in the PISA in 2025.

In the Philippines, 8,072 students from 208 schools completed the assessment, representing about 1.75 million 15-year-olds, or an estimated 82% of the country’s 15-year-old population.

However, the improvement in the Philippines’ scores came from a low base. Only 32% of Filipino students reached at least Level 2 proficiency in science, compared with 74% across OECD countries.

In mathematics, 21% reached the baseline level, against 65%, while 31% attained at least Level 2 in reading, compared with 69%.

Among eight Southeast Asian peers, the Philippines remained a laggard as it ranked last in science, sixth in mathematics and sixth in reading.

In science, Singapore had the highest score with 560, followed by Vietnam (457), Brunei Darussalam (439), Thailand (432), Malaysia (419), Indonesia (389), Cambodia (382) and the Philippines.

Singapore again dominated mathematics with a score of 563, followed by Vietnam (443), Brunei Darussalam (435), Thailand (407) and Malaysia (397). The Philippines was only ahead of Cambodia (366) and Indonesia (364).

In reading, Singapore posted the highest score with 535, followed by Brunei Darussalam (426), Malaysia (393), Vietnam (392) and Thailand (392). The Philippines was ahead of Indonesia (365) and Cambodia (347).

Mr. Schleicher said the Philippines could learn from higher-performing education systems in East Asia, particularly in setting high expectations for all students and directing resources toward those who need them most.

“The students from the most disadvantaged backgrounds show very similar success rates… They set very high expectations for every student. There’s no compromise,” he said.

Mr. Schleicher said East Asian education systems were also effective at aligning resources with needs, including attracting highly talented teachers to more challenging classrooms and placing strong school leaders in the toughest schools.

“They have rigorous and focused instruction environments. This is something the Philippines is also currently building, but I think the environment for education, the capacity to make teaching one of the most attractive careers, I think there are some very important lessons a country like the Philippines can learn by looking East to their most advanced education systems,” he said.

Chinese jurisdictions of Beijing, Shanghai, Jiangsu and Zhejiang (BSJZ) were the highest performers across the three core subjects with 597 in science, 612 in mathematics and 527 in reading.

China (BSJZ) and Singapore were the highest performers across the three subjects along with Estonia, Japan, Korea, Macao (China), Chinese Taipei and the United Kingdom.

FOCUS ON STUDENTS
Meanwhile, Mr. Angara said the gains in PISA scores should encourage the Department of Education (DepEd) to build on the improvements while continuing to focus on students who are struggling.

“We should be proud of how far our learners and teachers have come, but we should be even more determined about how much farther we can go,” he said.

According to the DepEd, the OECD’s 10-year trend analysis showed the Philippines as the fastest-improving country in reading performance.

“The OECD likewise identified the Philippines among countries with notable improvement in mathematics. In science, the Philippines recorded a positive long-term trend despite an overall decline in science performance globally,” the department said.

However, Mr. Angara said more work remained, particularly in addressing inequities and sustaining reforms to improve learning outcomes and support teachers and schools.

The PISA report had showed the gains did not translate into narrower achievement gaps across all three subjects. The OECD said the gap between the highest- and lowest-performing Filipino students widened in science between 2022 and 2025, while changes were not statistically significant in mathematics and reading.

THE PHILIPPINES’ unemployment rate jumped to the highest in four years in July, as the labor force expanded faster than employment, leaving 3.14 million Filipinos without jobs.

The unemployment rate rose for a third straight month to 6.01% in July, from 5.3% a year earlier and 4.9% in June, the Philippine Statistics Authority (PSA) said on Tuesday.

The ranks of the unemployed rose by 550,000 in July from 2.59 million in the same month a year ago.

“We have not seen this in quite some time,” National Statistician and Civil Registrar General Claire Dennis S. Mapa told reporters on Tuesday, noting that the last time the jobless rate breached the 6% level was in January and February 2022 when it hit 6.4% as the economy recovered from the pandemic.

The July unemployment rate was the highest since the 6.03% in June 2022.

For the January-to-July period, the jobless rate averaged 5.2%.

Mr. Mapa attributed the uptick mainly to a swelling labor force, particularly among the youth.

Around 3.7 million additional people joined the labor force in July, mostly young Filipinos transitioning from school to work, resulting in a lower employment rate of 94% from 94.7% a year earlier.

About 1.33 million of the new entrants were aged 15 to 24, many of them fresh from school and entering the job market for the first time.

“Not all of them were employed,” Mr. Mapa said, adding that this was especially evident in the National Capital Region (NCR), where 731,000 young people joined the labor force in July but only 532,000 were absorbed, leaving roughly 199,000 unemployed.

Mr. Mapa said the NCR’s unemployment rate has historically tracked close to the national figure, so the July reading was more likely tied to weather disruptions and the seasonal influx of new graduates.

PSA data showed Metro Manila had the highest unemployment rate among regions at 8.2%, followed by the Bicol Region at 8%, Ilocos Region at 7% and Central Visayas at 6.3%.

“We need to closely monitor where employment opportunities are growing and where gaps remain so that our employment programs and services can respond to the needs of workers and jobseekers,” Labor Secretary Francis N. Tolentino said in a separate statement.

Department of Economy, Planning, and Development in a statement said the government will strengthen support for workers and businesses following the mixed labor market results, while sustaining its push to generate more quality jobs.

“These figures show both progress and challenge. More Filipinos are participating in the labor market, which means that we need to intensify efforts to attract investments, especially those that create quality jobs,” Economy Secretary Arsenio M. Balisacan said in the statement. “The key is to continuously improve the ease of doing business in the country.”

Meanwhile, job quality improved as the underemployment rate eased to 12.9% in July from 14.8% a year earlier. However, it rose from the 12.1% in June.

About 6.33 million employed Filipinos wanted additional hours of work, another job or a job with longer hours.

For the first seven months, the underemployment rate averaged 12.8%.

The labor force participation rate in July rose to 63.6% from 60.7% a year earlier. This translated to a labor force of 52.36 million in July, significantly higher than the 48.64 million a year ago.

Among Filipinos aged 15 to 24, the labor force participation rate increased to 33.7% from 29.5% a year earlier, while the employment rate slipped to 81.4% from 81.9%. The share of young people not in education, employment or training fell to 15.2% from 15.9%.

SIGNS OF WEAKNESS
Chinabank Research said the latest jobs data is showing “clearer signs of weakness, with unemployment nearing pandemic-era levels.”

“The sharp deterioration in Metro Manila could have implications on upcoming wage-board decisions — lower minimum wage increases are warranted to minimize the risk of layoffs amid a challenging business environment,” it said in a note.

While courts have temporarily halted P85 wage hike in Metro Manila, Chinabank said the elevated unemployment figures could be an important consideration for wage boards’ decisions on wage hike petitions across regions.

“While the Bangko Sentral ng Pilipinas (BSP) has flagged minimum wage increases as an upside risk to inflation, we think the softer labor market will likely result in more modest succeeding wage hikes, reducing their potential inflationary impact and providing some offset to the BSP’s inflation concern for 2027. This reinforces our view that the BSP’s hiking cycle has ended,” Chinabank said.

Jose Ramon G. Albert, senior research fellow at the Philippine Institute for Development Studies, told BusinessWorld that the rising unemployment rate was less a surprise than a matter of arithmetic, as the labor force simply grew faster than the economy could absorb new entrants.

“We are adding work at the lower end of the productivity ladder and losing it in the segments that pay better and offer more stable arrangements,” Mr. Albert said via Facebook Messenger chat.

He noted that the largest annual employment gains were concentrated in agriculture and accommodation and food service activities, even as manufacturing and information and communication sectors reduced jobs.

PSA data showed manufacturing posted the biggest annual drop in employment, shedding 134,000 jobs in July. The information and communication sector cut 41,000 jobs, while professional, scientific and technical activities reduced jobs by 28,000.

On the other hand, agriculture and forestry posted the largest annual increase in jobs, adding 1.03 million in July. Accommodation and food service activities added 729,000, while wholesale and retail trade added 424,000.

Mr. Albert also noted that average weekly hours worked by an employee fell to 40.6 hours in July from 42 hours a year ago, which was a telling gauge of how much work the economy generated.

“Multiplying headcount by average hours, total labor input grew by roughly three percent even as the number of employed grew by close to seven percent,” he said, adding that the gap between the two figures better reflects the quality of jobs being created.

Mr. Albert also pointed to the NCR’s 8.2% unemployment rate, as a sign that the formal urban labor market was not generating enough entry-level positions for new graduates.

“It’s always bad news when unemployment increases as families will have a harder time making ends meet,” Benjamin B. Velasco, assistant professor at the University of the Philippines Diliman School of Labor and Industrial Relations said.

Mr. Velasco said the fallout from the Middle East conflict rippled through the Philippine economy and economies elsewhere, disrupting global supply chains and weighing on the labor market.

“Habagat and El Niño will impact agriculture and so it will add to loss of jobs and livelihood. On the other hand, manufacturing and services may add employment as production usually picks up during the ber months,” Mr. Velasco said.

Chinabank said disruptions due to bad weather and flooding likely weighed on the jobs market in August.

“With monsoon rains battering Luzon for over a month now, we expect softer labor data in August, particularly in weather-sensitive sectors like agriculture and construction as well as brick-and-mortar retail businesses that may be affected by reduced consumer mobility,” it said.

“Upon entry into the office, the first mandate that I had carried out was to change the tone of voice of the Department of Tourism with regard to how it communicates to the public,” DoT Assistant Secretary for Branding and Marketing Communications Armand Lorenze “Ren” Sapitan told lawmakers in a House Committee on Appropriations budget hearing.

“We didn’t have to change the members of branding and the marketing team,” he added. “The only thing that we adopted was a change in direction.”

Mr. Sapitan noted that the agency will shift how it approaches the Love the Philippines campaign instead of replacing it through its Discover More to Love program.

“We would not change this campaign because we recognize that the administration only has two years left,” he said. “What we are changing is how we approach the campaign.”

“The way we relate to the people, the way we promote, the way we market our tourism destinations,” he added.

The Discover More to Love program aims to highlight local destinations by partnering with companies, offering travel bundles and discounted offers.

“The Sun Group actually not only invests in marketing, but they also invest in the entire ecosystem,” Tourism Secretary Dita Angara-Mathay explained, citing the agency’s relationship with the private sector.

“The tourist attractions, from hotels, the accommodation, the entire village – that’s the kind of investment that is complete; it’s almost like a subsidy,” she added.

Filipino talents BINI and SB19 were also named as the country’s tourism ambassadors who will support the push for domestic travel.

The DoT earmarked a P4.03 billion budget under the 2027 National Expenditure Program (NEP), down 4.6% or P196 million from the approved P4.23 billion budget for 2026.

Of the proposed budget, P1 billion will fund branding campaigns, mostly for overseas marketing (60%) and domestic efforts (40%).

“You could see that the aesthetic that we are showing in our social platforms has improved drastically,” said Mr. Sapitan. “We’re not showing our faces anymore; we are showing the beautiful places across the Philippines.”

Former Tourism Secretary Ma. Esperanza Christina G. Frasco previously faced criticism during her tenure over alleged overexposure in the agency’s promotional materials. — Almira Louise S. Martinez

Playing at home without their naturalized star, Gilas swept the fourth window of the FIBA World Cup Asian Qualifiers, edging Jordan, 82-81, before beating Iran, 68-56, at the Mall of Asia Arena.

ArenaPlus users backed Gilas to get the job done in both games, with 74.4% of the total bet count picking the Philippines to beat Jordan and 71.1% backing the team against Iran.

The confidence came despite the absence of Brownlee, who has not played since Gilas’ doubleovertime loss to New Zealand in the third window last July 3 because of hamstring and knee issues.

Brownlee has been one of Gilas’ most reliable contributors in the qualifiers, averaging 14.2 points, 5.8 rebounds, 4.6 assists, and 1.6 steals per game.

But with their leading offensive weapon on the sidelines, the locals showed they had more than enough firepower to carry the load.

Sotto makes impact in return

At the center of it all was Kai Sotto, who made a long-awaited return to the national team after a two-year absence and immediately made his presence felt.

Sotto averaged 15.5 points and 15 rebounds across his first two games back, providing Gilas with a much-needed interior presence as the Philippines continued its push for a World Cup berth. Dwight Ramos was equally steady, averaging 15 points, six rebounds, 1.5 assists, and 1.5 steals during the window.

Against Jordan, it was CJ Perez who sparked Gilas’ comeback from a double-digit deficit, pouring in 16 points and five rebounds. Kevin Quiambao added 14 points, five rebounds, and two assists, including a crucial three-pointer that helped Gilas secure the thrilling one-point victory.

The locals delivered again against Iran, with Juan Gomez de Liaño making his mark in the come-from-behind victory with 16 points and three rebounds.

The win also carried a little extra weight. Iran had defeated the Philippines in the 2013 FIBA Asia Championship final at the same venue, making Gilas’ latest victory over the Iranians a chance to rewrite a piece of history on familiar ground.

Gilas depth works wonders

For Ethan William, Head of ArenaPlus, the strong backing for Gilas despite Brownlee’s absence showed the confidence Filipino basketball fans have in the national team’s depth.

“Justin Brownlee has been a huge part of Gilas Pilipinas’ campaign, so it would have been understandable for fans to wonder how the team would respond without him. Instead, we saw ArenaPlus users continue to back Gilas, and the local players delivered,” said William.

“Kai Sotto’s return, the consistency of Dwight Ramos, and the big performances from the other locals showed just how much talent this team has. The numbers reflect the confidence of Filipino fans in Gilas and their belief that the team can find a way to win, whoever is on the floor.”

Gilas now moves forward with momentum — and perhaps an even greater sense of belief. Brownlee’s absence may have changed the equation, but it didn’t change expectations.

For ArenaPlus users, the bet on Gilas was still very much worth making.

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These rainfall conditions are likely in the next 24 hours despite the absence of any tropical cyclone within the Philippine Area of Responsibility (PAR), the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said in its 5:00 a.m. press briefing.

The intense rainfall projected in Zambales and Bataan could bring 100 to 200 millimetres during this period.

PAGASA warned of possible numerous flooding events, especially in urbanized, low-lying and near-river areas. Landslides are also likely in moderate to high-risk areas.

Meanwhile, heavy downpours, translating to rainfall of 100 mm, are likely in Pangasinan, Tarlac, Pampanga, Cavite, Batangas and Occidental Mindoro in the next 24 hours.

Under this rainfall intensity, localized flooding and landslides are likely, especially in the same high-risk areas.

PAGASA has issued a heavy rainfall outlook until Thursday, with more areas likely said to be affected. — Edg Adrian A. Eva

The Philippines’ dollar reserves recovered to a five-month high in August amid higher gold prices and net earnings from its foreign investments, the Bangko Sentral ng Pilipinas (BSP) said.

Preliminary central bank data showed it held $104.813 billion in gross international reserves (GIR) at end-August, up 1.45% from end-July’s $103.317 billion.

This was the highest dollar reserves level seen since March, when it stood at $106.636 billion.

However, it fell by 2.13% from $107.098 billion at end-August 2025, marking the sixth month in a row that the GIR declined year on year.

“The increase in reserves was mainly driven by the… upward valuation adjustments in the Bangko Sentral ng Pilipinas (BSP)’s gold holdings due to the increase in the price of gold in the international market, and the BSP’s net income from its investments abroad,” the central bank said in a statement late on Monday.

However, these were partly offset after the government withdrew foreign currency from the central bank to pay off its external debts, the BSP added.

International reserves are the central bank’s foreign assets held mostly as investments in foreign-issued securities, foreign exchange and monetary gold, among others.

These are supplemented by claims to the International Monetary Fund (IMF) in the form of reserve position in the fund and special drawing rights (SDRs).

Based on preliminary BSP data, its gold holdings rose to a three-month high of $19.109 billion in the eight-month period, jumping by 31.57% from $14.523 billion the previous year and by 9.26% from $17.49 billion a month ago.

However, its foreign currency and deposits plunged by 67.64% to $1.55 billion as of August from $4.789 billion a year earlier and by 17.54% from $1.879 billion.

Its foreign currency-denominated securities, on the other hand, declined by an annual 15.87% to $64.024 billion from $76.103 billion. It also slipped by 4.66% month on month from $67.157 billion.

BSP data also showed the Philippines’ reserve position in the IMF amounted to $728 million, 1.14% lower than the $736.4 million logged in the same month last year. However, it edged up by 0.39% from $725.2 million the prior month.

SDRs — or the amount the Philippines can tap from the IMF’s reserve currency basket — grew by 0.57% to $3.958 billion as of August from $3.935 billion last year and by 0.52% from $3.937 billion from end-July.

Meanwhile, the central bank’s other reserve assets more than doubled (120.28%) to $15.445 billion from $7.011 billion a year ago. It likewise rose by 27.34% from $12.129 billion a month earlier.

“The end-August GIR level can cover up to 6.8 months’ worth of imports of goods and payments for services and primary income,” the central bank said.

This stands well-above the three-month standard, and could also cover about 3.7 times the country’s short-term external debt based on residual maturity.

Ample foreign exchange buffers protect the country from market volatility and ensure that it is capable of paying its debts in case of an economic downturn.

The BSP sees its foreign reserves falling to $104 billion this year from the $110.8 billion it held last year.

The first flag-adorned trucks trundled across the 1 km (0.6 mile) long two-lane bridge as Russian Prime Minister Mikhail Mishustin and North Korea’s Premier Pak Thae Song tuned in by video link to address workers and government officials from both countries.

Construction of the new bridge, which had been under discussion for years, began in April last year after the project was agreed during a visit by President Vladimir Putin to North Korea in 2024. There are already direct air and rail links between Moscow and Pyongyang, but until Monday there had not been a proper road link. Instead, since 1959 and by special arrangement, planks had been placed on the nearby rail bridge – for decades the sole border crossing point – in order to move vehicles across the border between the two countries.

“I am convinced that the expansion of cross-border transport infrastructure will provide a powerful impetus for the further development of trade, economic, scientific, technological and cultural cooperation,” said Mr. Mishustin, who said ties between Moscow and Pyongyang were “at an unprecedented high level” and called the opening of the bridge “a genuinely historic event.”

The construction of the bridge was not merely an engineering project, he said, but “a new symbol of friendship”.

Mr. Mishustin said up to 300 vehicles would be able to cross every day and that the bridge would be linked to Russia’s federal road network and have easy access to the transport corridor which runs from the far eastern city of Vladivostok to St. Petersburg. Trucks would begin to use the bridge immediately to transport cargo, the Russian government said. At the end of this year, the bridge would be fully operational and could be used for passenger traffic too.

The bridge was built near an existing “Friendship Bridge”, a rail bridge which was commissioned in 1959 after the Korean war. Symbolically, the new bridge is named after Yakov Novichenko, a Red Army soldier who Pyongyang credits with protecting the life of North Korea’s first leader Kim Il Sung in 1946 by intercepting a grenade thrown at him and others.

The bridge showed the allies had established key infrastructure to expand economic cooperation, including people-to-people exchanges, tourism and trade in goods, North Korea’s state media KCNA reported on Tuesday.

Ties between the two countries have grown stronger since the start of the war in Ukraine in 2022, with Pyongyang sending thousands of troops to Russia’s Kursk region to help repel a 2024 Ukrainian incursion there.

Mr. Mishustin made a reference to that in his speech on Monday, referring to “the Korean heroes who, only recently, fought shoulder to shoulder with our soldiers and defended Russian soil”.

The bridge underscores how economic sanctions against North Korea are becoming meaningless, said Lim Eul-chul, a professor at South Korea-based Kyungnam University’s Institute for Far Eastern Studies.

“While North Korea is trying to maximize its own interests, Russia has secured a direct road route for the transport of military supplies, ammunition and manpower, including troops, for its prolonged war in Ukraine.” — Reuters

The unemployment rate increased from 5.3% a year earlier and 4.9% in June, while the number of unemployed rose by 550,000 from 2.59 million in July 2025, the Philippine Statistics Authority (PSA) said on Tuesday.

“We have not seen this in quite some time,” National Statistician and Civil Registrar General Claire Dennis S. Mapa told reporters on Tuesday, noting that the last time the jobless rate breached 6% was in January and February 2022, at 6.4%.

The unemployment rate last hit 6% in June 2022.

Mr. Mapa attributed the uptick mainly to a swelling labor force, particularly among the youth.

The increase in employment was not enough to absorb the 3.7 million additional people who joined the labor force — mostly young Filipinos transitioning from school to work — resulting in a lower employment rate of 94% from 94.7% a year earlier.

About 1.33 million of the new entrants were aged 15 to 24, many of them fresh from school and entering the job market for the first time.

“Not all of them were employed,” Mr. Mapa said, adding that this was especially evident in the National Capital Region (NCR), where 731,000 young people joined the labor force in July but only 532,000 were absorbed, leaving roughly 199,000 unemployed.

Bad weather in July also weighed on hiring in some sectors, he said.

The labor force participation rate in July rose to 63.6% from 60.7% a year earlier. Employment also increased to 49.21 million from 46.05 million.

Underemployment, however, eased to 12.9% from 14.8% a year earlier. About 6.33 million employed Filipinos wanted additional hours of work, another job or a job with longer hours.

The average workweek also shortened to 40.6 hours from 42 hours a year earlier.

Services remained the biggest source of jobs, accounting for 62.8% of total employment, followed by agriculture at 19.7% and industry at 17.5%. Wholesale and retail trade, agriculture and forestry, and construction were the three largest employment subsectors.

Agriculture and forestry posted the largest annual increase in employment, adding 1.03 million workers. Accommodation and food service activities added 729,000, while wholesale and retail trade added 424,000.

Manufacturing posted the biggest decline, shedding 134,000 workers from a year earlier. Information and communication lost 41,000 jobs, while professional, scientific and technical activities declined by 28,000.

The National Capital Region had the highest unemployment rate among regions at 8.2%, followed by the Bicol Region at 8%, Ilocos Region at 7% and Central Visayas at 6.3%. Six regions recorded unemployment rates above the national average.

Among Filipinos aged 15 to 24, the labor force participation rate increased to 33.7% from 29.5% a year earlier, while the employment rate slipped to 81.4% from 81.9%. The share of young people not in education, employment or training fell to 15.2% from 15.9%. — Norman P. Aquino and Erika Mae P. Sinaking

Around 4,000 LANDBANK employees contributed their time, skills, and resources to school improvement projects, blood donation drives, community outreach activities, tree-planting efforts, and coastal clean-up programs. Employees also raised P1.32 million in voluntary cash donations for selected communities and beneficiaries.

“At LANDBANK, service goes beyond banking. Through the Volunteerific Program, our employees come together with compassion and a shared sense of purpose to support communities, help protect the environment, and contribute to a more inclusive and sustainable future for the Filipino people,” said LANDBANK President and CEO Lynette V. Ortiz.

Among those reached were residential care facilities in Iloilo and Cavite, senior citizens in Rizal, persons with disabilities in Pangasinan, and students in Misamis Occidental. Employee volunteers organized feeding and gift-giving activities, wellness and recreational programs, and the distribution of essential supplies.

The Volunteerific Program also supported environmental conservation through coastal clean-up drives in Sulu and Surigao del Sur, along with tree-planting activities across the country, including the planting of 500 seedlings at the National Irrigation Administration (NIA) watershed in Peñablanca, Cagayan.

Meanwhile, LANDBANK formally turned over renovated classrooms at New Alimodian Elementary School in Cotabato on Aug. 19 in support of the Department of Education’s (DepEd) Adopt-A-School Program. The project marks the sixth completed school improvement initiative under the Bank’s P6-million financial assistance for the rehabilitation and repair of the 12 last-mile schools in geographically isolated and disadvantaged areas (GIDAs) nationwide.

Other completed school improvement projects are the San  Francisco Elementary School in Isabela, Arew Elementary School in Zambales, Mampurog Elementary School in Camarines Norte, Osman Elementary School in Aklan, Sal-ing Elementary School in Bohol, and Tudela Central School in Misamis Occidental.

LANDBANK will continue to conduct volunteer activities throughout the remainder of the year, providing employees with opportunities to serve communities beyond their roles in banking. Through the Volunteerific Program, the Bank strengthens its contribution to inclusive community development and environmental sustainability.

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The southwest monsoon, being enhanced by tropical depression Krovanh, previously known as PIlandok, is likely to bring heavy rainfall and thunderstorms in Luzon and Visayas until Wednesday, posing a risk of flooding and landslides, according to the state weather bureau on Monday.

Krovanh was last located 1,195 kilometers east-northeast of Extreme Northern Luzon, packing 55 kilometers per hour (kph) of maximum sustained winds and 70 kph of gustiness, PAGASA said in its 10:00 a.m. storm outlook.

“This tropical depression is enhancing the southwest monsoon, which is affecting Luzon and Visayas, Aldczar D. Aurelio, weather specialist of PAGASA, said in a 5:00 a.m. press briefing in Filipino.

“Tomorrow until Wednesday, it is still expected to affect Luzon and Visayas, ” he added.

Krovanh has a low chance of entering the Philippine Area of Responsibility, Mr. Aurelio said.

In the next 24 hours, heavy downpours, or rainfall between 50 to 100 millimeters (mm), are expected in Zambales, Bataan, Batangas, and Occidental Mindoro, he also said.

More areas in Luzon are expected to experience similar rainfall intensity until Wednesday due to the enhanced southwest monsoon.

Mr. Aurelio warned that localized flooding is likely under this rainfall condition, especially in low-lying, near-river, and urbanized areas.

Other areas such as Metro Manila, the rest of Luzon, and the Visayas are expected to experience thunderstorms in the next 24 hours also due to the southwest monsoon, PAGASA said in a separate advisory.

PAGASA also warned of possible flooding and landslides in these areas. — Edg Adrian A. Eva

PROPOSED changes to the Philippine Stock Exchange, Inc.’s (PSE) sponsor rules could make initial public offerings (IPOs) more feasible for small and medium enterprises (SMEs) by lowering costs for sponsors and widening the pool of advisers willing to bring companies to market, analysts said.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said the proposed revisions could address the high costs and compliance requirements that may discourage firms from participating in the SME sponsor program.

“The proposal would substantially lower the initial sponsor accreditation fee from P3.5 million to P50,000, introduce a P250,000 fee for each company endorsed, remove the professional indemnity insurance requirement, and allow firms without the prescribed firm-level track record to qualify if at least two key officers have sufficient initial public offering or corporate-finance experience,” he said in a Viber message.

The lower upfront cost could make it more viable for financial institutions and corporate-finance advisers to enter the sponsor market, while the per-company fee would tie a larger portion of the cost to actual listing activity, Mr. Arce said.

He also cited proposed changes to a sponsor’s post-listing role that could reduce the long-term commitment required under the existing framework.

Under the proposal, the PSE would no longer require the original sponsor to remain with a listed company for at least three full fiscal years. Instead, the company would be required to retain an accredited compliance adviser, while the original sponsor could decide whether to continue in that capacity.

Mr. Arce said the proposed removal of the 5% post-listing ownership limit would also give sponsors greater flexibility to retain an interest in companies they help bring to market.

For SMEs, the changes could broaden the pool of potential sponsors and give companies greater access to advisers with experience in public offerings, he said.

“More sponsors could mean greater competition for mandates, potentially lowering transaction friction and giving smaller companies more access to experienced advisers,” Mr. Arce said.

However, he said the proposed changes would not necessarily lead to a wave of new listings, as companies would still have to demonstrate viable business models, sound governance, adequate disclosure, and sufficient investor demand.

“Regulatory reform alone is unlikely to produce a surge in SME listings,” he said.

Mr. Arce said another challenge would be ensuring sufficient investor interest and secondary-market liquidity after an SME completes an IPO.

“If SME shares trade very thinly after IPO, companies may continue to see private capital, bank financing or strategic investors as more attractive alternatives,” he said.

For investors, the easing of entry requirements for sponsors would have to be accompanied by effective oversight, Mr. Arce said.

“Notably, it would remove the existing safe-harbor language that allows a sponsor to avoid responsibility for false, inaccurate or misleading information by demonstrating good faith and reasonable due diligence,” he said.

The PSE would also conduct annual reviews of sponsors and could take regulatory action against those that fail to endorse at least one company within five years, subject to an exception for prospective issuers rejected after proper due diligence, according to Mr. Arce.

Liam Limbo, investment analyst at F. Yap Securities, Inc., said lowering costs and easing some sponsorship requirements could make IPOs more feasible for SMEs.

“We view this as being aimed at easing compliance requirements in IPOs, which remains a large barrier keeping SME firms from listing publicly,” he said in a Viber message.

“The lower upfront cost and added flexibility with the sponsorship requirements will lead to SMEs considering IPO listings as more feasible options.”

Mr. Limbo said a larger number of SME listings could give investors access to more companies and business models and potentially encourage greater retail participation in the stock market.

“Should this lead to more SMEs listing, it would provide investors with more investment options: new firms that can introduce fresh business models,” he said. “Ultimately, this would have the potential to boost interest among retail investors towards the stock market.”

THE ELECTRIC VEHICLE Association of the Philippines (EVAP) is urging the government to extend tariff incentives for imports of electric vehicles (EV) and components through 2040, saying the move would support the Department of Energy’s clean transport goals and accelerate EV adoption.

“The DoE’s targets extend until 2040. So, for the industry, we hope that the incentives are granted until 2040 also so more people can adopt EVs,” EVAP Vice-President Carla Buencamino told reporters on the sidelines of an event last week. 

“We have to sustain, if not, further improve what these incentives are,” she said.

Under the Philippine Energy Plan, the DoE is targeting EVs to make up half of the country’s vehicle fleet by 2040 and 60% by 2050.

In 2023, President Ferdinand R. Marcos, Jr. issued Executive Order (EO) No. 12 which slashed import duties of certain EVs and their parts and components to zero for a period of five years or until 2028. Tariffs previously ranged from 5% to 30%.

In 2024, Mr. Marcos expanded the tariff exemptions to cover e-motorcycles, e-bicycles, nickel metal hydride accumulator batteries, e-tricycles, quadricycles, hybrid EVs (HEVs), plug-in hybrid EV (PHEV) jeepneys or buses, battery electric vehicles (BEVs), HEV and PHEV cars and trucks, and completely knocked down EVs for all types of vehicles.

At the same time, EVAP also welcomes legislative proposals aimed at encouraging mass EV adoption, Ms. Buencamino said.

“We welcome all of these initiatives because we have to continue to incentivize this industry,” she noted.

Senator Sherwin T. Gatchalian had filed Senate Bill (SB) No. 2270, which seeks to expand the scope of Republic Act No. 11697 or the Electric Vehicle Industry Development Act (EVIDA).

It proposes to grant zero import duties on all EVs, as well as their equipment and infrastructure. It also seeks to extend the validity of EVIDA’s fiscal and nonfiscal incentives to 12 years from the issuance of its implementing rules and regulations, from the current eight years since the effectivity of the law.

The bill also seeks to provide additional incentives for EV users, such as parking discounts and toll-free expressway access.

Ms. Buencamino, who is also the head of mobility infrastructure at Ayala-led ACMobility Holdings, Inc., noted the government’s role in building the Philippines’ EV ecosystem.

“The government is a large procurement body, so this is really where they can show the example of doing the transition so that the private sector can follow suit,” she said.

Ms. Buencamino said there is a need to streamline the process for setting up the necessary infrastructure to support the country’s EV ecosystem.

For instance, the varied requirements and processes across local government units is delaying ACMobility’s rollout of EV charging stations nationwide, she added.

“If we want to go for high numbers, we’re really hoping to have a streamlined process,” she noted.

ACMobility, which has a growing EV charging network, is looking to set up 1,000 charging points this year.

As of July, the company has set up over 500 charging points across 250 charging locations. The company’s EV charging network comprises more than 45% of DoE’s registered charging stations, Ms. Buencamino said.

Sought for comment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the government should carefully balance the extension of EV tariff incentives with measures aimed at incentivizing domestic EV production.

“The two could compete at some point,” he said in a Viber message.

“That should be the consideration on whether or not to extend the tariff exemptions for EV imports — if locally produced EVs are adversely affected by cheaper EV imports.”

In July, Mr. Marcos issued EO 121 establishing an Electric Vehicle Incentive Strategy program, which seeks to encourage EV manufacturers to set up their facilities here.

EV demand in the Philippines has accelerated this year as fuel prices soared due to the ongoing Middle East conflict.

As of end-July, total EV sales surged by 136.4% to 38,286 units from the 16,195 units sold in the same period last year, according to the latest data from the Chamber of Automotive Manufacturers of the Philippines, Inc. and the Truck Manufacturers Association.

THE Department of Agriculture (DA) said enacting a national land use law is critical to identifying and protecting prime agricultural lands, allowing the government and private sector to focus investments on areas that can sustain long-term food production.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. stressed the importance of a national land use code in supporting the farm sector.

“It’s important that the law is enacted to make it clear and to protect what are the real agri lands and so we can invest more in land that will be really for agri,” he told BusinessWorld via WhatsApp.

Mr. Laurel’s comment came after Economy Secretary Arsenio M. Balisacan called for the passage of the legislation as population growth continues to outpace rice production growth.

A national land use framework would help safeguard farmland by identifying areas that should be retained for agriculture despite mounting pressure from residential, commercial and industrial expansion.

Former Agriculture Secretary William D. Dar also backed the proposed national land use act.

“Our population is growing. I agree that a national land use act be enacted,” Mr. Dar said.

He said the measure should protect prime agricultural lands, particularly irrigated areas, and consider the value chain system for agriculture and agribusiness.

Mr. Dar also said farm clustering and consolidation remain important strategies for achieving economies of scale. He urged the government to encourage and incentivize partnerships between the private sector and clustered small farmers to improve productivity and incomes.

“With this we can ensure food security in the country,” he said.

Colliers Research Director Joey Roi H. Bondoc said the proposed national land use law could reshape the property sector by protecting prime agricultural lands and imposing stricter land-use standards.

“However, this will not completely affect developers with existing land banks earmarked for conversion or expansion,” he said in a Viber message.

Mr. Bondoc said the bill’s penalties would mainly target illegal, speculative or nonperforming land banking, including conversions carried out without Department of Agrarian Reform’s approval or projects that remain idle without valid justification.

Landholdings with valid titles, existing zoning classifications, or approved or properly pending applications for DAR conversion would not automatically be affected, he said. 

“The bill also helps identify agricultural lands which may no longer be economically viable for farming and may qualify for reclassification or conversion,” he added.

Under the bill, land would be classified into protection, production, settlements, and infrastructure. This could help developers identify areas intended for urban expansion, mixed-use estates, and population centers.

“Once settlement zones are established, they are less likely to be subject to sudden reclassification or conversions,” Mr. Bondoc added.

Although projects near ancestral domains, environmentally sensitive areas and hazard-prone zones may face tighter requirements, clearer land-use designations could reduce overlapping claims, legal disputes and project delays, he said.

Overall, he said the measure could benefit the property sector over the long term if its implementation balances the interests of farmers, developers, consumers, and investors.

For decades, bills seeking to establish a national land use code have been filed in Congress, but none has been signed into law.

On May 5, the House of Representatives approved House Bill No. 8466, or the proposed National Land Use Act, on third and final reading.

Several Senate bills are still pending at the committee level.

In its quarterly global outlook for the fourth quarter, UOB Group Research said the country’s gross domestic product (GDP) will likely expand around 4% in the July-to-December period.

“Nevertheless, downside risks to the outlook remain, including renewed geopolitical tensions in the Middle East, lingering governance-related challenges, potential weather-related disruptions from a Super El Niño, and the risk of tighter monetary conditions if inflation re-emerges,” UOB said.

“Taken together, we expect economic activity to improve gradually to ~4.0% in the second half of 2026, bringing 2026 full-year GDP growth to 3.2%, but below the government’s target range of 3.5%-4.5%,” it added.

In the second quarter, domestic growth slumped to a new post-pandemic low of 2.3% as last year’s flood control mess continued to drag investments and construction while the Middle East war-driven inflation dampened household spending.

In the first half of the year, GDP expanded by 2.6%.

Economy Secretary Arsenio M. Balisacan earlier said the economy has to grow by at least 4.4% in the second semester to hit the lower end of the government’s full-year target.

The BSP had also said that fiscal measures will likely help the economy regain growth momentum in the fourth quarter, with a full rebound expected by 2027.

UOB said gradual economic recovery, coupled with easing inflation, should allow the BSP to cap its tightening cycle and keep its benchmark rates unchanged until at least the third quarter of 2027.

In August, headline inflation eased a five-month low of 6.1% from 6.2% in July amid lower food and utility prices. This brought the year-to-date average inflation to 5.2%.

UOB sees inflation settling at 6% this year, before easing back to the BSP’s tolerance range at 4% next year. These are slower than the BSP’s 6.1% and 5.4% estimates, respectively.

“With inflation expected to remain on a gradual downtrend and return to BSP’s 2.0%-4.0% target range by 2027, while economic activity continues to recover at a modest pace, we expect BSP to pause further rate hikes in the coming months and maintain a prolonged hold thereafter,” the bank said.

“This would allow policymakers to assess evolving economic conditions while ensuring that the cumulative effects of past monetary tightening continue to transmit through the broader economy,” it added.

In August, the BSP’s policymaking Monetary Board tightened for a third straight meeting as it sought to preemptively contain inflation risks from the looming “Super El Niño,” potential wage hike, and volatile global oil prices.

It raised its key policy rate by 25 basis points (bps) to an over one-year high of 5%, bringing its cumulative hikes to 75 bps since it first tightened in April.

BSP Governor Eli M. Remolona, Jr. remained hawkish, leaving the door open to further tightening as necessary to ensure inflation steers closer to their target.

The Monetary Board is scheduled to hold two more policy reviews this year on Oct. 22 and Dec. 17.

UOB said the BSP’s policy stance could lean more hawkish if risks re-emerge from inflation, growth, global oil prices, geopolitical environment, peso swings, and the US Federal Reserve’s monetary policy.

“Any renewed inflationary pressures, external supply shocks, or sharper-than-expected currency depreciation could prompt a recalibration of the monetary policy stance,” it said.

On Friday, the peso slumped to a fresh low of P62.59 versus the dollar after falling by seven centavos to break its previous historic trough of P62.565 seen on Wednesday.

Year-to-date, the peso has weakened by P3.8 or 6.07% from its P58.79 finish on Dec. 29, 2025.

“The currency’s underperformance largely reflects the Philippines’ vulnerability to higher energy prices and supply security given its net oil-importing status, alongside uncertainty over the US Fed’s policy trajectory,” UOB said.

For UOB, the peso will likely trade past the P62-a-dollar level until next year as the strong greenback and external pressures continue to weigh on it.

It sees the peso depreciating to P62.9 against the greenback in the fourth quarter, before recovering next year to P62.7 in the first quarter, P62.5 in the second quarter, and P62.4 in the third quarter.

“Looking ahead, we see limited catalysts for a strong recovery in the PHP (Philippine peso). External headwinds, including lingering Middle East tensions and a higher-for-longer US interest rate environment, are likely to keep the USD (US dollar) well supported,” UOB said.

“Domestically, political and policy uncertainties, coupled with persistent macroeconomic imbalances, could continue to weigh on investor sentiment. The Philippines is expected to sustain sizeable twin deficits while the risk of a sovereign credit rating downgrade by Fitch and ongoing external financing needs remain key constraints on the PHP outlook,” it added. — Katherine K. Chan

The latest Treasury data showed payments for the government’s debt obligations rose by 29.56% to P139.99 billion in July from P108.06 billion in the same month a year earlier.

Month on month, debt service surged by 81.29% from P77.22 billion in June, driven largely by higher interest payments.

Debt service covers the NG’s interest and principal payments on domestic and foreign debt.

Interest payments accounted for 97.99% of the debt service bill in July, while the remainder went to principal amortization.

The government’s interest payments went up by 29.14% to P137.18 billion in July from P106.22 billion in the same month a year earlier.

Interest payments on domestic debt stood at P98.85 billion in July, rising by 19.21% from P82.92 billion in the same month in 2025.

Broken down, P88.49 billion went to interest payments for fixed-rate Treasury bonds, P4.91 billion for Treasury bills, P3.56 billion for retail Treasury bonds, and P1.89 billion for other domestic borrowings.

On the other hand, interest payments for foreign borrowings soared by 64.48% to P38.33 billion in July from P23.3 billion a year ago.

Meanwhile, NG’s repayment of its loan principal surged by 53.38% to P2.82 billion in July from P1.84 billion a year ago.

This consisted of P135 million in amortization of domestic obligations, which declined by 24.16% from P178 million a year earlier, and P2.68 billion for foreign obligations, which jumped by 61.7% from P1.66 billion.

SEVEN-MONTH BILL
For the first seven months, the government’s debt service bill surged by 55.98% to P1.37 trillion from P876.16 billion in the same period last year.

In the January-to-July period, the NG’s repayment of its loan principal accounted for more than half or 54.57% of the total debt service bill.

Amortization payments in the January-to-July period more than doubled to P745.82 billion from P355.12 billion a year earlier.

Broken down, principal payments for domestic debt soared by 269.82% to P631.04 billion, while payments for external borrowings declined by 37.79% to P114.78 billion.

Interest payments, meanwhile, stood at P620.87 billion in the seven months ending July, up by 19.16% from P521.04 billion in the same period a year earlier.

Interest payments on domestic debt jumped by 20.07% year on year to P459.57 billion in the first seven months from P382.74 billion a year ago.

This consisted of P330.65 billion for fixed-rate Treasury bonds, P91.06 billion for retail Treasury bonds, P30.06 billion for Treasury bills, and P7.8 billion in interest payments for other domestic borrowings.

Interest payments on foreign obligations increased by 16.63% year on year to P161.3 billion in the January-to-July period from P138.3 billion a year ago.

“The sharp increase in debt service payments reflects the combined impact of a larger debt stock, higher interest costs, and the scheduled repayment of maturing obligations,” said Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion in a Viber message.

“The weaker peso has likewise raised the cost of servicing foreign currency-denominated debt,” he added.

The peso closed at P61.24 against the dollar on July 31, strengthening by 12 centavos from its P61.36 close on June 30. However, it was weaker by P2.45 than its P58.79 close on Dec. 29, 2025.

“Looking ahead, debt service is likely to remain elevated as the government continues to fund its fiscal requirements, making revenue performance, borrowing conditions, interest rates, and exchange rate stability key factors to watch,” Mr. Asuncion said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the higher debt service bill reflected a wider deficit and increased borrowings.

The NG’s budget deficit widened by 461.73% to P106.3 billion in July from P18.9 billion in the same month a year ago.

As of end-July, NG’s outstanding debt increased by 1.7% to P19.39 trillion from P19.07 trillion at end-June.

For the coming months, he said the government’s catch-up infrastructure spending and still-elevated inflation “could lead to higher debt servicing costs, both in principal and interest payments.”

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said the higher debt payments reflected a combination of principal repayments coming due, higher interest costs from past borrowings, and the impact of exchange rate movements.

“What’s important to note is that debt service tends to be lumpy, so a few large maturities can significantly boost the monthly and year-to-date numbers. It does not necessarily signal debt stress, but rather reflects the government’s repayment schedule,” he said in a Viber message.

For the rest of the year, Mr. Ravelas said investors should watch out for the pace of government borrowings, the direction of interest rates, and peso movements.

“The good news is that the Philippines still maintains manageable debt metrics and strong market access,” he said. “The key challenge is ensuring that economic growth continues to outpace the growth of debt, allowing fiscal consolidation to proceed without compromising development spending.” — Justine Irish D. Tabile

“If anyone wants to do radiology, you should not do diagnostic radiology. You must be an interventional radiologist,” Dr. Ang Peng Tiam, medical director and senior consultant of PCC, said during a media launch.

“(This means) that you must be the person who does the angiogram, to block off the vessels, the one who does the biopsy, and not the one who just reads the X-rays.”

“Because that reading in the future will all be done by computer and AI. So this is a whole learning process,” he also said.

Mr. Ang’s statement stems from the center’s experience with a lung cancer patient, where a radiologist initially identified only three nodules in the lungs, but subsequent AI-assisted analysis revealed a total of 20 nodules.

This discrepancy created a clinical dilemma, forcing doctors to weigh whether they should still recommend surgery based on the traditional human reading of three nodules — which academic literature suggests could offer a 25% chance of a cure — or reconsider treatment because the AI detected 20 nodules, he said.

Because historical medical research has been based entirely on human visual recognition rather than computer counts, physicians face a complex learning curve in determining how to interpret and act on these machine-detected findings.

“So that’s why when you look at the whole field of medicine, there are two areas which have changed and will be changed in a very big way: one is diagnostic radiology, and two is pathology,” Mr. Ang said.

Although AI in medicine is emerging, he said the technology can never replace humans, as healthcare also entails “the element of trust, care, and hope,” which he noted that only humans can provide.

Mr. Ang’s statement comes as the AI in healthcare market is projected to be valued at $28.2 billion in 2026 and grow to $146.3 billion by 2031, representing an annual growth rate of 39%, according to Wissen Research, a global consulting firm. — Edg Adrian A. Eva

The showcase comes at a time when businesses are looking for technologies that can strengthen their operations, respond to changing market demands, and create new avenues for growth. By bringing Taiwan brands and their capabilities to Manila, the pavilion provides a venue for Philippine businesses to explore technologies, establish industry connections, and consider potential areas of cooperation.

Rather than focusing solely on individual products, the Taiwan Excellence Pavilion highlights the broader capabilities behind them, from research, design, manufacturing, and technology. The participating brands demonstrate how Taiwan’s innovation ecosystem continues to develop products with applications across multiple sectors and international markets.

Connecting Taiwan’s Technology with Philippine Businesses

For companies seeking new technologies and international partners, Taiwan Expo 2026 offers an avenue to engage with Taiwan businesses and understand their areas of expertise.

The pavilion will feature messages from representatives of paticipating Taiwan companies and organizations, offering perspectives on their work and the role of innovation in addressing emerging market needs. The exhibition also creates space for potential business relationships. Philippine companies can explore solutions relevant to their sectors, while Taiwan participants gain an opportunity to better understand the Philippine market and identify areas for future partnerships.

Four Sectors, One Vision for Growth

The 24 featured products are grouped into four categories: Intelligent Technology, Smart Life, Smart Healthcare, and Consumer Electronics. Intelligent Technology covers developments in connected systems and advanced computing. Smart Life focuses on products designed for modern environments and changing consumer needs. Smart Healthcare brings together tools related to health, wellness, and care, while Consumer Electronics highlights products supporting an increasingly digital economy.

It also illustrates how innovation can extend across sectors rather than confined to a single field. As technology becomes increasingly interconnected with business, healthcare and daily life, cross-industry expertise becomes a systemic part of building a resilient market.

Strengthening Regional Business Connections

The Taiwan Excellence Pavilion forms part of a wider effort to strengthen trade relationships between Taiwan and international markets. The value of the exhibition extends beyond the three-day event. Business conversations that begin at the pavilion can lead to deeper discussions around market entry, distribution, technology integration, and other forms of commercial collaboration.

The Taiwan Excellence Pavilion will also feature Ivana Alawi and Dimples Romana, who will join the event and explore the consumer benefits of participating Taiwan brands. Their involvement connects the business-focused exhibition with a wider Filipino audience, showing that developments in technology can have relevance beyond the corporate environment.

Fu Bear, the brand ambassador of Taiwan Excellence, whose job is to share Taiwan’s best products, tech, healthy, and eco-friendly lifestyle with the world, will likewise be present throughout the three-day event, welcoming guests and adding an interactive element to the pavilion experience.

As Taiwan and the Philippines continue to build stronger connections, the Taiwan Excellence Pavilion stands as a mee ng point for ideas, industries and opportunities that can help shape what comes next.

For more information and updates on the Taiwan Excellence Pavilion at Taiwan Expo 2026, follow Taiwan Excellence on social media (FB: @TaiwanExcellence.ph, IG: @taiwanexcellence_ph, LinkedIn: Taiwan excellence).

Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by publishing their stories on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

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Fruity, frozen, and refreshingly unexpected, the new lineup combines high-quality tea, real fruit flavors, and an icy blended texture rarely found in traditional tea beverages. The result is a vibrant, thirst-quenching drink experience that reimagines how tea can be enjoyed.

The series features three distinct flavors. The Frozen Berry Burst Tea blends juicy berries for a bright, expressive drink with a naturally tart finish. The Frozen Pink Drop Tea brings delicate dragon fruit notes, offering a light, crisp, and subtly sweet refreshment. Meanwhile, the Frozen Peach Pop Tea delivers the gentle sweetness of peach, balanced by a soft fragrance and smooth finish.

Whether you’re taking a break between errands or looking for something different to sip while you shop, the Frozen Fruit Teas offer a refreshing alternative to your usual café order.

Tea tastes even better when it’s frozen, fruity, and completely unexpected. And with CBTL’s Frozen Fruit Teas exclusively available at SM Store, every shopping trip comes with a refreshingly different way to pause, recharge, and enjoy the moment.

Spotlight is  BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by publishing their stories on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

Join us on Viber at https://bit.ly/3hv6bLA to get more updates and subscribe to BusinessWorld’s titles and get exclusive content through www.bworld-x.com.

Cignal is bringing Filipino sports fans even closer to the biggest sporting events from around the world as it welcomes back beIN SPORTS to its sports channel lineup beginning Aug. 28, 2026.

Through the renewed partnership, Cignal subscribers will gain access to beIN SPORTS 1, beIN SPORTS 2, and beIN SPORTS 3, offering even more world-class football, motorsports, tennis, cycling, and other international competitions LIVE and in HD.

“Sports have always had a unique ability to bring Filipinos together, whether we’re cheering for our homegrown athletes or following the world’s biggest competitions,” said Christopher C. Lizo, Officer-in-Charge and Senior Vice-President/Chief Finance Officer of Cignal TV, Inc. “As Filipino athletes like Alex Eala continue to make their mark on the world stage, we want our viewers to be part of that journey while also giving them access to the teams, athletes, and competitions they love. With beIN SPORTS back on Cignal, we’re bringing even more of the world’s biggest sporting moments closer to Filipino fans.”

More of the World’s Biggest Sports

Motorsports fans can experience the speed and excitement of Formula 1, following the world’s top drivers and teams as they race across iconic circuits around the globe. The sport has built a passionate following in the Philippines, with audiences on beIN SPORTS doubling year on year. Fans can also catch Formula 2, Formula 3, F1 Academy, the FIA World Endurance Championship, 24 Hours of Le Mans, World Rally Championship, and other major racing series.

Football fans can follow the excitement of the UEFA Champions League, where Europe’s leading football clubs and biggest stars compete for one of the sport’s most prestigious titles. Fans can also catch the UEFA Europa League and UEFA Conference League, along with action from Spain’s LaLiga and Germany’s Bundesliga, two of Europe’s premier football leagues, as well as the UEFA Women’s Champions League and Women’s Super League.

Tennis fans can follow two of the sport’s four Grand Slam tournaments, the Australian Open and Roland-Garros. With growing interest in tennis among Filipino audiences, fueled in part by the rise of homegrown talents on the international stage, fans can watch the world’s best players compete on two of the sport’s biggest stages, from the hard courts of Melbourne to the clay courts of Paris.

Beyond the Grand Slams, tennis fans can also catch major international events such as the United Cup and Laver Cup. The racket sports lineup extends to Premier Padel, featuring top players from the growing global sport of padel.

beIN SPORTS rounds out its diverse lineup with even more international sporting action, including cycling’s Tour de France and La Vuelta, World Athletics, SailGP, and more.

With major leagues, tournaments, and championships happening throughout the year, Cignal subscribers can look forward to even more live sports across the beIN SPORTS channels.

Strengthening Cignal’s Home of Sports

The arrival of beIN SPORTS builds on Cignal’s growing sports lineup, spanning the biggest sporting moments at home and major competitions from around the world.

Cignal’s sports lineup starts at home, with One Sports, One Sports+, and PBA Rush bringing Filipino fans closer to the country’s biggest leagues, teams, and athletes.

Cignal also offers dedicated channels made for Filipino sports fans, including the UAAP Varsity Channel and NBA TV Philippines, giving fans more ways to follow the competitions they love, from collegiate sports in the Philippines to world-class basketball from the NBA.

Beyond its homegrown and dedicated channels, Cignal brings more international sports to Filipino viewers through Fight Sports, Premier Sports 1 and 2, and SPOTV 1 and 2. The addition of beIN SPORTS 1, 2, and 3 further strengthens this lineup with even more major competitions from around the world.

Together, Cignal’s growing sports lineup gives Filipino fans a front-row seat to more of the sports they love, from local leagues and homegrown athletes to some of the world’s biggest sporting events, all in HD.

beIN SPORTS on Cignal 

Beginning Aug. 28, 2026, subscribers can catch beIN SPORTS 1 on Channel 276, beIN SPORTS 2 on Channel 277, and beIN SPORTS 3on Channel 278.

The three channels will be available to Cignal Postpaid subscribers on Plans 520 and up and Cignal Prepaid subscribers on Loads 600 and up.

For more information on Cignal and its subscription offers, visit mycignal.ph, call #88555, or message m.me/BuyCignal.

Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by publishing their stories on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

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Gil G. Chua Is Still Building — and Still Teaching Us How 

By Anna Chua Norbert, his eldest daughter

Most people, on their birthday, look back. My father looks at what’s next.

He has spent more than four decades building a company, and this past year, he had to rebuild it — not because he wanted to, but because the world changed under his feet. When Omnicom decided to retire the DDB brand globally, the agency he’d nurtured for 33 years lost the name it had worn since before I was born. It would have been reasonable for him to feel that a piece of his life’s work had been taken from him.

Instead, he asked a better question. Not “what do we call ourselves now,” but “who are we, really, underneath the name?”

Who Are We Now?

He didn’t hire a branding consultant to answer that question. He asked the people who worked for him.

“Who do you work for?” he asked, across the organization.

The answer came back the same way, again and again: “GGC.” Not the network. Not the holding company. Him — or rather, what his initials had come to mean inside those walls.

That’s how DDB Group Philippines became GGC Group Asia. The name wasn’t invented in a boardroom. It was already alive in how people spoke about their own workplace, long before it went on the door.

THE TAKEAWAY — Culture is the asset that survives

Logos, networks, and contracts can be taken away overnight. What can’t be taken is what people believe about how work gets done in your building. Before your next rebrand, restructuring, or crisis, ask your own people the question my father asked his: not what should we be called, but what do you already believe we are? The answer is usually the truest strategy document you’ll ever get for free.

Building Leaders, Not Followers

If the rebrand answered who we are, the next project answered what we do about it. My father calls it The GGC Way — a codification of the habits he used to teach one conversation at a time, now written down so anyone in the company can learn them without needing years of proximity to him.

Respond with discipline. Bring solutions, not complaints. Protect the dignity of clients and teammates. Measure what you execute. Leave people and places better than you found them. And there’s a visible ladder for anyone who lives by it — coordinator to senior, manager, director, principal, equity partner.

In the book Abundance, Ezra Klein and Derek Thompson argue that progress doesn’t come from good intentions alone — it comes from institutions with the actual capacity to build. My father has always understood this instinctively. For him, abundance was never about having more for himself. It’s about building the kind of systems that let more people succeed without him in the room.

Shared success means multiplying leadership, not multiplying dependence on the leader.

THE TAKEAWAY — Write it down before it walks out the door

If your best judgment only exists in your own head, your organization’s ceiling is your own bandwidth — and your risk is that it leaves when you do. Turn your instincts into a document your newest hire can read on day one. That’s not bureaucracy. That’s succession planning disguised as a handbook.

Awards He Didn’t Chase — and One That Will Outlive Him

The recognitions came anyway. The Creative Guild of the Philippines gave him the Kidlat Lifetime Achievement Award. Junior Achievement of the Philippines gave him the Tanglaw ng Kabataan Award, one of its rarest honors, for a lifetime spent preparing young Filipinos for the world beyond their diploma.

Then Junior Achievement did something my father has never done for himself: they put his name on something that will keep giving after he’s gone. The Gil G. Chua Marketing Excellence Award, inspired by the Sarimanok — a Filipino symbol of good fortune — will recognize marketing mentors, companies, and schools that use creativity to build businesses, create opportunities, and uplift communities. Four words anchor it: Creativity. Purpose. Impact. Legacy.

But if you ask me what people will actually remember about my father, it isn’t the plaques. It’s that he made other people believe they could lead, too.

From individual Clubs to One district.

Here is what he did the week after the honors came in: he went back to teaching.

He was personally invited to speak to a few Rotary clubs and noticed the same gap in every one — good people doing meaningful community work, without the communications skill to make that work visible or supported. His answer was pure Gil Chua: don’t teach the same lesson fifteen separate times. Do it en banc. 300 people from Rotary District 3830 learn public relations and media strategy in one room.

THE TAKEAWAY — Design for scale, not just for effort

The instinct to help one person at a time feels generous, but it caps your impact at the size of your calendar. Before you repeat a lesson for the fifth time, ask my father’s question: could this be one room instead of five? The multiplier is usually sitting right there, waiting for someone to bother meeting it.

Making Good News in a Fearful Season

This past year has not been an easy one for optimism. The war involving Iran pushed up energy and operating costs, rattled markets, and made companies pull back spending. The cost of living kept climbing. And the news cycle, as it always does in hard seasons, kept finding new reasons for people to feel afraid.

So my father built a magazine about hope. He calls it Tayo Mismo — a platform for the Filipinos who are quietly solving problems, serving their communities, and making the country better, whether or not anyone is watching.

He knows bad news sells. He’s spent a career in media; nobody has to explain that to him. But he also understands something most media strategists never say out loud: we become what we keep looking at. If a country is only shown its failures, it starts to believe failure is all it has. The good is already happening. Someone just has to keep pointing the camera at it.

Hope is not denial. It is the decision to notice what is already working, and help it grow.

THE TAKEAWAY — Optimism is a discipline, not a mood

In hard quarters, the instinct is to go quiet or go grim. Do the opposite, deliberately: build a habit — a newsletter, a Friday wins-thread, a standing agenda item — that forces your team to name what’s working. Not to spin the bad news away, but to make sure the good news has somewhere to live. Attention is a resource. Spend some of it on purpose.

The Measure of a Life

My father’s legacy was never going to fit neatly into revenue or awards. It’s in the numbers that took decades to build quietly: women now make up 68 percent of GGC Group Asia’s workforce, 70 percent of its senior management, and 53 percent of its Board. Nobody handed him a mandate to build that. He just kept opening doors and then stepped back to let people walk through them. Today, GGC Group Asia employs 7700 nationwide.

It’s in the Rotary clubs that can now tell their own stories. In the 2,000,000 students learning that professionalism is predictable, that calm is a form of power, and that consistency is what turns trust into scale. In every reader of Tayo Mismo who closes the app believing, a little more, that the country is worth investing in.

What I Want You to Take From This

I could tell you my Papa is a great businessman, and he is. But the more useful thing I can tell you — is this: every hard turn in this story became a system, not just a story. The rebrand became a values exercise. The recognition became an award for other people. The Rotary visits catalyst a scaled conference to reach more people. The hardest news cycle in years became a magazine about what’s still good.

When circumstances force an ending, you get to decide what kind of beginning it becomes.

That is the real inheritance he’s building — not a company name, but a habit of turning whatever happens to you into something that helps the next person.

Happy Birthday, Papa

The future is always bright with GGC around. And the best really is yet to come — because you never stopped building it for the rest of us.

With all my love,

Anna

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“We are reassessing the plan to ensure that our borrowing strategy remains responsive to evolving market conditions,” National Treasurer Sharon P. Almanza said on Thursday in reply to Bloomberg News queries. She said the government didn’t anticipate the Middle East situation will further deteriorate when the borrowing plan was prepared in June, adding a decision on this month’s bond sale will be out “soon.”

Jumbo bonds, also known as fixed-rate Treasury notes sold to institutional investors, typically raise a significant portion of the government’s funding requirements similar to retail bonds that are offered to individual investors.

The five-year Treasury notes planned for auction on Sept. 22 form part of this month’s P380-billion ($6.1-billion) debt offerings. The latest jumbo bond sale in February raised P235 billion.

Investors are cautious as the central bank may continue raising interest rates to curb inflation that remains elevated, said Helen Oleta, president of the Fund Managers Association of the Philippines in Manila. “Investors are waiting for better entry points and may be looking to reposition for next year,” Ms. Oleta also said.

With the escalation of the Middle East conflict driving oil prices higher anew, the Philippine peso fell to a new record low this week, in turn raising concerns about a surge in inflation. Price increases eased for three months in a row to hit 6.2% in July, still more than twice the target for the year.

For foreign investors, high inflation and weak local currency erode bond returns when converted back to their home currency, discouraging them to buy. Scrapping the jumbo bond sale would hamper government’s efforts to boost large-scale offerings and bolster liquidity. Pushing through with the plan, however, would entail higher interest expense at a time when efforts to rein in the budget deficit are already challenging.

The government needs more funds to ramp up spending to spur economic growth, and also has to refinance bonds that will fall due this year. Over P100 billion of retail Treasury bonds will mature in September, while another P50 billion will be due in October, according to data compiled by Bloomberg.

In a sign of waning investor demand for longer-dated securities, the bids for five-year Treasury bonds auctioned on Wednesday came in 1.2 times the offer size, smaller than the 3.1 times oversubscription at the previous sale of the same securities in early August. — Bloomberg

THE PHILIPPINES’ fiscal deficit-to-gross domestic product (GDP) ratio will likely narrow until 2027 as the government’s tax reforms are expected to boost revenue mobilization, the ASEAN+3 Macroeconomic Research Office (AMRO) said.

In its latest Quarterly Fiscal Bulletin released on Thursday, AMRO said the country’s budget gap may shrink to 5.3% of GDP this year, before further narrowing to 5.2% in 2027.

“The fiscal deficit is projected to remain broadly unchanged at 5.2% of GDP in FY (fiscal year) 2027, compared with 5.3% in FY 2026,” AMRO said.

If this holds true, the fiscal deficit-to-GDP ratio will be narrower than the above-target 5.6% seen last year, when the gap ballooned by 4.7% year on year to P1.577 trillion.

The National Government (NG) expects its fiscal deficit to settle at P1.659 trillion or 5.4% of GDP by yearend, before potentially narrowing to P1.695 trillion or 5.1% of GDP by 2027.

In July, the NG’s budget deficit swelled to P106.3 billion, more than fivefold (461.73%) the P18.9-billion gap logged in the same month last year. It was, however, narrower than the P264.3-billion deficit in June.

The country’s seven-month shortfall widened by 13.85% to P893.1 billion from the P784.4-billion deficit a year earlier.

“On the revenue side, revenue mobilization is expected to strengthen gradually through the full implementation of recent tax policy reforms — including the VAT (value-added tax) on Digital Services Act, CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) law, Capital Markets Efficiency Promotion Act, and the new Mining Fiscal Regime — alongside continued improvements in tax administration,” AMRO said.

The government’s tax revenues rose by an annual 5.66% to P2.595 trillion in the January-to-July period, thanks to the 5.31% increase in the Bureau of Internal Revenue’s collections to P1.99 trillion and the 7.25% rise in the Bureau of Customs’ collections to P583.4 billion.

The government’s total expenditures jumped by 7.02% to P3.764 trillion in the seven months to July from P3.517 trillion a year ago.

AMRO noted the disruptions tied to the controversial flood control projects continued to dampen the country’s capital spending.

Infrastructure spending also slumped by 40.8% year on year to P367.4 billion in the first half of the year from P620.2 billion.

Despite this, AMRO lauded the administration’s proposed national budget for 2027, along with those of Indonesia and Thailand, noting that it prioritizes “growth-enhancing spending, expenditure efficiency, and stronger revenue mobilization.”

“Amid limited fiscal space and rising mandatory spending pressures, the budget also emphasizes expenditure efficiency through the Government Optimization Program, stronger performance-based management, and tighter controls on operating expenditure and redundant programs,” AMRO said.

The government proposed a P7.2-trillion national budget for 2027, placing social services and infrastructure programs as the administration’s priorities. This is 6% higher than this year’s P6.793-trillion budget.

“Looking ahead, fiscal policy will need to balance support for growth and vulnerable groups with efforts to rebuild fiscal space,” AMRO Group Head for Fiscal Surveillance Seung Hyun Hong said in a statement.

“Continued efforts to strengthen revenue mobilization, improve spending efficiency, and reinforce public financial management frameworks will be important for maintaining fiscal sustainability and resilience,” he added.

CHALLENGES
Meanwhile, Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said hitting AMRO’s deficit-to-GDP ratio forecasts are “achievable but not guaranteed” as structural and governance issues derail the country’s fiscal consolidation.

“The 5.3% target for 2026 looks realistic because it is very close to the government’s own fiscal program,” he told BusinessWorld via Facebook chat. “The 5.2% projection for 2027 is also feasible, but the margin for error will depend heavily on whether economic growth recovers, and whether revenue reforms produce the expected gains.”

Meeting the forecasts may be possible if the government sustains its revenue collection and controls its spending, he said, noting the “encouraging signs” from Customs exceeding its half-year collections target.

However, tepid economic growth and elevated inflation would make reducing the deficit-to-GDP ratio a harder feat, Mr. Peña-Reyes noted.

“2026 is also a difficult year for fiscal consolidation because economic growth has weakened… Slower growth makes it harder to generate buoyant tax revenues, while higher inflation can put pressure on government spending,” he said.

In the first half of the year, the economy expanded by 2.6% after growth slumped for a fourth straight quarter to a new post-pandemic low of 2.3% in the April-to-June period.

AMRO has trimmed its Philippine growth forecast to 3.4% from 4.1% for this year, and to 4.8% from 5.5% in 2027. This would put the country’s growth below the government’s 3.5%-4.5% for this year and 5%-6% target next year.

The administration’s fiscal consolidation program also faces risks from slow revenue mobilization, the pressure to maintain public investment and social spending, as well as rising interest rates and debt service pressures, Mr. Peña-Reyes added.

With this, he noted that the government must place equal weight on improving the quality of fiscal consolidation and accelerating its pace.

“The government should avoid achieving lower deficit ratios primarily by cutting productive investment or by accumulating arrears,” Mr. Peña-Reyes said. “A more durable strategy would be to combine stronger tax administration and revenue mobilization with tighter procurement, better project selection, reduced leakage and protection of high-return public investment.”

“That would allow the Philippines to narrow the deficit while preserving the growth needed to bring down the debt-to-GDP ratio over time,” he added.

On the other hand, Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said AMRO’s forecasts are “realistic and attainable,” especially with revenue-strengthening reforms underway.

“The good news is that improvements in tax administration, digitalization, and compliance are already helping strengthen revenues,” he said in a Viber message.

“Going forward, the government should stay focused on broadening the tax base, curbing leakages and smuggling, and ensuring that public spending is efficient and directed toward high-impact infrastructure and social programs,” Mr. Ravelas added.

However, global uncertainties and weather shocks could also weigh on the government’s efforts to lower its deficit-to-GDP ratios, Mr. Ravelas said.

“Overall, the key is not just reducing the deficit but doing so in a way that preserves growth and strengthens the country’s long-term economic fundamentals,” he added.

By 2030, the Philippine government wants to narrow its fiscal deficit-to-GDP ratio to 3.5% with a P1.458-trillion shortfall as it commits to its fiscal consolidation plan.

THE NATIONAL Government’s (NG) outstanding debt rose to a fresh high of P19.39 trillion at end-July amid higher domestic and external borrowings and the revaluation of foreign currency-denominated obligations, the Bureau of the Treasury (BTr) said.

The latest data from the Treasury showed that the NG debt increased by 1.7% to P19.39 trillion at end-July from P19.07 trillion at end-June.

“The increase was primarily driven by the net availment of domestic and external debt, as well as the revaluation of foreign currency-denominated obligations following movements in the peso relative to the US dollar and other foreign currencies,” the Treasury said.

Year on year, outstanding debt rose by 10.39% from P17.56 trillion at end-July 2025, while it jumped by 9.5% from P17.71 trillion at end-2025.

The end-July debt stock already represents 98.09% of the revised P19.766-trillion level projected for end-2026 under the Budget of Expenditures and Sources of Financing.

NG debt refers to the total amount owed by the Philippine government to creditors such as international financial institutions, development partner countries, banks, global bondholders and other investors.

“The NG continues to implement a borrowing mix in favor of domestic sources to reduce exposure to foreign exchange risks and support a more stable debt profile,” the Treasury said.

The bulk or 67.61% of the total debt stock came from domestic sources, while the remaining 32.39% consisted of external borrowings.

Domestic debt, which consisted almost entirely of government securities, increased by 2.11% to P13.11 trillion at end-July from P12.84 trillion at end-June.

“The increase was mainly attributable to the P271.22-billion net issuance of government securities, with the remaining movement due to the slight upward revaluation of Onshore Dollar Bonds (ODBs),” the BTr said.

Year on year, domestic debt rose by 8.26% from P12.11 trillion.

Meanwhile, external debt inched up by 0.84% to P6.28 trillion at end-July from P6.23 trillion at end-June.

“This was mainly due to P17.1 billion in net external loan availment, complemented by the higher peso value of foreign currency-denominated obligations following the depreciation of the peso against the US dollar and third currencies,” the BTr said.

Year on year, external debt jumped by 15.12% from P5.46 trillion.

External debt was composed of P3.19 trillion in global bonds and P3.09 trillion in loans.

“The latest NG debt position highlights the country’s tenuous, but still manageable fiscal situation,” University of Asia and the Pacific Economist Marco Antonio C. Agonia said in an e-mail.

“This record debt level largely reflects two recent spending themes: repayment of pandemic-era obligations and the NG’s need to pump-prime the economy,” he added.

The country’s fiscal space is thinning as slower growth, lower tax collections and weak investment coincide with a greater need for public spending, Mr. Agonia said.

While there is still room for growth-accelerating spending, the bigger concern is the quality and impact of these expenditures.

“Prioritizing impactful, transformative spending unlocks larger fiscal multipliers that can put the economy in a better position to manage financing needs,” Mr. Agonia said.

He noted the recent affirmation of investment grade ratings by some credit raters shows there is still fiscal space and that growth prospects may hold in the coming years.

The Japan Credit Rating Agency, Ltd. and Rating and Investment Information, Inc. recently affirmed the Philippines’ “A-” rating with a “stable” outlook, while Moody’s Ratings affirmed the country’s “Baa2” investment-grade rating and maintained its “stable” outlook.

Mr. Agonia said recent foreign exchange revaluation-driven increases in debt and global interest rate volatility may encourage the government to shift toward a larger share of domestic financing from foreign sources.

However, he said foreign-denominated debt refinancing risks remain elevated “with the soft peso-dollar rate making foreign debt more expensive in peso terms, while advanced economy yields tread upwards on fiscal sustainability concerns.”

“Assuming oil-driven inflation risks and macroeconomic headwinds wind down next year, domestic rate risk premia may narrow and allow NG to roll over its debt at better terms to promote fiscal sustainability,” he added.

The NG’s guaranteed obligations inched up by 0.35% to P306.13 billion at end-July from P305.07 billion at end-June.

“The month-on-month increase was primarily due to the P1.47-billion revaluation of external guarantees, partly offset by net repayments of P260 million in external guarantees and P150 million in domestic guarantees,” the BTr said.

Year on year, guaranteed obligations declined by 13.27% from P352.97 billion.

SLOWER PRICE increases in food and electricity led headline inflation to its weakest pace in five months in August, the Philippine Statistics Authority (PSA) said on Friday.

PSA data showed headline inflation, as measured by the consumer price index, eased to 6.1% in August from 6.2% in July, but accelerated from 1.5% a year ago.

This was the slowest headline clip in five months or since the 4.1% in March.

This also fell within the central bank’s 5.5%-6.5% forecast for the month, but was slightly faster than the 6% median estimate of 20 analysts polled by BusinessWorld.

However, August marked the sixth straight month that the headline print settled above the Bangko Sentral ng Pilipinas’ (BSP) 3% target.

In the eight months to August, inflation averaged 5.2%.

The cooler headline print was largely driven by slower inflation in food and electricity, according to National Statistician Claire Dennis S. Mapa.

Meanwhile, core inflation, which excludes volatile food and oil prices, cooled for a second straight month to 4.1% from 4.2% in July. However, this was still faster than the 2.7% in August 2025.

Inflation in the National Capital Region (NCR) also slowed to 4.1% last month from 4.4% in July but quickened from 2.9% last year.

Outside NCR, it came it at 6.6%, slightly slower than July’s 6.7% but sharply faster than the 1.1% a year earlier.

However, inflation for the bottom 30% of income households in August steadied at July’s pace of 8.2%, but accelerated from -0.6% last year. As of August, it stood at an average of 6.2%.

“The effects of the southwest monsoon, or habagat, will continue and will bring heavy to intense rainfall, particularly in areas in the western section of Central and Southern Luzon,” Obet Badrina, weather specialist of the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA), said in its 5:00 a.m. weather advisory.

Zambales and Bataan will experience intense downpour, or rainfall between 100 to 200 millimetres (mm), in the next 24 hours.

PAGASA warned that numerous flooding is likely, especially in high-risk areas, such as low-lying, near-river, and urbanized areas.

Metro Manila, Pangasinan, Pampanga, Tarlac, Bulacan, Rizal, Cavite, Batangas, and Occidental Mindoro will receive heavy downpours, or rainfall between 50 to 100 mm, during the same period.

Under this rainfall condition, localized flooding is possible, especially in high-risk areas.

Heavy downpours are expected in similar areas until Sunday.

The rest of the large parts of Luzon and Visayas are likely to experience thunderstorms due to the effects of the southwest monsoon.

As of 8:00 a.m., PAGASA said that the upper to lower portions of Pampanga River are all above the alarm water level.

Meanwhile, PAGASA remains to monitor a low pressure area and tropical depression outside of the Philippine Area of Responsibility (PAR).

The tropical depression, which developed from an LPA on Thursday night, was located 1,770 kilometers east of Extreme Northern Luzon, PAGASA said in the press briefing.

“The possibility of it entering the PAR is relatively low,” Mr. Badrina said.

It is also forecast to downgrade into an LPA and become part of Tropical Cyclone Krovanh, formerly known as Pilandok.

The LPA, formerly Saudel, was spotted 870 km west-northwest of Extreme Northern Luzon after lashing eastern China. — Edg Adrian A. Eva

A single hospitalization can wipe out months, or even years, of hard-earned savings. These realities prompted the Cocolife Idea Hub’s 2026 Emergency and Medical Preparedness study. 

The findings of the study paint a sobering picture: while Filipinos recognize the importance of health protection, many remain financially vulnerable when faced with unexpected medical expenses. 

One of the study’s most striking findings is the disconnect between having confidence in dealing with medical emergencies and actual preparedness for them. Although more than half of the respondents consider themselves somewhat prepared for emergencies, only 16% felt truly ready to handle them. Nearly half admitted feeling uncertain or unprepared, highlighting that confidence often masks limited financial capacity. 

This lack of preparedness becomes even more concerning when viewed alongside respondents’ actual experiences. 62% experienced at least one emergency room visit or hospitalization within the past year, while nearly one-third reported multiple hospitalizations. Rather than representing a distant possibility, medical emergencies have become a recurring reality for many Filipino households.

When emergencies occur, the majority still rely on personal savings as their primary source of funding. Savings accounted for 43% of first-line financing, followed by employer-sponsored health maintenance organizations (HMOs) and PhilHealth. While these systems provide some support, they often leave significant out-of-pocket expenses that families must shoulder themselves.

Others resort to borrowing money from relatives, using credit cards, or even pawning valuables — solutions that may solve today’s problem while creating tomorrow’s financial burden.

Perhaps the study’s most alarming statistic is that 64% of respondents cannot afford more than three days of emergency hospitalization costs. Considering that the average hospital stay exceeds five days and inpatient expenses average over P82,000, many families would exhaust their emergency funds long before treatment is completed.

This explains why Filipinos often say, “Bawal magkasakit.” It is not just a reminder, but a painful reflection of economic reality.

Beyond hospitalization, outpatient care quietly drains household finances throughout the year. Seven in ten respondents visit a doctor at least once a year, yet over one-third have no outpatient coverage at all, paying consultation fees entirely out of pocket.

These recurring expenses often discourage early medical consultation, increasing the likelihood that manageable conditions become more serious — and more expensive — later on.

Financial concerns also dominate Filipinos’ health anxieties. The Cocolife Idea Hub study showed that 24% of the respondents said that hospitalization costs is their greatest fear, followed by the cost of medicines, doctors’ professional fees, laboratory tests, and income loss during recovery. Together, these concerns demonstrate that healthcare costs affect every stage of illness, from diagnosis to treatment and eventual recovery.

Protection for better preparedness

Recognizing these current gaps among Filipinos, Cocolife reinforces its Alagang Cocolife brand of care, a continuing commitment to improving their lives and helping them face life’s uncertainties with greater confidence and peace of mind, as it has done for 48 years. 

Through Alagang Cocolife, the company responds to the real worries and priorities of Filipinos by offering a comprehensive suite of health-focused solutions that ensure robust financial resilience no matter the scale of protection required. 

More than covering medical expenses and securing an individual’s future needs, the Cocolife Aruga life and health plan offers the Philippines’ first results-oriented health coverage beyond standard lists of defined illnesses. 

From this pioneering plan, Cocolife’s suite of products has expanded to Cocolife Agapay, Cocolife Kalinga, Critical Illness Benefit Rider, and Hospitalization Income Benefit Rider, solidifying the company’s commitment to care. 

For those seeking wealth growth alongside protection, Cocolife Agapay serves as an investment-linked life and health insurance plan designed to protect the policyholder’s future in more ways than one. The plan uses built-in life, health, and savings benefits to help policyholders pursue their long-term financial goals while staying protected through uncertainties. 

Additionally, Cocolife Kalinga provides an affordable term insurance plan that delivers life and health protection. It offers crucial financial support when it is needed most — whether for a family’s future or during a health emergency. 

The Critical Illness Benefit Rider provides a lump-sum cash payout upon the diagnosis of any of the 36 covered critical illnesses, including cancer, heart attack, and stroke; while the Hospitalization Income Benefit Rider provides daily cash benefits for each day the insured is confined due to illness, dread disease, or injury.

Beyond individuals, Cocolife also extends its solutions to group or corporate clients through Cocolife Healthcare. With over 25 years of industry experience, Cocolife Healthcare has become a preferred partner of top hospitals and clinics, medical practitioners, and organizations in meeting the healthcare needs of employees and their families. It is also the first healthcare program provider certified under ISO 9001:2015, regulated by the Insurance Commission, and a long-standing member of the Association of Health Maintenance Organizations of the Philippines, Inc.

As individuals, families, and companies navigate different stages of life, Cocolife continues to adapt its offerings to ensure relevant and accessible financial protection, health coverage, and life security.

“We constantly enhance products and services through adaptive technologies while maintaining a strong emphasis on personal connections. This has reinforced Cocolife’s position as a leader in providing top-tier customer experiences,” First Vice-President and Head of Cocolife’s Marketing and Research Department Ma. Rowena Asnan noted.

The greatest challenge facing Filipino households is not simply the rising cost of healthcare, but the lack of financial resilience when illness strikes unexpectedly. Savings alone are often insufficient; existing coverage leaves significant gaps, and many families remain one medical emergency away from financial hardship.

Through its tailored insurance products and its robust, responsive healthcare network, Cocolife bridges these gaps by providing practical health and financial solutions that align with the realities of Filipino families and corporate workforces alike.

Learn more about the Alagang Cocolife suite of health products at www.cocolife.com, and visit the Cocolife Idea Hub, https://www.cocolife.com/idea-hub/ for a chance to earn rewards by participating in Cocolife surveys.

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THE PESO will likely hover around the P62-a-dollar handle until yearend as global headwinds and the country’s persistent trade deficit continue to weigh on the local currency, MUFG Global Markets Research said.

In its latest monthly foreign exchange outlook, the Japanese bank said it now sees the peso trading at P62.20 against the greenback in the third quarter, weaker than its earlier estimate of P61.75.

It projects a slight recovery to P62 per dollar in the fourth quarter, although that remains weaker than its prior forecast of P61.50.

“Our forecast change reflects USD/PHP (US dollar/Philippine peso) recently breaking above the P62 level, and also driven by global factors more salient to PHP such as spikes in oil prices, coupled with the rise and stickiness in US yields,” MUFG said in a report published on Tuesday.  “Of course, over here whether these are driven by term premia or expectations of tighter policy through real yields matters a great deal.”

The strong US dollar and inflation concerns fueled by the central bank’s latest outlook dragged the peso to new lows against the greenback, with the local unit sliding past the P62 handle for the first time at end-August.

On Wednesday, the peso weakened anew to a fresh low of P62.565 versus the dollar after losing 16.5 centavos to break its previous historic trough of P62.40 seen on Tuesday, Bankers Association of the Philippines data showed.

It also plunged to its worst intraday showing on record of P62.69, surpassing Tuesday’s P62.40.

Year-to-date, the peso has slumped by P3.775 or 6.03% from its P58.79 finish on Dec. 29, 2025.

According to MUFG, the peso-dollar exchange rate is also largely driven by the Philippines’ trade deficit and interbank rate differentials.

“Our model of USD/PHP shows that the most important factors driving the pair includes the trade deficit and also interbank rate differentials, with a rough rule of thumb that every 10% rise in oil prices weakens PHP by 0.9%,” the bank said. 

By the first quarter of 2027, MUFG said the peso may rebound to the P61 level at P61.50 to the dollar, before strengthening further to P61 by the second quarter. However, this remains weaker than its earlier estimates of P61 and P60.50, respectively.

The Development Budget Coordination Committee expects the peso to trade between P60 and P62 against the greenback until 2030.

MUFG flagged the country’s widening trade deficit but noted that this gap should eventually narrow as oil prices ease.   

Based on the latest Philippine Statistics Authority data, the country’s trade-in-goods balance, or the difference between the values of exports and imports, stood at a $5.97-billion gap in July, up 34.9% from the $4.43-billion deficit last year.

This brought the seven-month trade deficit to widen year on year to $37.34 billion from $28.91 billion. 

BSP Governor Eli M. Remolona, Jr. earlier said the dollar reserves cannot defend the peso back to the P60 handle, describing the exchange rate problem as “very hard to fix” considering the country’s expensive exports. 

Still, he noted that the central bank remains present in the foreign exchange market, but is keeping its intervention minimal to prevent exhausting their dollar reserves.

He has said they intervene not to defend a specific exchange rate but to smoothen out the local currency’s sharp inflationary swings.   

For MUFG, further monetary policy tightening and some catch up in government spending could buoy the peso versus the dollar.

“With our expectation for BSP to remain hawkish and deliver one more 25 bps (basis points) rate hike, coupled with our forecasts for some tentative improvement in government spending, we are comfortable with our baseline view for USD/PHP to move lower,” it said.

Last week, the Monetary Board tightened for a third straight meeting in a preemptive move aimed at containing inflation risks from the looming “Super El Niño,”  a potential wage hike, and global oil price swings.

The BSP raised its key policy rate by 25 bps to an over one-year high of 5%, bringing its cumulative hikes to 75 bps since it first tightened in April.

Mr. Remolona last week said they hope they won’t have to hike more, but kept the door open to further tightening as needed to bring inflation closer to their 3% target. 

The Monetary Board will hold two more policy reviews this year — on Oct. 22 and Dec. 17.

However, MUFG noted the peso remains vulnerable to inflation risks that could arise from the “Super El Niño” and potential increase in minimum wages.

“A key risk for PHP is the possibility of a ‘Super El Niño,’ with the NOAA’s (National Oceanic and Atmospheric Administration) latest forecast showing a more than 80% chance of such a weather event happening,” MUFG said. 

“This could manifest in the Philippines through more extreme weather patterns with possible spillover effects on both global and domestic food prices, and higher second-round effects through inflation expectations,” it added.

The Philippine Atmospheric, Geophysical and Astronomical Services Administration said the Philippines may encounter a strong El Niño phenomenon in the third quarter, which could intensify into a “very strong” one by October until January next year.

THE Bureau of Internal Revenue (BIR) is preparing a Revenue Memorandum Circular (RMC) that will remove the value-added tax (VAT) on the allowable system loss charge in electricity bills.

In a statement on Wednesday, the BIR said it is set to issue the RMC 15 days after the publication of Energy Regulatory Commission (ERC) Resolution No. 26, Series of 2026.

“When there is a clear basis under the law to provide tax relief, we should act on it,” BIR Commissioner Charlito Martin R. Mendoza said.

“We are preparing the BIR issuance now so that after the required period has lapsed, we can immediately implement the VAT removal and pass the benefit on to electricity consumers,” he added.

The ERC has issued Resolution No. 26, which declared the allowable system loss charge a government-mandated pass-through cost that should not be included in the gross sales of generation companies, the National Grid Corporation of the Philippines (NGCP), or distribution utilities for VAT purposes. It was approved on Aug. 26 and released on Aug. 28.

“In simple terms, consumers should not be paying VAT on electricity that never actually reaches their homes or businesses,” Mr. Mendoza said.

“A pass-through charge is a cost collected from consumers and passed on to the proper recipient. Removing VAT from that charge means a lower amount will be passed on to electricity consumers,” he added.

The ERC earlier estimated that removing the 12% VAT on allowable system loss charges could result in about P6 billion in annual savings for electricity consumers nationwide, while the Department of Finance estimates about P10 billion in foregone revenues annually.

Ateneo Center for Economic Research and Development Senior Research Fellow Ser Percival K. Peña-Reyes said the removal of these charges could return some purchasing power to households and lower operating costs for businesses.

“One could describe the macroeconomic effect as positive but incremental rather than transformative,” he told BusinessWorld via Facebook Messenger.

A typical household consuming 200 kilowatt-hours (kWh) per month could save roughly P21 monthly, or about P250 annually.

While modest, the recurring reduction in a non-discretionary expense could ease the financial burden on households, particularly lower-income families, or free up money for food, transportation, education and other consumption, he said.

“The P6-billion annual (savings) estimate is essentially a transfer of purchasing power back to electricity consumers,” Mr. Peña-Reyes said.

Businesses would also benefit from lower electricity costs, with electricity-intensive establishments likely to see larger peso savings, he said.

This could marginally improve operating margins or give firms some room to moderate prices, Mr. Peña-Reyes said.

“This matters particularly for sectors where electricity is a significant input —manufacturing, retail, food processing, cold storage, telecommunications/data facilities and other energy-intensive services,” he added.

The direct effect on headline inflation, however, should be very small because the reduction amounts to only around 0.6% of a typical electricity bill.

“It is better viewed as a small, broad-based disinflationary measure,” rather than a major anti-inflation intervention, Mr. Peña-Reyes said.

Over the longer term, the savings could marginally improve the competitiveness of Philippine businesses, which have long faced concerns over high electricity prices.

“Removing VAT from system-loss charges does not fundamentally change the cost of generating electricity. It simply removes a tax imposed on one component of the bill,” he said.

The BIR issuance will build on RMC No. 60-2026, released in June, which clarified that the Lifeline Subsidy, Green Energy Auction Allowance and other specified government-mandated charges are not subject to output VAT and related creditable withholding taxes.

“We will continue reviewing our tax rules for areas where their proper application can provide practical relief to taxpayers. Where the law allows it, we want that relief to be clear, immediate, and felt by our people,” Mr. Mendoza said.

Last July, President Ferdinand R. Marcos, Jr. urged Congress during his fifth State of the Nation Address to amend the Electric Power Industry Reform Act and prohibit system loss charges, including the corresponding VAT, from being passed on to consumers.

ELECTRIFICATION TARGET
Meanwhile, the Philippines could be waiting until 2043 to achieve total electrification with the constrained funding for the initiative, according to an official from the Department of Energy (DoE).

Energy Undersecretary Rowena Cristina L. Guevara said that more than two million households remain without electricity, putting the country far behind its target of achieving full electrification by 2028.

“Based on our calculations, it will happen in 2038, or possibly 2043, as long as the allocation for electrification isn’t increased,” Ms. Guevara told congressman at the DoE budget hearing on Wednesday.

The government will need about P100 billion to hit the goal or about P10 billion annually, she said.

However, the National Electrification Administration (NEA), the agency tasked to support rural electrification, was only earmarked around P2-3 billion per year.

“We have the Total Electrification Program under DoE. This is aside from the NEA’s budget, which is about P500 million,” Energy Secretary Sharon S. Garin said.

For 2027, the DoE is proposing a budget of P5.58 billion, up 25.7% from its current appropriations of P4.43 billion.

The proposed budget includes P1.36 billion for the Philippine Gradiometry and Seismic Survey Project, P600 million for the Total Electrification Project, and P949.71 million for the Information Systems Strategic Plan.

Under the electrification initiative, Energy Undersecretary Giovanni Carlo J. Bacordo said the department seeks to procure additional mobile energy systems (MES) to accelerate energization of households.

MES is a rapidly deployable, solar-powered energy solution that can provide reliable electricity for disaster response, unserved households, and underserved areas.

“For 2027, we are proposing a P600-million budget for at least 60 additional MES units,” Mr. Bacordo said.

Data from the DoE showed that household electrification has reached 94.93%, energizing 28.75 million households out of 30.28 million potential households. Luzon has an electrification rate of 98.3%, covering 17.66 million households. In the Visayas, the electrification rate stands at 95.7%, while in Mindanao, about 85.3% of households have access to electricity.

Bagong Henerasyon Party-list Rep. Robert L. Neal agreed that the DoE and NEA’s budget should be increased to allow them to pursue electrification targets. — with Sheldeen Joy Talavera

THE PESO sank to a new record low against the US dollar on Wednesday, extending its decline for a fourth straight trading day as broadening price pressures from the renewed Middle East conflict weighed on the currency and raised the risk of a breach of the P63 level.

The peso weakened by 16.5 centavos to P62.565 against the greenback from its previous record low of P62.40 on Tuesday, Bankers Association of the Philippines data showed.   

Year to date, the peso has depreciated by P3.775 or 6.03% from its P58.79 finish on Dec. 29, 2025.

The local unit opened Wednesday’s session flat at P62.40 per dollar, which was already its intraday best and was the peso’s previous trough.

It later reached P62.69 against the greenback, marking its new record intraday low.

Dollars exchanged rose to $1.828 billion on Wednesday from $1.306 billion on Tuesday.

“The peso’s weakness reflects a combination of higher US yields, expectations for tighter US monetary policy, elevated oil prices, and geopolitical uncertainty,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message. “While the recent Middle East tensions have added to market caution, the pressure on the peso stems from broader global factors.”

A trader said in a text message that the peso’s continued decline also reflected the overall outlook on the Philippine economy and rate differentials.

“The peso recorded a new all-time low amid prevailing risk off sentiment in the market due to lingering tensions in the Middle East and hawkish remarks from US Federal Reserve Chair Kevin Warsh increasing hopes of a hike,” a second trader said by telephone. “The market continued to rally, tracking the strong dollar overnight.”

In his first Jackson Hole address last week, Mr. Warsh said policymakers may need to raise borrowing costs if inflation does not ease to the US central bank’s 2% target.

Dollar demand was also supported by the seasonal increase in local importation activities in the third quarter in preparation for the expected rise in demand in the last three months of the year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Thursday, Mr. Ricafort sees the peso moving between P62.45 and P62.7 against the dollar.

Analysts expect the peso to test the P63-per-dollar level in the near term as pressure from the intensifying Middle East conflict will continue to weigh on the dollar.

“The P63 level is an important psychological marker, but the currency’s direction will continue to depend largely on external developments,” Mr. Asuncion said.

Persistent tensions in the Middle East and elevated oil prices add risk to the peso hitting the P63-per-dollar level, the second trader said, noting this would stoke inflation and raise concerns about the growth outlook.

However, the trader noted the local unit could remain under the P63 level as the market is overbought, with possible profit taking and technical correction.

“The P63 level will naturally be watched as the next psychological level but it should not be interpreted as a fundamental threshold or forecast,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

He said the peso may remain volatile in the near term as markets continue to digest movements in oil prices, US interest rates, and geopolitical developments. 

“Rather than focusing on how low the peso can go, the more important questions are whether the depreciation remains orderly, how persistent it becomes, and whether the underlying external pressures begin to ease,” Mr. Rivera said.

However, the possibility of the peso testing the P63 level has increased, he added.

“There is certainly a risk-off component associated with the renewed Middle East hostilities, but the pressure is broader than a knee-jerk reaction. Higher oil prices, rising US Treasury yields, and stronger safe-haven demand for the dollar are reinforcing one another, and these are particularly relevant for an oil-importing economy like the Philippines,” Mr. Rivera said.

The first trader likewise said the peso’s continued slide will add to inflationary pressures especially as dollar demand is expected to increase in the next few months.

“The peso’s weakness is a factor for the BSP because of its potential impact on inflation, particularly through higher fuel and import costs. However, the key question is whether the depreciation proves persistent enough to affect inflation expectations and the broader inflation outlook,” Mr. Asuncion said.

The Monetary Board last week raised benchmark rates by 25 basis points (bps) for a third straight meeting in a preemptive move to combat broadening price pressures from volatile global oil prices, the looming “Super El Niño,” and potential minimum wage increases

BSP Governor Eli M. Remolona, Jr. has said they hope there will be no more need for further tightening, but still left the door open for more hikes as necessary to steer inflation back to their 3% target.

The photograph was taken in August 2026 as part of a conservation survey by the Center for Conservation Innovation Ph Inc. (CCIPH), in partnership with Iraya Mangyan communities within their ancestral domain.

The species’ last confirmed record was in 2005, when a Mindoro bleeding-heart was caught in a snare intended for Red Junglefowls near a fruiting Ficus tree. The lack of confirmed records eventually led to the Mindoro bleeding-heart being included in the Lost Birds List, a global registry of bird species not seen, heard or genetically detected for at least a decade.

The new record is significant not only because it confirms the species’ continued survival, but also because the bird was detected at an elevation above 900 meters, beyond its historically documented range.

The Mindoro bleeding-heart has traditionally been considered a lowland forest specialist, usually occurring at around 400 meters above sea level and occasionally reaching about 800 meters.

CCIPH researchers said their earlier ecological studies had predicted that suitable habitat for the species could now be more concentrated at higher elevations.

The latest camera-trap record is consistent with that prediction, although the researchers cautioned that a single observation cannot establish the species’ current distribution.

The finding may indicate that some surviving Mindoro bleeding-hearts are using upland forests as refuges as their traditional lowland habitat continues to decline.

Mindoro’s forests have been reduced and fragmented by agriculture, settlements, quarrying, timber extraction, roads and other forms of land conversion. Remaining forest areas are increasingly separated by farmland and settlements.

Researchers also noted that the absence of previous confirmed sightings should not have been treated as proof that the species was extinct.

Earlier field surveys by the team failed to detect the bird. For rare and secretive species, however, non-detection can result from several factors, including survey timing, weather, camera placement, habitat conditions and low population density.

The researchers described this risk as the “Romeo Error,” referring to the possibility of declaring a species extinct after prolonged non-detection and consequently reducing conservation efforts while the species may still be surviving in an overlooked area.

The latest record provides an opportunity to conduct more targeted research on the species’ remaining population, distribution and habitat requirements.

The monitoring was carried out under the Mindoro Forest and Biodiversity Conservation Programme, with Iraya Mangyan patrollers Alex, Melenciano, Cristito, Jay and Sonnyboy helping conduct field activities and monitor the forest.

CCIPH researchers John Bibar and Joshua Manila deployed the camera traps with the community patrollers.

The conservation group said the record demonstrates the value of combining scientific monitoring with Indigenous knowledge and long-term stewardship of ancestral lands.

The researchers stressed that the photograph does not mean the species is secure. Instead, it provides evidence that the Mindoro bleeding-heart is still present and underscores the need to protect and restore the remaining forest habitat on which it depends. — Kaizzer Angela Marie V. Manuba

FEU is home to the country’s largest ensemble of Art Deco buildings. Six of these structures, designed by National Artist for Architecture Pablo Antonio and his son Pablo, Jr., have been declared National Cultural Treasures. Rather than standing as monuments to a bygone period, they remain in active use, making architectural preservation part of the school community’s everyday experience.

Founded in 1928, FEU has been in the heart of Manila for 98 years. Its presence has helped define the character of the city, while generations of students have passed through its classrooms during periods of reconstruction, urban growth, and social change.

That history gave wider context to a distinction conferred on June 18, when FEU received the Natatanging Tagapagbayad ng Buwis para sa Negosyo (Korporasyon) award during the Gawad Manileño 2026 at the Metropolitan Theater. Held as part of Manila’s 455^th founding anniversary celebration, the awards recognized individuals and organizations whose dedication and service support the capital’s development.

In his remarks, Manila Mayor Francisco “Isko Moreno” Domagoso emphasized that building a city is a shared responsibility. “A great city is not built by the government alone; it is built by the citizens who choose to care,” he said.

FEU was the only university represented among the corporate awardees during the ceremony. Dr. Rowena Capulong Reyes, FEU Vice President for Corporate Affairs, accepted the recognition.

“[Our] history has always been closely linked with the history of Manila,” Reyes said. “For almost 100 years, FEU has grown alongside the city and its people. We are honored by this distinction and remain committed to contributing to Manila through education, culture, community engagement, and nation-building.”

The award draws attention to a form of civic participation less immediately visible than a heritage campus or an educational legacy. Fulfilling its financial obligations allows an institution to take part in the city’s development while demonstrating fiscal responsibility, accountability, and responsible corporate citizenship.

FEU Chief Finance Officer Rosanna Salcedo said the recognition reflects the university’s approach to financial stewardship.

“This recognition reflects FEU’s commitment to responsible corporate citizenship and good governance. It underscores the university’s strong financial stewardship, integrity, and accountability, while demonstrating that FEU not only educates future leaders but also actively contributes to the sustainable growth and progress of the community it serves,” Salcedo said.

FEU will mark its centennial in 2028. The milestone will commemorate not only a century of education, but also a century since the university made Manila its home and became part of the city’s continuing life.

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BusinessWorld was recognized as the “most supportive media organization whose work has consistently amplified evidence-based research and deepened public understanding of key development issues.”

BusinessWorld Editor-in-Chief Cathy Rose A. Garcia received the award from PIDS President Philip Arnold P. Tuaño, former Presidential Communications Operations Office (PCOO) Secretary Herminio B. Coloma, Jr. and PIDS Vice-President Marife M. Ballesteros at an event on Monday in Quezon City.

THE Philippines’ debt service on foreign loans continued to rise as the government made higher principal payments as of May, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Based on data released by the central bank, the country’s external debt service burden amounted to $6.208 billion in the five-month period, up 4.78% from $5.925 billion a year ago.

Broken down, principal payments rose by 13.55% year on year to $3.008 billion in the January-to-May period from $2.649 billion previously.

However, interest payments slipped by 2.29% to $3.2 billion at end-May from $3.275 billion a year earlier.

SM Investments Corp. Vice-President and Group Economist Robert Dan J. Roces noted that the Philippines’ higher foreign debt service burden reflected the increase in maturing debt rather than financial stress.

“The increase in debt service largely reflects scheduled repayments, not financial stress,” he said in a Viber message. “More debt matured during the period, pushing principal payments higher, while interest payments declined.”

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the end-May external debt service bill points to “responsible debt repayment rather than financial stress.”

The debt service bill represents principal and interest payments after rescheduling, according to the BSP.

This includes principal and interest payments on fixed medium- and long-term credits, including International Monetary Fund credits, loans covered by the Paris Club and commercial bank rescheduling, and New Money Facilities.

It also covers interest payments on fixed and revolving short-term liabilities of banks and nonbanks.

However, the debt service data exclude prepayments on future years’ maturities of foreign loans and principal payments on fixed and revolving short-term liabilities of banks and nonbanks.

Still, the country’s reserves level and sustained foreign currency inflows will allow it to finance its external obligations, Mr. Roces noted.

“With ample reserves and steady foreign currency inflows, the country remains well-positioned to meet its external obligations,” he said.

While the BSP said its dollar reserves remain adequate, the latest data showed its gross international reserves (GIR) fell year on year for a fifth straight month to its lowest level in nearly two years.

As of end-July, the country’s GIR stood at $103.317 billion, down by around 2% from the $105.418 billion it held a year ago and by 1.36% from $104.745 billion at end-June.

The country’s dollar inflows are largely sourced from overseas Filipino workers’ remittances, revenues from business process outsourcing (BPO), and its export receipts.

“As long as economic growth, remittances, BPO revenues, and foreign exchange reserves remain supportive, the country’s external debt position remains broadly manageable,” Mr. Ravelas noted.

“The key challenge is ensuring that the economy continues to generate sufficient dollar earnings to comfortably meet future debt obligations while preserving fiscal flexibility,” he added.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the budget deficit, global and local interest rates, foreign debt maturities, and the peso’s performance against the dollar will determine the country’s external debt service bill in the months ahead.

“For the coming months, foreign debt servicing costs would be a function of future budget deficits, interest rate hikes locally and in the US or globally, foreign debt maturities especially increased borrowings since the COVID-19 pandemic; US dollar-peso exchange rate since foreign debts are partly paid in pesos…,” he said in a Viber message.

The US Federal Reserve’s benchmark rate has remained at the 3.5%-3.75% range for five straight meetings but is expected to rise later this year.

The BSP hiked its key policy rate by a third consecutive 25 basis points (bps) to 5% last month.

BSP Governor Eli M. Remolona, Jr. has said he is open to taking further monetary policy action as necessary to bring inflation closer to their 3% target, with the headline clip at 5% as of July and projections that it will continue to breach their goal until 2028.

Meanwhile, the external debt service bill as a share of gross domestic product (GDP) stood at 3.4% in the first quarter, higher than the 2.9% in the prior year. There was no available data for end-May.

However, the Philippines’ outstanding external debt edged up by 0.42% to $147.351 billion as of end-March from $146.737 billion in the same period last year, according to the latest BSP data.

Quarter on quarter, the debt stock went down by 0.2% from $147.651 billion.

Of the total, $95.655 billion is public sector debt, while $51.696 billion came from the private sector.

The BSP’s external debt data cover borrowings of Philippine residents from nonresident creditors, regardless of sector, maturity, creditor type, debt instruments or currency denomination.

The central bank gathers data on external debt through reports submitted by borrowers, banks, and major foreign creditors.

For 2026, the National Government plans to borrow a total of P2.682 trillion, up 3.15% from the P2.6-trillion borrowing program last year. This accounts for 5.1% of the country’s GDP.

It seeks to source 77% or about P2.065 trillion from local lenders and the remaining 23% or P616.86 billion from foreign creditors. It observed an 81:19 borrowing mix in 2025 in favor of local sources.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco and Asia Economist Meekita Gupta said the BSP’s latest inflation outlook seems “overly pessimistic.”

Following its August policy review, the central bank revised its full-year inflation estimates to 6.1% from 6.4% for 2026, 5.4% from 4.5% for 2027, and 3.3% from 3.1% for 2028.

“These all seem overly pessimistic to us, particularly next year’s projection, which undoubtedly will be dragged down massively by base effects,” Mr. Chanco and Ms. Gupta said in a note on Tuesday.

They noted that inflation will likely ease for a fourth straight month in August, with their forecast matching market consensus at 6%.

“Inflation likely cooled further in August, to 6% from 6.2% in July, albeit thanks mainly to favorable food base effects,” Mr. Chanco and Ms. Gupta said.

“A slight re-acceleration in the transport lift, by 0.1 ppt (percentage point), should prevent a more noticeable headline drop,” they added.

A BusinessWorld poll of 20 analysts conducted last week yielded a median estimate of 6% for the August headline print, easing from 6.2% in July but accelerating from 1.5% a year ago.

If realized, inflation would hit its slowest pace in four months or since the 4.1% in March.

However, it also means that inflation would breach the central bank’s 3% target for six months in a row, bringing the eight-month average clip to 5.1%.

The Philippine Statistics Authority is scheduled to release the August inflation report on Friday (Sept. 4).

Meanwhile, Mr. Chanco projects core inflation, which excludes volatile food and oil prices, to slow to 4.1% from 4.2% in July.

“That being said, core inflation should continue to ebb, slipping to 4.1% from 4.2%, providing additional comfort to policymakers, especially the BSP,” he said in an e-mail.

Last month, the Monetary Board delivered its third consecutive 25-basis-point (bp) hike, bringing the benchmark interest rate to an over one-year high of 5%.

It has so far raised rates by a total of 75 bps since it began its tightening cycle in April.

According to Mr. Chanco and Ms. Gupta, the BSP’s August hike likely marked the end of its tightening cycle as they expect inflation to settle at 5% in the fourth quarter before cooling further to 3.4% in the first quarter of 2027.

“Only 20% of surveyed forecasters, including us, incorrectly expected the Bank to hit the pause button, though we believe that the August hike will be its last,” they said.

As of August, Pantheon Macroeconomics’ 2026 inflation estimate stands at 5.3%.

On the other hand, Singapore-based Oversea-Chinese Banking Corp. (OCBC) still expects the BSP to extend its tightening cycle up to a fifth consecutive hike this year to ensure inflation risks are contained.

“Looking ahead, although the Governor noted that the hike was preemptive and aimed at mitigating the price pressures from the severe El Niño phenomenon and minimum wage increases, he did not close the door on further rate hikes,” OCBC said in a separate report dated Aug. 31.

“We expect BSP to remain focused on keeping price pressures contained,” it added.

OCBC’s baseline policy call prices in an additional 50 bps worth of hikes, through two consecutive quarter-point increases, to bring the key policy rate to 5.5% by yearend.

BSP Governor Eli M. Remolona, Jr. has said he hopes they won’t have to tighten further but left the door open for additional hikes as needed to bring inflation closer to their target.

OCBC also acknowledged that its growth outlook for the Philippines is “less optimistic” than the central bank.

OCBC sees the country’s gross domestic product growing by a new post-pandemic low of 3.2% this year, slower than last year’s 4.4%.

Mr. Remolona has said growth will start picking up in the fourth quarter before reaching full recovery next year, noting that the country’s medium-term economic fundamentals remain intact.

Meanwhile, GlobalSource Partners Country Analyst Diwa C. Guinigundo noted that while the BSP made the right call to hike for a third straight time, it must ensure a clearer forward guidance ahead of its next meeting.

“The issue is not simply whether the BSP should raise, hold or eventually cut its policy rate,” he said in an Aug. 31 commentary. “The more fundamental question is whether monetary policy is sufficiently restrictive in real terms to bring inflation back to target and keep expectations firmly anchored.”

Mr. Guinigundo, a former BSP deputy governor, said the central bank must not be complacent on the back of its elevated inflation outlook and the peso’s continued depreciation. 

This means reaffirming its commitment to its price stability mandate in a policy environment challenged by the trade-off between containing inflationary pressures or supporting tepid growth, he added.

“If inflation remains elevated and the real policy rate remains negative, simply holding the nominal rate unchanged could be interpreted by markets as a further easing of the real monetary stance. That would be the wrong signal,” Mr. Guinigundo said.

“The BSP should resist the temptation to declare the tightening cycle effectively finished simply because growth is weak. This is not an argument for indiscriminate tightening or for ignoring growth. It is an argument for recognizing the hierarchy of responsibilities,” he added.

The Monetary Board will have its last two rate-setting meetings this year on Oct. 22 and Dec. 17. — Katherine K. Chan

THE PESO tumbled to a new low against the US dollar on Tuesday as hawkish signals from the US Federal Reserve and intensifying Middle East tensions lifted the greenback.

The peso weakened by 13.5 centavos to a record-low P62.40 against the dollar on Tuesday from its previous record of P62.265 on Friday, Bankers Association of the Philippines data showed.

Year to date, the peso has depreciated by P3.61 or 5.79% from its P58.79 finish on Dec. 29, 2025.

The local unit opened Tuesday’s session at P62.25 per dollar, which was already its intraday best. Its weakest showing was its closing value of P62.40, which also surpassed Friday’s intraday low of P62.27.

Dollars exchanged slid to $1.306 billion from $1.96 billion previously.

The peso’s slide to a fresh low reflected a stronger US dollar environment driven by rising US Treasury yields, growing expectations of a rate hike by the US Federal Reserve, and higher oil prices amid escalating geopolitical tensions in the Middle East, Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message. 

“These developments have encouraged investors to shift toward dollar assets while increasing inflation and import cost concerns for oil-importing economies such as the Philippines,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message that the greenback was generally stronger following hawkish signals from Fed Chair Kevin Warsh at the Jackson Hole Symposium last week.

Mr. Ricafort also said the peso’s decline was tempered by signs that the Bangko Sentral ng Pilipinas (BSP) may have intervened to smooth excessive volatility.

Meanwhile, a trader noted in a text message that the central bank signaled that they will not defend the peso if its decline tracks the region or is in line with the dollar’s general strength.

BSP Governor Eli M. Remolona, Jr. said on Thursday that the central bank can only slow the peso’s depreciation and manage sharp movements rather than defend a specific level as they will run out of reserves.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message that the peso is likely to remain under pressure in the near term.

Mr. Asuncion said global factors are likely to remain the primary drivers of the peso’s movement in the coming months, mainly to be led by upcoming US economic data and the Fed’s policy decision later this month.

“Sustained strength in the dollar, elevated global yields, and higher energy prices could keep the [local] currency on the defensive. However, continued support from remittances, BPO (business process outsourcing) revenues, tourism receipts, and foreign investment inflows should help temper excessive volatility,” he added.

Both Mr. Ricafort and Mr. Ravelas expect the local unit to trade within the P62.25 to P62.50 per dollar range in the near term. 

Meanwhile, MUFG Global Markets Research Senior Currency Analyst Michael Wan said he expects the peso to hover around P62 to the dollar for the remainder of the year.

“We have shifted our USD/PHP profile slightly higher, and now forecast USD/PHP trading around the P62 levels in second half of 2026 before moving lower towards P61 in the first half of 2027,” he said on Tuesday.

Still, Mr. Wan noted that the peso will gradually strengthen against the dollar, driven by several factors including the potential narrowing of the country’s trade deficit and a growth recovery as its fiscal position improves.

“While there are significant risks from a severe El Niño event, the good news is that we have seen domestic rice prices move into better balance between supply and demand at least over the past two months. Lastly, our model suggests PHP is now slightly undervalued against the dollar,” he said. — with Katherine K. Chan

PHILIPPINE manufacturing activity expanded at its fastest pace in nearly a decade in August, driven by stronger new orders and improved production efficiency, S&P Global said.

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) improved to 54.9 in August from 51.8 in July. This was the manufacturing sector’s fastest growth since December 2016.

August also marked the fourth straight month of PMI expansion.

A PMI reading above 50 signals an improvement in operating conditions from the previous month, while a reading below 50 shows a deterioration.

“The Filipino manufacturing sector continued to build momentum in August, moving on from the flat performance seen in the previous quarter, when activity was affected by the conflict in the Middle East,” said S&P Global Market Intelligence Economist Maryam Baluch.

At 54.9, the country’s August PMI reading was the highest among selected Southeast Asian economies. It was ahead of Thailand (53.8), Myanmar (50.3), Malaysia (50.2), and Indonesia (49.8).

Citing anecdotal evidence, S&P Global said growth in new orders accelerated to its fastest pace in six months in August, driven by new product and model launches, higher repeat business and a broader customer base.

“Overall new business also received a modest lift from a renewed improvement in international sales, as new export orders for Filipino manufactured goods rose for the first time in six months,” it said.

S&P Global noted that production output rose in August, the fastest since December 2016.

“Improved underlying demand and greater production efficiency were cited by respondents as key factors behind a substantial rise in manufacturing output during August,” S&P Global said.

August data also showed a further rise in input purchases, the fastest in six months.

“Firms responded by increasing both purchasing and hiring to keep up with greater production needs,” said Ms. Baluch.

Inventories rose for the first time since February, although at a moderate pace.

S&P Global said finished goods inventories slipped for a second month in a row as “supplier delays led some firms to draw on existing stocks to meet production requirements, although the rate of depletion remained only marginal.”

Employment rose for the first time in five months, the strongest in 21 months, it said.

Meanwhile, the pace of input-cost inflation eased in August from July, as firms reported higher payments for energy, raw materials and logistics, S&P Global said.

Output charges went up, but at a modest pace and weakest in the last six months, it added.

S&P Global said business confidence surged to its highest level since November 2024.

“Goods producers that forecasted an expansion in output in the year ahead cited expansion plans, the introduction of new product lines, and expectations of stronger inflows of new work and new customer wins,” it said.

Francisco Cid L. Terosa, an associate professor and former dean of the University of Asia and the Pacific School of Economics, partly attributed the faster PMI activity to the global boom in artificial intelligence (AI), which benefited Filipino electronics and intermediate-goods suppliers.

He also cited easing inflationary pressures and expectations of stronger demand in the next few months, which lifted pre-production purchases of raw materials and semi-finished goods and supported job creation.

“I think the recovery is sustainable in the near term, particularly for electronics, which is driven by the global AI and technology boom, and food processing and consumer goods industries,  which are both driven by strong domestic demand,” he said in a Viber message.

If sustained, stronger manufacturing activity could help prevent a deeper economic slowdown, Mr. Terosa said.

“Manufacturing growth can provide a vital buffer for third-quarter gross domestic product as it results in job creation, higher household income, and consequently, consumer spending. It can also constrain manufacturing-related inflationary pressures,” he added.

The Philippine economy grew by 2.3% in the second quarter, a post-pandemic low, in the April-to-June period. That was well below the 5.4% expansion in the same quarter last year and the 2.8% growth in the first quarter.

During the first half, the economy grew by 2.6%, below the government’s 3.5%-4.5% target for the year.

However, Mr. Terosa said that manufacturing growth alone is unlikely to drive a broad-based recovery, as the economy remains heavily reliant on services and consumption.

He said weaknesses in real estate, private construction, and consumer spending could weigh on economic growth.

“The broader economic outlook is still beset by a weak peso, external trade uncertainties, negative repercussions of the Iran war and elevated benchmark interest rates,” he said.

“Hence, a resurgent manufacturing sector can provide cushion for the third, but, on its own, it may not lift the economy out of the doldrums. Manufacturing growth alone may be inadequate to revitalize the sluggish economy,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the August PMI points to a pickup in business and other economic activity.

The improvement is consistent with strong exports driven by demand for AI-related electronics and semiconductors, as well as the seasonal increase in pre-production purchases ahead of the Christmas period, he said.

“Going forward, local manufacturing performance would be partly a function of catching up National Government spending, especially on infrastructure,” he added.

However, Mr. Ricafort said higher oil, shipping and logistics costs could raise import costs and squeeze manufacturers’ profit margins.

THE BANGKO SENTRAL ng Pilipinas (BSP) has room to curb excessive volatility in the peso but does not need to defend a specific exchange rate unless the currency’s depreciation becomes disorderly or generates significant inflationary pressures, analysts said.

“For the near term, all else equal, we expect the peso to remain around current levels, with some correction toward P61/$ by yearend as seasonal remittance inflows pick up,” China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message.

The peso weakened by 37.7 centavos to close at a record-low P62.265 against the dollar on Friday from P61.888 on Thursday. This was a day after the Monetary Board raised its policy rate by 25 basis points to 5%.

Ms. Velasquez attributed the peso’s weakness to a combination of the country’s structural balance-of-payments (BoP) deficit due to weak exports relative to hefty import demand, risk-off sentiment favoring the dollar, softer domestic sentiment and expectations of further depreciation.

“The last two factors can reverse, while the structural pressure is likely to persist in the near term,” she said.

A correction in global oil prices could also ease pressure on the peso by reducing the country’s import bill, Ms. Velasquez added.

“The BSP has room to smooth excessive volatility, but we don’t think it needs to defend a particular level unless depreciation becomes disorderly or starts generating significant inflationary pressures,” she said.

Ms. Velasquez estimated that every P1 depreciation of the peso against the dollar adds 0.03 percentage point to inflation. Around 20% of the inflation basket consists of imported goods, she added.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said the central bank has “ample firepower” given the country’s healthy dollar reserves.

The country’s gross international reserves stood at $103.32 billion as of end-July, 1.36% lower than the $104.74 billion a month earlier.

However, Mr. Ravelas said intervention alone could not reverse the depreciation driven by global dollar strength and capital flows.

“The peso’s weakness is more a reflection of global dollar strength than domestic fragility,” he said.

“If peso weakness begins to materially threaten inflation or inflation expectations, the BSP may need to consider additional policy tightening,” he added.

For now, the BSP would likely favor a combination of calibrated intervention in the foreign exchange market and a data-dependent monetary policy approach, Mr. Ravelas said.

“The key question for the BSP is not the exchange rate level itself, but whether the depreciation becomes persistent enough to threaten price stability,” he added.

MUFG Global Markets Research Senior Currency Analyst Lloyd Chan said the Philippine peso remained Asia’s “weakest link.”

“USD/PHP has moved to fresh record highs despite hawkish rhetoric from the BSP. (BSP) Governor (Eli M.) Remolona, (Jr.) has signaled willingness to tighten policy further as inflation risks remain elevated, but markets continue to focus on the difficult balance between containing inflation and preserving growth,” he said in a commentary on Monday.

In Asia, the market narrative has likely shifted toward whether inflation remains sticky enough to warrant further policy tightening, Mr. Chan said.

“While recent dollar weakness had provided support for the Asia foreign exchange broadly, Friday’s market reaction suggests that several regional currencies could face a tougher backdrop this week if front-end US yield increases prove persistent,” he added.

Mr. Remolona last week said the Philippines needs to strengthen its exports to support the peso.

“The exchange rate itself is something very hard to fix for a country like the Philippines. As you know, we’ve had a trade deficit that’s about 13% of our gross domestic product,” he told a Senate hearing on Thursday. “Our exports are really lacking, so it’s hard to stop the peso depreciation.”

He said the country could run out of reserves if it tried to support the peso without addressing its weak exports.

University of Asia and the Pacific Associate Professor George N. Manzano agreed that expanding exports could support the peso by generating more foreign exchange inflows, but said the high import content of many Philippine goods exports could limit the benefits.

“This means that even when exports increase, a significant portion of the foreign exchange generated may still be used to pay for imported inputs,” he said in a Viber message.

Improving productivity, reducing logistics and energy costs, and strengthening domestic supply chains would help make Philippine exports more competitive, Mr. Manzano said.

He said the Philippines could also boost foreign exchange inflows by attracting more foreign direct investments, particularly those that establish export-oriented industries and integrate the country into regional and global value chains.

The services sector, including business process outsourcing, tourism and digitally delivered services, is another major source of foreign exchange, he added.

“The Philippines has a strong comparative advantage in these areas, and expanding into higher-value services would provide significant opportunities for growth,” Mr. Manzano said.

Philexport President Sergio R. Ortiz-Luis, Jr. said he agrees with Mr. Remolona’s statement that the Philippines has to strengthen its exports.

“Because right now, although we are proud in saying that our export growth in percentage is higher than some of our neighbors, our absolute number is smaller,” he told BusinessWorld in a phone interview.

Mr. Ortiz-Luis said one of the reasons the peso is the worst performer in the region is because of the country’s growing trade deficit.

“And the reason is really because we are not investing in exports,” he added.

In the first seven months, the trade deficit ballooned by 29.2% to $37.34 billion from $28.91 billion a year ago. Imports grew by 18.9% to $92.26 billion as of end-July, outpacing the 12.9% increase in exports to $54.92 billion.

Mr. Ortiz-Luis said the government should take the industry more seriously and fund product research and development, marketing, promotions and participation in exhibitions.

“It is not surprising that because we are not investing in exports, while we are growing in percentage, we are being left behind continuously,” he added.

“I think that you don’t expect a major reversal. It will be slow, but as long as we see it is improving, I feel that’s good,” Mr. Balisacan told reporters in a mix of Filipino and English on Thursday.

However, he expressed hope that consumption will recover after the weak second quarter.

Philippine gross domestic product (GDP) expanded by 2.3% in the second quarter — a new post-pandemic low, amid tepid consumption growth and sluggish public spending.

Household final consumption expenditure, a primary driver of the economy, grew by 2.8% in the second quarter — the weakest pace since the 4.8% contraction in the first quarter of 2021. It also marked the fifth straight quarter of slowing growth.

Mr. Balisacan said elevated inflation remains a major constraint on household spending.

Headline inflation eased to 6.2% in July from 6.4% in June but remained above the Bangko Sentral ng Pilipinas’ (BSP) 3% target. Inflation averaged 5% in the first seven months, faster than the 1.7% in the same period last year.

A recovery in public infrastructure spending could also support consumption by stimulating private sector activity, particularly in construction, Mr. Balisacan said.

“When public infrastructure projects are underway, it influences private sector construction, so it generates multiplier effects across the country,” he said.

In the second quarter, public construction plunged by 32.4% as infrastructure agencies remained cautious following the flood control corruption scandal last year.

Mr. Balisacan also identified sentiment as an important factor in the consumption outlook. The corruption scandal involving flood control projects also continued to weigh on consumer and business sentiment.

“Hopefully, we can get inflation to decline and Congress will deliver the legislation that could help improve the perception about our governance,” he said.

Analysts said they expect household consumption to pick up in the second half, although it will remain muted.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., expects consumption to remain positive but subdued in the third quarter before strengthening more visibly in the fourth quarter.

“The ‘ber’ months should provide the usual seasonal lift from holiday spending, remittances, bonuses and greater discretionary activity, but consumers are likely to remain more selective than in previous cycles,” he said.

Mr. Arce said easing food inflation would improve household purchasing power, although consumers would likely remain value-conscious because prices are still substantially higher than in previous years.

“The fourth quarter should be stronger than the third, but I would describe the outlook as a normalization in consumption rather than a consumption boom,” Mr. Arce said.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet was more cautious, saying household consumption could remain weaker than a year earlier even if it picks up from the second quarter.

“The consumer is under pressure from elevated prices, slow growth, high interest rates and natural calamities,” he said.

Mr. Colet said a breakthrough in Middle East peace efforts could improve consumer sentiment by easing inflationary pressures, although such a development does not appear likely for now.

Beyond the near-term consumption outlook, BSP Governor Eli M. Remolona, Jr. has raised concern over the country’s low savings rate, which he linked to the persistent current account deficit.

“The current account has been in the negative for a long time. As much as possible, we hope savings will increase because that is the long-term solution,” Mr. Remolona told a Senate budget briefing.

Mr. Remolona said domestic investment exceeds national savings, requiring the country to obtain financing from abroad.

In the first quarter, the current account deficit widened to $5.66 billion, equivalent to 4.8% of GDP from $4.2 billion or 3.7% of GDP a year earlier.

For 2026, the central bank expects the current account deficit to reach $18 billion or 3.6% of GDP.

However, Jose Enrique “Sonny” A. Africa, executive director of the think tank IBON Foundation, pushed back against Mr. Remolona’s characterization, saying low household savings largely reflect inadequate incomes rather than excessive consumption.

“Millions of Filipinos consume all their earnings and don’t save because their incomes are so low that they don’t have anything left to save,” he said in a Facebook post.

Mr. Africa said the BSP should instead focus on directing affordable financing toward farmers, fisherfolk and micro, small and medium enterprises, while supporting accessible public services, infrastructure and utilities. — Justine Irish D. Tabile

THE PHILIPPINES saw short-term foreign investment inflows drop sharply in July amid persistent volatility, central bank data showed.

Transactions on foreign investments registered with the Bangko Sentral ng Pilipinas (BSP) through authorized agent banks yielded a net inflow of $66.47 million in July, plunging by 91.05% from $742.56 million a year earlier.

Month on month, this was 60.93% lower than the $170.12-million net inflow in June. 

Still, July marked the third month in a row that foreign portfolio investments (FPIs) posted a net inflow.

FPIs are also referred to as “hot money” due to the ease with which these flows enter or leave the country.

Based on BSP data posted on its website, gross outflows of hot money jumped by 33.21% year on year to $2.301 billion in July from $1.727 billion. However, it declined by 16.99% from the $2.772-billion outflows in the previous month.

On the other hand, total hot money inflows amounted to $2.368 billion during the month, declining by 4.15% from $2.47 billion a year prior and by 19.53% from $2.942 billion in June.

Lingering volatility in global markets likely kept foreign investors cautious about channeling funds into short-term investments in the country, analysts said.

“Foreign portfolio investments posted a third straight month of net inflows in July, although the pace slowed significantly to $66.47 million from $170.12 million in June, indicating that foreign investors remained selectively constructive on Philippine assets despite a more challenging global environment,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said via Viber. 

SM Investments Corp. Vice-President and Group Economist Robert Dan J. Roces also attributed the reduced FPI net inflows in July to the local currency’s volatility.   

“The third straight month of inflows is a positive sign that foreign investors continue to see value in Philippine assets, supported by improving growth prospects and attractive yields,” he said in a Viber message. “The smaller July inflow, however, shows that investors remain cautious amid global uncertainty and peso volatility.”

Soaring oil prices amid renewed conflict in the Middle East reignited safe-haven demand for the greenback in July, dragging the peso to as low as P61.847 per dollar.

The local unit stood at an average of P61.5963 versus the dollar in July, about 8.54% or P4.844 weaker than the P56.7523 recorded a year ago, according to BSP data.

Most or $86 million of the net inflows in July were recorded in investments in Philippine Stock Exchange (PSE)-listed securities, a turnaround from the $141-million net outflow in the same month last year.

Meanwhile, investments in peso-denominated government securities reversed to a net outflow of $20 million from the $880-million net inflow a year earlier. 

Still, Mr. Asuncion noted that the sustained hot money net inflow signals investors remain optimistic about Philippine financial markets despite global and domestic headwinds weighing on their risk appetite.

“The continued inflow likely reflected pockets of opportunity in local financial markets, supported by still-resilient domestic economic activity and investor search for returns, even as concerns over global growth, geopolitical tensions, elevated oil prices, and inflation risks tempered risk appetite,” he said.   

SEVEN-MONTH HOT MONEY
In the seven months to July, net outflows of hot money reached $3.938 billion, larger than the $2.285-billion outflows a year earlier.

Combined gross outflows grew by an annual 60.82% to $19.546 billion in the seven-month period from $12.154 billion a year ago. Total inflows went up by 8.1% to $15.608 billion as of end-July from $14.439 billion a year earlier.

Broken down, foreign investments in government securities posted a net outflow of $2.213 billion in the period ending July, a reversal of the $3.742-billion net inflow seen a year prior.

Meanwhile, hot money outflows in PSE-listed securities amounted to $1.728 billion as of July, higher than the $1.461-billion outflows recorded in the previous year. 

Analysts said FPI flows will likely remain volatile for the remainder of the year as global uncertainty continues to cloud the investment climate.

“Looking ahead, foreign portfolio flows may continue to swing between inflows and outflows depending on global market developments and investor sentiment,” Mr. Asuncion said.

“While the Philippines remains on investors’ radar, flows are likely to stay measured and selective as markets navigate heightened uncertainty and a more complex interest rate and inflation environment.”

For Mr. Roces, the Philippines needs to attract more short-term foreign investments to strengthen its financial stability and buoy the peso.   

“We expect flows to remain uneven, but continued inflows would help support financial stability and the peso, which ultimately matters to businesses and consumers through more stable borrowing costs and prices,” he said.

In August, the peso breached the P62 handle for the first time as it plunged to a new all-time low of P62.265 against the dollar on Friday.

BSP Governor Eli M. Remolona, Jr. earlier said that the “exchange rate itself is something very hard to fix for a country like the Philippines.”

The BSP projects FPIs to post a smaller net inflow of $1.8 billion this year from the $3.7-billion total estimated net inflows in 2025.

“The Philippines remains fundamentally attractive, but foreign portfolio flows will continue to ebb and flow with global risk appetite,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., also said via Viber.

“The key is that our macroeconomic story remains intact, which should help sustain investor interest over the medium term.”

Tropical Depression Pilandok remains inside the Philippine Area of Responsibility (PAR), located 1,050 kilometers east of Extreme Northern Luzon, according to the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) during its 5:00 a.m. press briefing.

Pilandok has maintained its intensity, with maximum sustained winds of 55 kilometers per hour (kph) and gustiness of up to 70 kph.

“Tropical Depression Pilandok has no direct effect on any part of the country and has a very low chance of making landfall in any part of the country,” PAGASA weather specialist Veronica C. Torres said during the press briefing in Filipino.

She also said Pilandok is likely to intensify into a tropical storm within the next 12 hours and will exit PAR between Wednesday evening and Thursday morning.

PAGASA is also monitoring Tropical Storm Saudel, formerly known as Obet, located 965 kilometers west of Extreme Northern Luzon. It was packing maximum sustained winds of 65 kph and gustiness of up to 80 kph.

Ms. Torres said the bureau is not ruling out the possibility that Saudel may re-enter PAR, in which case it will still be called Obet.

The third tropical depression being monitored was located 645 kilometers west-northwest of Itbayat, Batanes, packing maximum sustained winds of 45 kph and gustiness of up to 60 kph.

PAGASA is also monitoring an LPA outside PAR, located 3,000 kilometers east of Southeastern Luzon. It has a chance of developing into a tropical depression within the next 12 hours and may enter PAR.

Meanwhile, the southwest monsoon is expected to continue bringing rains over Luzon and the western section of the Visayas.

Heavy rainfall, or rainfall of between 50 and 100 millimeters, is expected in Ilocos Norte, Ilocos Sur, La Union, Pangasinan, Batanes, Abra, Benguet, Zambales, and Bataan.

PAGASA warned of possible localized flooding and landslides, particularly in urban and near-river areas.

More areas are expected to be placed under rainfall warnings, with intense rainfall possible in some areas until Thursday. — Edg Adrian A. Eva

In an advisory, the DENR-Environmental Management Bureau (DENR-EMB) said it is also monitoring air quality across Central Luzon, CALABARZON, and MIMAROPA.

Based on real-time air quality data from the DENR-EMB, multiple monitoring stations in the NCR have registered Acutely Unhealthy and Very Unhealthy air quality levels.

Acutely Unhealthy air quality was recorded at monitoring stations in Las Piñas, Malabon, Mandaluyong, Manila, Marikina (Parang), Muntinlupa (Filinvest City), Parañaque (Don Bosco), Quezon City (Ateneo), San Juan, Taguig, and Valenzuela.

Meanwhile, Very Unhealthy air quality was recorded in Makati, Navotas, Pateros, and Quezon City (SMPH Commonwealth).

The agency said the observed haze is likely due to “smoke and transboundary haze from ongoing fires in Kalimantan, Indonesia,” which may have been transported toward the country by prevailing winds.

DENR-EMB said it is monitoring air quality levels through its network of air quality monitoring stations to assess the extent and potential impacts of the haze.

According to the Department of Health (DoH) on Tuesday, exposure to haze could cause difficulty breathing, cough, chest pain, watery eyes, and an itchy nose, and may worsen existing respiratory conditions such as asthma.

The DoH urged people to stay indoors as much as possible, wear N95 masks when going outdoors, and call 911 during emergencies. — Edg Adrian A. Eva

PHILIPPINE MERCHANDISE exports are expected to outpace the government’s 3% projection, amid a strong performance so far this year, the Department of Trade and Industry (DTI) said.

“We’re optimistic that of course, we’re going to grow,” Bianca Pearl R. Sykimte, director of the DTI-Export Marketing Bureau (EMB), told reporters on the sidelines of an event last week.

“We’ve seen the DBCC (Development Budget Coordination Committee) forecast, which is about 3% growth in exported goods… We are cautiously optimistic that we’ll surpass that,” she said.

Ms. Sykimte noted that the double-digit growth in exports signals that export growth will remain strong this year.

The DBCC projects goods export growth at 3% this year, 4% from 2027 to 2029, and 5% by 2030.

In the first seven months of the year, exports climbed by 12.9% to $54.92 billion from $48.69 billion last year, driven by exports of electronic products.

Electronics accounted for 21.1% of total exports in the January-to-July period at $30.92 billion, as semiconductor exports rose amid the global boom in artificial intelligence (AI).

Sought for comment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the AI boom is expected to continue driving Philippine export growth.

“A bright spot for Philippine exports has been the boom in AI-related spending and demand worldwide, especially with the large investments by the world’s biggest tech companies,” he said in a Viber message.

Chinbank Research noted electronics “remain the heavyweight of Philippine trade, driving both export growth and demand for imported components.”

“The sector is powering export growth, but its heavy reliance on imported components is also widening the trade deficit, with electronic inputs now rivaling oil as a major import item,” it said.

PSA data showed the January-to-July deficit ballooned by 29.2% to $37.34 billion from $28.91 billion in the same period a year ago.

DCTS
Meanwhile, the EMB said it is coordinating with the UK government to help more Philippine exporters leverage the Developing Countries Trading Scheme (DCTS) and improve its access to markets in the UK.

“It’s really a discussion with the UK government — with them providing insights on the level of utilization — so that we can work together in terms of promoting utilization in sectors,” she said. “We can do much more in terms of promoting.”

The UK’s DCTS allows the Philippines to enjoy simplified trading rules and duty-free exports to the UK on over 80% of eligible products.

UK Trade Adviser Ellie Parker recently said that about £92 million (or P7.7 billion) worth of Philippine goods that entered the UK did not benefit from lower tariffs under the DCTS last year.

This is significantly below the £299 million worth of eligible Philippine exports to the UK last year under the DCTS, she said.

The DCTS, which replaced the UK’s Generalised Scheme of Preferences (GSP) in 2023, provides reduced tariffs and relaxed rules of origin to 65 developing countries.

The Philippines remains eligible for the DCTS even though it was re-classified as an upper-middle income country (UMIC) in July.

Under DCTS rules, a country that receives UMIC status for three straight years would no longer receive DCTS perks.

Ms. Sykimte noted that the DTI’s ongoing negotiations for free trade agreements (FTAs) would help ensure that Philippine goods maintain its tariff perks even as an upper-middle income country.

“Part of the strategy is, again, as the [Trade] Secretary mentioned, negotiate FTAs with our trading partners… Market diversification has always been a strategy for us,” Ms. Sykimte said.

Over 60% of the Philippines’ exported products go to markets where it has trade preferences, she added.

The country is looking to finish negotiations for five FTAs this year, Trade Secretary Maria Cristina A. Roque said earlier.

She has said the country is on track to finish FTA talks with Canada and the European Union, as well as the updated Japan-Philippines Economic Partnership Agreement, this year.

The Philippines has sealed free trade deals with the United Arab Emirates and Chile this year.

THE NATIONAL GOVERNMENT’S (NG) gross borrowings surged in July, reflecting the timing and front-loading of debt issuances to finance its deficit and maturing obligations, analysts said.

Data from the Bureau of the Treasury showed that the total gross borrowings jumped by 75.4% to P291.375 billion in July from P166.107 billion in the same month in 2025.

Domestic debt, which accounted for 93.1% of the total gross borrowings for the month, reached P271.321 billion. This was a 77.9% increase from P152.54 billion in July 2025.

Domestic borrowings consisted of P133.2 billion in net Treasury bill issuances and P138.121 billion in fixed-rate Treasury bonds.

On the other hand, gross external borrowings jumped by 47.81% to P20.054 billion in July from P13.567 billion a year earlier.

External financing during the month consisted of P18.641 billion in new project loans and P1.413 billion in program loans. There were no global bonds in July.

“The sharp increase in July borrowings likely reflects a combination of financing requirements and the timing of debt issuances and refinancing activities,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

“The National Government may have also taken advantage of available market liquidity to secure funding and pre-fund part of its requirements,” he added.

However, Mr. Asuncion said that monthly borrowing figures can be volatile as these are influenced by issuance schedules, refinancing needs, and prevailing market conditions, which can result in large year-on-year swings.

“The large increase in NG borrowings over July reflects the government’s multiple spending fronts,” University of Asia and the Pacific Economist Marco Antonio C. Agonia said in an e-mail.

“NG took on more debt ahead of the fourth-quarter infrastructure rush, to fund social assistance programs for cushioning the effects of the Middle East war, and for repayment of existing liabilities,” he added.

Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said that the increase reflects “a financing calendar and debt-management effect, rather than a sudden 75% deterioration in the fiscal position.”

“One could interpret the July surge as mostly a timing/composition story layered on top of a structurally large financing requirement,” he said.

“Gross borrowing counts funds raised and then later used to refinance maturing debt. What matters for the government’s fiscal health is more closely related to the deficit, net borrowing, interest burden, and debt-to-gross domestic product trajectory,” he added.

SEVEN-MONTH FINANCING
In the January-to-July period, NG gross borrowings rose by 20.2% to P2.113 trillion from P1.758 trillion a year earlier.

Domestic debt went up by 15.4% to P1.548 trillion from P1.341 trillion a year prior. This accounted for 73.27% of the total borrowings in the seven-month period.

Domestic borrowings consisted of P1.157 trillion in fixed-rate Treasury bonds and P390.901 billion in net Treasury bills.

External borrowings in the first seven months jumped by 35.8% to P564.856 billion from P415.918 billion a year ago. This was composed of P314.371 billion in global bonds, P157.607 billion in program loans, and P92.878 billion in new project loans.

Mr. Asuncion said he expects more borrowing activity in the next five months.

“Borrowing activity is likely to remain relatively elevated throughout the rest of the year as the government continues to finance its fiscal deficit, fund priority expenditures, and refinance maturing obligations,” he said.

“However, the pace may vary depending on revenue collections, expenditure execution, and market conditions,” he added.

For the January-to-July period, the fiscal gap widened by 13.85% to P893.1 billion from the P784.4-billion deficit last year, representing 53.84% of the upwardly revised P1.659-trillion program approved by the Development Budget Coordination Committee (DBCC) in May.

Mr. Agonia also expects borrowing levels to remain elevated “but within manageable levels, as NG needs some room to pump-prime the economy.”

“Elevated yields associated with higher risk premia from existing geopolitical and fiscal sustainability uncertainty in advanced economies may likewise add upward pressure on financing requirements,” he added.

Meanwhile, Mr. Peña-Reyes said he expects borrowings to stay active but at a slower pace.

“The bigger issue is not necessarily another surge in gross borrowing. It is whether continued heavy issuance puts upward pressure on domestic yields and eventually raises the government’s interest burden,” he added.

BORROWING PROGRAM
With gross borrowings as of end-July already equivalent to about 77% of the P2.734-trillion full-year program approved by the DBCC in May, Mr. Agonia said there is a chance the government goes beyond the program if there are unexpected shocks.

“In our view, the two most salient risks are weather effects and interest rate volatility, where the government may have to face relatively expensive borrowing terms to fund climate damage mitigation programs as advanced economy yields run higher,” he said.

Meanwhile, Mr. Asuncion said that the government is still capable of staying within its planned financing framework.

“Borrowing activity is often uneven throughout the year, with issuances sometimes front-loaded to lock in funding and manage market risks,” he said.

He said the risks to this outlook include a wider-than-expected fiscal deficit, weaker revenue collections, additional spending requirements arising from economic or weather-related shocks, or higher refinancing needs.

“Absent these developments, the government remains on track to manage its financing requirements within the programmed borrowing level,” he added.

Mr. Peña-Reyes said it is highly probable that the Philippine government will stay within its P2.734-trillion borrowing plan, “as the heavy front-loading of debt issuance in the first half of the year is a standard fiscal strategy to lock in favorable interest rates and secure liquidity early.”

He also noted that the government typically scales back its debt auctions during the final four months of the year.

However, Mr. Peña-Reyes said slower revenue collections, higher social-assistance spending, foreign exchange volatility and unplanned infrastructure costs could push the government beyond its borrowing program.

HEADLINE INFLATION may have eased to a five-month low in August but stayed above the central bank’s target as the bad weather drove up food prices and transport costs remained elevated year on year, analysts said.

The median estimate of 20 analysts polled by BusinessWorld showed inflation, as measured by the consumer price index, likely eased to 6% in August from 6.2% in July but accelerated from 1.5% a year ago.

If realized, the August headline print would cool to its slowest pace in five months or since the 4.1% in March.

However, August would mark the sixth consecutive month that inflation breached the Bangko Sentral ng Pilipinas’ (BSP) 3% target.

At 6%, the Philippines’ eight-month average inflation would reach 5.1%.

The central bank expects August’s headline inflation to settle between 5.5% and 6.5%, with weather-sensitive food prices and still high oil costs emerging as key risks.

The Philippine Statistics Authority will release the August inflation report on Sept. 4.

“Inflation in August was partly driven by higher prices of food items, such as rice, fish, fruits, and vegetables as a consequence of inclement weather given heavy rainfall and flooding as well as high transport inflation due to elevated oil prices,” Security Bank Corp. Chief Economist Angelo B. Taningco said in an e-mail.

Four tropical cyclones battered the Philippines in August, which also intensified the southwest monsoon, bringing heavy rains and severe flooding across parts of the country.

“Enhanced monsoon rains also affected logistics and distribution channels, resulting in localized supply constraints that likely pushed up food prices during the month,” Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion said via e-mail.

In the second half of August, regular milled rice was sold at an average of P49.61 per kilo, rising by 22.95% year on year from P40.35 and by 0.63% from P49.3 per kilo a month ago.

Meanwhile, the per-kilo price of well-milled rice climbed to P56.29 during the period, up by 19.59% from P47.07 last year and by 1.08% month on month from P55.69.

Still, lower oil and utility costs during the month may have softened the headline print, according to University of Asia and the Pacific Economist Marco Antonio C. Agonia.

However, S&P Global Market Intelligence Principal Economist Harumi Taguchi noted that energy prices remained elevated in August, with continued spillover to other commodities adding inflationary pressures.

Based on Department of Energy data, gasoline prices were trimmed by as much as P2.20 per liter in August, while kerosene prices were cut by up to P0.99 per liter. The cost of diesel, on the other hand, increased by as much as P0.61 per liter.

However, retail fuel prices during the month remained above the prewar range of P50 to P60 per liter.

At end-August, gasoline costs between P64.20 and P96.57 per liter, diesel at P77 to P100.84 per liter, and kerosene at P99.10 to P133.32 per liter.

Manila Electric Co. likewise cut electricity rates by 4.28 centavos per kilowatt-hour (kWh) to P14.7833 from P14.8261 per kWh. This was equivalent to a P9 reduction in the total electricity bill of households consuming 200 kWh monthly.

“However, the impact of peso depreciation has eased slightly as the currency has traded within a relatively narrow range, while low base effects from food prices a year earlier are also likely to help soften headline inflation,” Ms. Taguchi added.

Still, the local unit’s plunge to back-to-back record lows in August may have raised import-related inflation, UnionBank’s Mr. Asuncion noted.

“(R)enewed oil price pressures linked to Middle East uncertainties and the peso’s depreciation toward the P62-per-US$ level contributed to higher import, transport, and production costs,” he said.

The peso touched the P60-a-dollar level several times this month after weeks of trading above the P61 handle.

However, Bankers Association of the Philippines data showed the local unit tumbled by 37.7 centavos to a new all-time low finish of P62.265 against the greenback on Friday, breaking its previous record of P61.888 on Thursday. It has weakened by P3.475 or 5.91% from its P58.79 close on Dec. 29, 2025.

It also slumped to as much as P62.27 during the late Friday session, marking its worst intraday showing in history.

On the other hand, several analysts said the headline clip is likely to have steadied at 6.2% in August.

“There remain significant upside pressures from fuel, food — particularly rice — weather-related supply disruptions and the weaker peso,” Marites M. Tiongco, a professor at the De La Salle University Carlos L. Tiu School of Economics, said in a Viber message.

“However, these are partly offset by lower electricity rates and some moderation in underlying inflation. I therefore expect inflation to remain elevated rather than accelerate sharply in August,” she added.

POLICY PATH AHEAD
With inflation easing in August but still likely to peak anew later this year, analysts are now split on the BSP’s next policy move.

Patrick M. Ella, an economist at Sun Life Investment Management and Trust Corp., said the central bank may pause until yearend before potentially tightening again by early 2027.

“For BSP, based on the recent press conference on the August meeting, I think they will pause in October and December but will likely resume a hike in the first quarter of 2027 —  subject to inflation path and other data points,” he said via e-mail.

For China Banking Corp. Chief Economist Domini S. Velasquez, the BSP’s tightening cycle may have ended this month even as inflation risks remain from high oil prices, the El Niño’s impact on agricultural output, and potential minimum wage hike.

“However, we believe the BSP has delivered its final rate cut. Inflation is likely to remain elevated for the rest of the year and could accelerate further in Q4,” she said in an e-mail.

“Given that much of the remaining inflationary pressure is supply-driven, further monetary tightening would have limited effect in bringing inflation back to the BSP’s 2-4% target band this year,” she added.

Last week, the Monetary Board tightened for a third straight meeting in a preemptive move to contain inflation risks from the looming “Super El Niño,” potential wage hikes, and volatile global oil prices.

The BSP raised its key policy rate by 25 basis points (bps) to an over one-year high of 5%, bringing its cumulative hikes to 75 bps since April.

BSP Governor Eli M. Remolona, Jr. said they hope they won’t have to hike more but left the door open to tighten further as they need to bring inflation closer to their 3% target.

The central bank noted that inflation will likely peak in the fourth quarter this year as the impact of the super El Niño feeds into food prices. It likewise flagged risks from fluctuating oil prices and the now-suspended wage hike.

Latest BSP projections show inflation could breach its target for three straight years — 6.1% this year, 5.4% in 2027, and 3.3% in 2028.

Meanwhile, Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. expects the BSP to maintain a hawkish stance, but cautioned that monetary policy should not overcompensate to address economic woes caused by governance issues.

“Inflation will likely remain a challenge for the rest of the year, and BSP may have to keep its tightening bias,” he said in a Viber message. “Improving governance is key to our country’s growth recovery and not really about keeping interest rates below inflation.

“After a serious lapse in the last four years, the Legislative and Executive branches need to step up big time to restore confidence and improve our country’s potential output. All sorts of serious negative side effects will emerge if BSP tries to compensate for inadequate delivery of public sector services and reforms,” Mr. Neri added.

The Monetary Board will hold two more policy reviews this year on Oct. 22 and Dec. 17.

“These three tropical cyclones are enhancing the southwest monsoon, which will affect Luzon and the western section of Visayas,” Aldczar D. Aurelio, PAGASA weather specialist, said during a 5:00 a.m. press briefing in Filipino.

Tropical Depression Pilandok, the strongest among the storms being monitored, was packing 55 kilometres per hour (kph) of maximum sustained winds and 70 kph of gustiness.

It was last located 1,120 kilometers East of Extreme Northern Luzon, and is moving almost stationary.

Mr. Aurelio said that Pilandok is expected to intensify into a tropical storm by Tuesday, will relapse into a tropical depression, and exit the Philippine Area of Responsibility by Wednesday.

“There is a low chance that the storm will make landfall and a low chance of a tropical cyclone wind signal being hoisted,” Mr. Aurelio said.

Meanwhile, a second tropical depression was located 485 kilometers west-northwest of Itbayat, Batanes, outside PAR. It was bearing 45 kph of maximum sustained winds and 55 kph of gustiness.

PAGASA still monitors Tropical Depression Saudel, formerly locally known as Obet, as it still enhances the southwest monsoon.

It was located 1,180 kilometers West of Extreme Northern Luzon, packing 45 kph of maximum sustained winds and 75 kph of gustiness.

Apart from three tropical depressions, PAGASA is also monitoring a low-pressure area outside PAR and was located 3,105 kilometers East of Eastern Visayas.

Mr. Aurelio said that the LPA has no direct effect on the country and is not enhancing the southwest monsoon.

Amid a tropical depression-enhanced southwest monsoon, PAGASA raised a rainfall warning to nearly 20 areas in Luzon.

Intense rainfall, or rainfall between 100 to 200 millimeters in the next 24 hours, is expected over Ilocos Norte, Ilocos Sur, La Union, Abra, Pangasinan, Benguet, Zambales, Bataan, Tarlac and Pampanga.

Under this rainfall condition, numerous flood events and landslides are likely in high-risk areas, PAGASA said.

Heavy rainfall, or rainfall between 50 to 100 mm, is expected in Batanes, Apayao, Kalinga, Ifugao, Mountain Province, Nueva Vizcaya, Nueva Ecija, and Bulacan.

PAGASA warned of localized flooding and landslides in high-risk areas under these rainfall conditions.

The bureau also said that thunderstorms are expected over the rest of Luzon and Western Visayas due to the prevailing southwest monsoon being enhanced by Tropical depressions.

The rainfall warnings are also hoisted in similar areas until tomorrow, posing similar hazards.— Edg Adrian A. Eva

The dam reached 200.20 meters above sea level after it gained a 2.20 meter increase in the past 24 hours, according to the 8:00 a.m. dam information of the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA).

Angat Dam has already increased by nearly 50 meters since its historic low of 150.42 meters on July 25.

Its continuous uptrend in water elevation follows continuous inclement weather in the past month and recent days, primarily due to the southwest monsoon being enhanced by tropical cyclones.

Rosalie C. Pagulayan, assistant weather services chief of PAGASA, said that the sustained rainfall within the watershed helped Angat reach its 200-meter operating level.

“The soil in the watershed is already saturated with water, so the rainwater is now flowing directly into the dam,” Ms. Pagulayan said in a message via Messenger on Monday in Filipino.

Angat Dam’s water level is being closely monitored as it supplies over 90% of Metro Manila’s water supply. There is also a concern of looming Super El Niño by the end of the year, bringing below-normal rainfall conditions in parts of the country, causing to strain the country’s water supply. — Edg Adrian A. Eva

In-line Forwarder has formed a strategic partnership with Thompson Property Management Corp. (TPMC), the official Global Channel Partner of Alibaba.com in the Philippines, to boost Filipino exporters in global trade.

This best-in-industry alliance integrates two vital pieces of the export journey: international market access and total logistics solutions.

A global leader for over 26 years, Alibaba.com is now the world’s largest B2B e-commerce platform, connecting buyers and sellers from around the globe. Its enormous scale provides a significant boost for Filipino businesses: the platform has over 50 million active buyers across 200 countries, onboarded more than 200,000 suppliers, and offers over 200 million items.

For an exporter, that massive reach translates to a concrete opportunity to bring Filipino products in front of new buyers and markets.

But getting their items discovered by customers is only the beginning.

Total logistics leader In-line Forwarder complements Alibaba.com’s digital reach with the logistics innovations and export expertise needed to get products from the Philippines to overseas. Through their team-up, In-line will provide MSME exporters access to total logistics solutions, including seafreight, international air cargo, export documentation, customs clearing, and even product warehousing required to move goods efficiently across borders. 

“For our exporters, getting an order is only half the journey. The next hurdle is figuring out how to actually get their products there efficiently, conveniently, and affordably,” said In-line Forwarder. “By combining Alibaba.com’s global reach and In-line’s logistics expertise, we want to make the entire export journey simpler for businesses of all sizes.”

Beyond logistics, the two titans also underscored the need to build the export readiness of MSMEs. They will jointly conduct exporter workshops, coaching sessions, and other programs covering international selling, e-commerce growth, export compliance, freight handling, and cross-border fulfillment.

The partnership comes as Philippine MSMEs increasingly look beyond the borders for new sources of sales. While Filipino products have significant potential internationally, smaller businesses still face barriers: getting new buyers, navigating complex export requirements, and managing shipping costs.

Their collaboration seeks to address these gaps through an innovative product order-to-shipping export solution.

“Our goal is to help more Filipino businesses confidently make the leap from being a local seller to a global company,” added TPMC. “By linking market opportunities with comprehensive logistics support, we can accelerate the conversion of international buyer interest into an actual sale.”

Ultimately, the partnership has a simple shared vision: more Filipino businesses selling globally, and more Filipino products reaching the world.

From the Philippines to the world, one shipment at a time.

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As economic activity expands beyond Metro Manila, the question facing real estate developers is also changing: how do you build places capable of supporting not only new investment, but the businesses, jobs and communities that grow around it?

For Aboitiz Economic Estates and Aboitiz Land, the answer has been shaped by decades of industry-anchored development.

That approach gained broader recognition at the 2026 PropertyGuru Philippines Property Awards, where Aboitiz Economic Estates and Aboitiz Land were named Best Developer (Luzon). Aboitiz Economic Estates also received Best Industrial Developer for the sixth consecutive year and Best Sustainable Commercial Developer, while TARI Estate, Biz Hub at LIMA Estate and The Villages at LIMA Estate earned awards in their respective development categories.

The significance lies not simply in the number of awards, but in their breadth. Together, they recognize different dimensions of a development philosophy that starts with the economic fundamentals: investment, infrastructure and jobs, then builds the commercial, residential, institutional and lifestyle ecosystem that growing regional economies require.

“For years, our strength has been industrial development, grounded in the belief that real estate should begin with the economic fundamentals: investment, infrastructure, and jobs. From that foundation, more complete communities can grow,” said Rafael Fernandez de Mesa, President and CEO of Aboitiz Economic Estates and Aboitiz Land.

“To now be recognized across industrial, mixed-use, residential, sustainability, and overall development tells us that this approach is increasingly relevant beyond the category where it began. We will continue raising the benchmark for integrated development by building places where businesses can compete, people can access opportunity, and communities can grow sustainably.”

Building new centers of growth

LIMA Estate in Batangas provides the most mature expression of the model. Over three decades, LIMA Estate has evolved from an industrial estate into an integrated economic community combining industry with business, residential, education, hospitality, retail and lifestyle uses.

Its commercial district, Biz Hub at LIMA Estate, named Best Completed Mixed Use Development, has grown around an established economic base. Its offices, retail, hospitality, education and services respond to demand generated by the companies, workers, residents, students and visitors already moving through the estate.

The same ecosystem supports The Villages at LIMA Estate, recognized as Best Lifestyle Housing Development. Developed by Aboitiz Land, the residential community connects families not only to employment, but to schools, retail, dining, leisure, hospitality, open spaces and essential services within the wider LIMA ecosystem.

Together, these developments demonstrate how industrial investment can become the foundation for a more complete regional center, where economic opportunity and quality of life reinforce one another.

Decades of experience, deployed at speed

In Central Luzon, TARI Estate, named Best Industrial Estate Development, represents the next iteration. Drawing on decades of industrial development experience, Aboitiz has been able to translate a greenfield site into an emerging industrial platform in a relatively short period.

The 384-hectare estate in Tarlac is strategically positioned along the Luzon Economic Corridor, with access to major transport infrastructure and economic gateways. Major investments from Ajinomoto Philippines and Coca-Cola Europacific Aboitiz Philippines are establishing its industrial base, while the estate is projected to support around 60,000 jobs at full build-out.

LIMA Estate and TARI Estate therefore represent two stages of the same idea: one demonstrates what an industry-anchored economic community can become as it matures; the other shows how that experience can be applied to an emerging growth corridor.

Across its economic estates, Aboitiz Economic Estates now supports more than 260 locators, over 100,000 jobs and PHP175.4 billion in investments.

As investment increasingly moves beyond traditional metropolitan centers, Aboitiz sees an opportunity to apply this development capability to more regions of the country.

The Best Developer (Luzon) recognition reflects the broader relevance the model is gaining. An approach long rooted in industrial estates is increasingly being recognized for what it can contribute to integrated real estate: starting with jobs and investment, and building the communities and regional economies that can grow around them.

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DoH Undersecretary for Health Dr. Gloria J. Balboa said leptospirosis cases reached 5,486 from January 4 to August 26, marking a 23% decrease from the 7,163 cases logged during the same period last year.

Despite the decline in cases, DoH said it continues to implement measures as it anticipates a possible increase in cases over the next two weeks.

“So, we are expecting an increase in cases in the next two weeks due to the recent heavy rains and flooding,” DoH Secretary Dr. Edwin M. Mercado said during a press conference in Filipino.

“That is why the DOH is continuously intensifying its surveillance of leptospirosis cases, while also ensuring that its facilities remain operational and have adequate supplies,” he added.

Of the total number of cases in the National Capital Region, 158 patients are admitted to San Lazaro Hospital, the majority of whom have mild cases.

At the National Kidney and Transplant Institute (NKTI), which handles more than 90% of severe leptospirosis cases, at least 144 patients have been admitted since January, with one fatality, NKTI Executive Director Dr. Jose Dante P. Dator said. Of these, 52 are currently admitted.

Amid the surge in cases and the potential for a further increase due to the ongoing inclement weather, 33 DOH hospitals in highly affected regions have implemented fast lanes to ensure that patients with leptospirosis are attended to promptly, Dr. Mercado said.

“Patients here will be attended to immediately. If they develop symptoms such as fever, swelling, and difficulty urinating, we do not delay treatment and instead expedite the process,” Mr. Mercado said.

“After seeing the long lines of patients at San Lazaro, we set up a tent so patients could be attended to immediately, as they first need to undergo testing and have their blood drawn,” he added.

The DOH has also convened a command conference to strengthen coordination among its hospitals, prevent congestion at individual facilities, and help patients find available hospitals for treatment.

The agency has also deployed additional health workers and set up tents at hospitals such as San Lazaro to help address the surge in cases.

The DOH continues to advise the public to avoid wading through floodwaters and, if unavoidable, seek consultation at health centers and YAKAP centers to receive preventive medication. — Edg Adrian A. Eva

The PropertyGuru Philippines Property Awards, now in its landmark 14^th year, stands as a gold standard of real estate excellence in the country. The prestigious event crowns the nation’s most visionary developers and transformative projects that continuously shatter the boundaries of design, innovation, sustainability, and community impact.

Standing out in this highly competitive arena, DLI was honored with the highly coveted Best Boutique Developer award for the second consecutive year and the third time since 2020. As the only Mindanao-homegrown property developer this year, the company has earned this distinct recognition as a testament to its craftsmanship, forward-thinking vision, and dedication to pioneering the future of Mindanao’s real estate landscape.

“Being recognized for these prestigious awards is a powerful validation that Mindanao is leading the way in real estate innovation. Damosa Land remains steadfast in its mission to deliver world-class yet mindful projects that drive investment potential and create lasting value for generations to come,” said DLI President Ricardo Floirendo Lagdameo.

Fresh off its January 2026 groundbreaking and becoming the first project approved under the newly launched Securing and Expanding Capital in Real Estate Non-Traditional Securities (SEC-RENT) framework of the Securities and Exchange Commission (SEC), DLI’s TRYP by Wyndham Samal condotel secured two premier accolades: Best Investment Condo Development and Best Beachfront Condotel Architectural Design.

The Best Investment Condo Development award highlights the condotel’s strategic location, strong rental yield, capital appreciation, and robust property management services that make it appealing to investors, while the Best Beachfront Condotel Architectural Design award spotlights the property’s luxurious coastal design, durable climate-resilient infrastructure, and efficient hospitality layouts that maximize oceanfront views.

TRYP by Wyndham Samal, slated for completion in 2028, is a contemporary island hotel inspired by the timeless architecture of the iconic Bahay na Bato. Reimagining its sturdy stone foundations, warm timber elements, and expansive rooflines, the development integrates heritage-inspired design with modern tropical hospitality, which creates a destination that is both enduring in character and deeply connected to its local setting.

This milestone project introduces the first global hotel brand to the Island Garden City of Samal. The arrival of Wyndham Hotels and Resorts, one of the world’s leading hospitality groups, signals strong international confidence in Samal Island’s investment potential and as a global tourist destination. With construction of the condotel already underway, the highly anticipated TRYP by Wyndham Samal has successfully sold 70% of its units, underscoring a strong market demand and appeal to investors.

Beyond the success of TRYP by Wyndham Samal, DLI continues to build momentum through a growing portfolio of developments shaping the future of Mindanao. These recognitions come as DLI continues to expand its footprint through award-winning developments such as its agritourism township Agriya, industrial park Anflo Industrial Estate, mixed-use marina lifestyle development community Bridgeport, information technology (IT) facility Damosa IT Park, and premium residential properties Kahi Estates, Ameria, and Agriya Gardens, each designed to strengthen the region’s competitiveness while promoting responsible and sustainable development.

More than building individual properties, DLI takes an ecosystem approach to development — bringing together residential, commercial, industrial, hospitality, and community spaces that create opportunities for people and businesses to thrive. By thoughtfully integrating these developments with their surrounding communities, DLI seeks to create places that are not only valuable destinations in themselves, but also catalysts for broader economic activity and improved quality of life.

This approach reflects DLI’s position as a homegrown developer with a deep understanding of Mindanao and its potential. From creating spaces that attract global investors and businesses to developing communities that respond to the evolving aspirations of Filipino families, DLI continues to demonstrate how locally rooted development can create opportunities with far-reaching impact.

“Our goal has always been to create ecosystems in every project that we build — places where people can live, work, invest, do business, and build their futures,” Lagdameo said. “We want the value of our developments to extend beyond their boundaries and benefit not only the communities within them, but also the neighboring communities around them. For us, that is what responsible development means: creating places that generate opportunities, strengthen communities, and contribute to the long-term growth of Mindanao.”

To learn more about Damosa Land and its developments, visit https://damosaland.com/.

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SM Investments Consultant and Head of Investor Relations and Sustainability Timothy Daniels and PHIVOLCS Director Teresito C. Bacolcol signed a memorandum of agreement on Friday covering SM’s use of GeoRiskPH, a government platform that provides information on natural hazards and related risks.

Under the agreement, SM will use GeoRiskPH tools, including HazardHunterPH Pro, Geomapper PH, PlanSmart and GeoAnalyticsPH, to assess potential hydrometeorological and geological hazards affecting its facilities, assets and operational sites.

The information will be used to support planning for SM’s properties and operations, including business continuity measures and long-term investment decisions.

“Partnerships like this with the private sector contribute significantly in helping us better understand the country’s multi-faceted needs regarding resilience,” Mr. Bacolcol said.

He added that integrating data-driven hazard assessment tools into business planning is important to disaster risk reduction and sustainable development.

For SM, the partnership forms part of its efforts to incorporate climate adaptation and disaster resilience into its investment and asset management decisions.

“Understanding the risks around our properties and operations helps us make better decisions about where and how we invest,” Mr. Daniels said.

The partnership also highlights the role of private businesses in supporting national disaster resilience, particularly as SM continues to operate and expand properties across the country. — Edg Adrian A. Eva

And the more popularity it continues to gather, the more important it becomes to form good habits around the security, continuity and legitimacy-building facilities of the treasuries, DAOs, communities and protocols.

As you continue to assess your own DAO’s financial literacy, it becomes more than essential to follow crucial elements for maintaining a sustainable and professional approach to DAO treasury management.

6 Ways To Manage DAO Treasury Efficiently

Whether it is about personal finances, traditional financial portfolio or DAO treasury in the De-Fi industry, treasury asset management should be followed with proper practices.

Read further to explore the key themes for approaching a systematic and sustainable procedure for treasury management.

1. Focus on DAO’s Mission

DAO treasury management is incomplete without keeping its core mission and goals in mind. The entire purpose of creating a treasury is to support the community and its future projects. Therefore, it is important not to get driven away or wrapped up in generating massive liquidity.

DAO treasury should focus more on assets that provide runway and survive the market cycles. For stable asset liquidity, focus more on Ethereum and stable coins. You can even get your hands on mix tokens to further ensure stability and maintenance of your operations.

Moreover, try to steer clear of farming and dumping as a method for quick asset generation. Instead, a simple and systematic approach to authentic treasury management is through collaboration and education in the DeFi world.

2. Support Accountability and Transparency

As someone who oversees the treasury management of the entire DAO, it is your job to keep the communication flowing and always have a hold of tracking. Regular and professional accounting practices must be maintained to achieve discipline.

The treasurer should have knowledge of who is getting paid what, when and why. It can be hard to achieve with the anonymous nature of the DeFi communities and industry.

A treasurer must be clear about the treasury with the core team and also must practice accountability with all its community members. This step is crucial as it minimizes the financial wrongdoings of the members. Fear, uncertainty and lack of trust bring fragility to your DAO working and can result in a collapse.

3. Use Assets to Reach the Goals

For DAO, using assets for reaching goals can ultimately mean mobilizing them for supporting protocols while also supporting your partners. If you are working the asset bridge, use your own assets to sustain the liquidity pool. This will allow your asset bridge to function properly.

Functioning in a DeFi is not an isolated process. Therefore, you must be able to manage collaboratively and work in a decentralized environment. It means that your vision and ideal goals must be flexible to manage your assets more accurately.

4. Diversify Your Treasury

Keeping a huge chunk of the treasury in native tokens for a DAO might seem like a good idea at first. But it is a high risk to take.

Holding a native token in your portfolio can be risky because if its value goes down by 30%, the entire value of the treasury will reduce by 30%. This is something that needs to be avoided by every organization, does not matter whether it is decentralized or not.

We recommend keeping a significant percentage of the treasury in less volatile tokens like stablecoins. If you set aside your stablecoins, you are in for effectively protecting yourself from offsetting your operational expenses.

5. Set up Treasury Experts in Your DAO

Everything works democratically in a DAO. No matter how great the democratic working model is for a DAO, it is sometimes unrealistic.

It has an excellent work mechanism; however, it makes every operation and function in the system slower than usual. This is because everything in the community works on the voting system, especially the treasury management system.

That’s why it is ideal to appoint a committee of elected members to handle all the ideal aspects related to the treasury. This committee can be chosen on the terms of their contributions to the community and the value they have added to the DAO.

Sourcing treasury members who are experts in treasury management or are interested in unfolding the market dynamics will lead to effective treasury management.

6. Earning Your Community’s Trust

Earning your community’s trust as a treasurer is the most important aspect of DAO treasury management. And financial reporting is the tool to effectively follow the best practices for managing treasury.

Going ahead and following the above practices will obviously get you the result by sharpening your treasury management processes. Still, they are of no use if you don’t combine proper financial reporting alongside.

Sending regular monthly or quarterly reports to the community will make the community members feel included in the work of the DAO. Moreover, you will earn their trust while having the same visibility and control over your other DAO finances.

You May Like To Read:

• 4 Top Reasons To Consider Gold Investment
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Author Bio: Akanksha Malik writes to share her knowledge on crypto trends, investments, and NFT opportunities with her readers so they can stay updated! She works as a digital strategist and content creator for Mesha, an online investing platform that serves as a club where investors from around the globe can meet new fellow investors, compete in money challenges, and invest in NFTs & crypto. Besides finance and fintech, Akanksha loves architecture and discovering cuisines of new places she travels to.

The post How To Maintain The Best Practices For DAO Treasury Management appeared first on Fincyte.

THE PHILIPPINES will likely miss its growth targets until 2027 as its investment slump and still heated inflation weigh on domestic activity, the ASEAN+3 Macroeconomic Research Office (AMRO) said.

In its assessment following its latest Annual Consultation Visit to the Philippines, AMRO slashed its 2026 gross domestic product forecast to 3.4% from 4.1% previously.

This is below the government’s 3.5%-4.5% target for 2026. It would also be slower than the 4.4% growth in 2025, when a flood control scandal dragged the economy to its weakest performance since the pandemic.

“Growth this year will be weighed down by weaker private consumption amid higher inflation and subdued investment, although a gradual recovery in public construction in the second half of the year and resilient exports should provide some support,” AMRO Mission Chief and Lead Economist Jinho Choi told a press briefing in Manila on Thursday. 

In the second quarter, the economy posted a new post-pandemic low growth of 2.3%, weaker than 2.8% in the first quarter and 5.4% a year ago. This brought its first-half growth to 2.6%.

By 2027, AMRO expects economic growth to recover to 4.8%, although slower than its previous 5.5% projection. This also falls below the government’s 5%-6% goal for 2027-2030.

AMRO Chief Economist Dong He said the Philippines is among the hardest hit by the Middle East war-driven energy shock but is not necessarily an underperformer in Southeast Asia.   

“Well, in terms of growth rate, certainly I think the decline in the growth rate this year, I think the Philippines is probably one of the economies that has suffered the most from this round of energy shock,” he said. “But I don’t necessarily say that it’s an underperformer. It’s a reflection of the type of energy mix you have.”

The country, a net importer of crude oil, has been under a year-long energy emergency since late March when the war in the Middle East started.

While they view the current slowdown as cyclical, AMRO noted that public investments remaining weaker for longer and the expected Super El Niño could further delay economic recovery.

“Over the medium term, structural challenges could pose greater obstacles to the economy’s growth potential,” it added.

Meanwhile, AMRO trimmed its Philippine inflation forecast to 5.4% from 5.7% for this year, and to 3.8% from 4.1% in 2027, citing easing inflationary pressures across the region.

However, Mr. Choi cautioned against renewed price risks arising from lingering uncertainty over continued unrest in the Middle East.

If AMRO’s forecast holds true, inflation will breach the central bank’s 3% target, marking a sharp acceleration from last year’s 1.7%.

Headline inflation has cooled for a third month in a row but stayed above the BSP’s 4% ceiling for five consecutive months at 6.2% in July. In the seven month-period, inflation stood at 5%.

“Elevated headline inflation reflects global oil prices remaining above pre-conflict levels, alongside second-round effects on non-energy items, including food and services,” Mr. Choi said.

Meanwhile, Mr. He noted that despite the peso’s recent depreciation against the dollar, they see limited exchange rate pass through to domestic prices.

“So, in our analysis, actually, there is somewhat a limited pass-through from exchange rate to domestic prices. I think the BSP has a very successful inflation targeting framework in place,” AMRO’s chief economist said.

“In this kind of framework, (the) exchange rate typically absorbs shocks. So, what you need to guard against is exchange rate becoming a shock amplifier. But so far, we haven’t seen a lot of that,” he added.

The peso plunged to an all-time low of P61.888 versus the greenback on Thursday, breaking its previous record of P61.847 on July 24, Bankers Association of the Philippines data showed.

The Development Budget Coordination Committee expects the peso to hold between P60 and P62 against the dollar until 2030.

For AMRO, sticky core inflation and potential de-anchoring of inflation expectations could justify further rate hikes by the BSP.

“Under monetary policy, the BSP should remain data-dependent in terms of monetary policy decision-making,” Mr. Choi said. “Further rate hikes would be warranted if core inflation remains elevated and persistent, or inflation expectations show signs of becoming de-anchored.”

Core inflation, which strips out volatile oil and food prices, has remained above the BSP’s target since the first full month of the Middle East war in March. However, it eased to 4.2% in July from the almost three-year high of 4.4% in June. 

At its Aug. 27 meeting, the central bank raised its key policy rate by 25 basis points (bps) for a third consecutive time to 5% as it sees underlying inflation risks from volatile global oil prices, the looming “Super El Niño,” and the potential minimum wage hike. This brought its total hike from April to 75 bps.

The Monetary Board still has two rate-setting meetings left this year on Oct. 22 and Dec. 17.

INFRASTRUCTURE SPENDING plunged by 34% in June as stricter validation, audit and documentation requirements delayed disbursements, the Department of Budget and Management (DBM) said.

The latest DBM report showed infrastructure and other capital outlays fell by 34.1% to P98 billion in June from P148.8 billion a year earlier. Month on month, infrastructure spending jumped by 22.4% from P80.1 billion in May.

“The infrastructure disbursements of the DPWH (Department of Public Works and Highways) were affected following the implementation of strengthened payment validation, audit, and documentary safeguards designed to ensure that public funds are released only for properly documented, verified, and compliant infrastructure works,” the Budget department said.

The slowdown in public works infrastructure spending was partly offset by capital expenditures under the Revised Armed Forces of the Philippines Modernization Program, the construction of school buildings and foreign-assisted railway projects, it added.

For the first six months, infrastructure and other capital outlays slumped by 40.8% to P367.4 billion from P620.2 billion a year ago.

Despite the annual decline, first-half infrastructure and other capital outlays exceeded the P351.8-billion program by P15.6 billion or 4.4%.

The DBM attributed the above-program spending to additional DPWH releases for mobilization costs, right-of-way claims, and the settlement of accounts payable under the 2026 General Appropriations Act and 2025 continuing appropriations.

The P367.4-billion tally excludes infrastructure spending coursed through subsidies and equity to government-owned and -controlled corporations, as well as transfers to local government units.

Including these components, overall National Government  infrastructure disbursements declined by 28.1% to P518.1 billion in the first half from P720.3 billion a year earlier. This was 2.5% below the P531.6-billion program for the first half.

The DBM said infrastructure spending could recover in the second half, driven by DPWH’s additional operating requirements for projects nationwide.

Other possible drivers include releases for the Department of Education’s Basic Education Facilities, the Department of Agriculture’s farm-to-market roads and projects under the military modernization program.

The settlement of accounts payable for the Department of Transportation’s foreign-assisted railway projects could also accelerate infrastructure spending for the rest of the year, it added.

However, acting Budget Secretary Kim Robert C. De Leon said faster infrastructure spending will not mean loosening government controls.

“We are not proposing any relaxation of safeguards. In fact, we want more safeguards,” he said in a statement “What we are looking at is how we can hasten implementation and procurement. The issue is not the safeguards. We need to implement. We have to start implementing.”

Analysts said the government would have to significantly accelerate project execution and disbursements in the second half to meet its full-year infrastructure spending program.

“The decline in infrastructure and other capital outlays in June was likely due to implementation bottlenecks, slower project execution, procurement and validation delays, and the lag between fund releases and actual disbursements,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion told BusinessWorld via Viber.

“Recent efforts to strengthen project review and compliance processes may have also contributed to slower spending in the short term,” he added.

Mr. Asuncion said the full-year target remains attainable but has become more challenging and will depend heavily on how quickly agencies can accelerate project execution in the coming months.

“While infrastructure spending typically accelerates in the second half of the year, particularly in the fourth quarter, the substantial contraction seen in the first six months means the government will need a significant catch-up in project implementation and disbursements to reach the programmed P931.54 billion by yearend,” he said.

Philippine Institute for Development Studies President Philip Arnold P. Tuaño said the June decline appeared to be part of the broader weakness in capital outlays during the first half.

“The decline in infrastructure spending in June appears to be part of the broader weakness in capital outlays that we have seen during the first half of the year,” he told BusinessWorld on Thursday.

“DBM itself has previously pointed to the slower implementation and completion of projects, as well as more stringent review and validation of payment claims.”

Mr. Tuaño said the year-on-year comparison should be viewed in the context of both last year’s spending pattern and the government’s 2026 fiscal program.

THE NATIONAL Government’s (NG) budget deficit widened more than fivefold in July as spending jumped nearly 20% driven by higher disbursements for social assistance and capital projects, the Bureau of the Treasury (BTr) said.

The fiscal gap ballooned by 461.73% to P106.3 billion in July from P18.9 billion in the same month a year earlier, Treasury data showed.

Month on month, the deficit narrowed by 59.8% from the P264.3-billion deficit in June.

The BTr said expenditures rose by 19.82% as the government ramped up disbursements for key programs and projects, while a base effect-driven decline in nontax collections limited revenue growth to 2.12%.

Government spending increased to P588.6 billion in July from P491.2 billion a year ago, mainly due to the implementation of various social assistance programs under the Unified Package for Livelihood, Industry, Food, and Transport framework to help address the impact of the Middle East conflict.

Disbursements for capital outlay projects under the Revised Armed Forces of the Philippines Modernization Program and direct payments made by development partners for various foreign-assisted rail transport projects of the Department of Transportation also drove faster spending.

Primary expenditure (net of interest payments) went up by 17.25% to P451.4 billion in July from P385 billion in the same month last year. It accounted for 76.69% of total disbursements.

Interest payments increased by 29.14% to P137.2 billion in July from P106.2 billion a year prior.

“This was attributed to coupon servicing on additional domestic debt securities and global bonds, as well as the impact of foreign exchange fluctuations on foreign-currency payments,” the BTr said.

On the other hand, total revenue collections inched up by 2.12% to P482.3 billion in July from P472.3 billion in the same month a year ago.

Tax revenues, which accounted for the 93.86% of total collections, rose by 7.02% to P452.7 billion in July from P423 billion a year ago.

The Bureau of Internal Revenue’s (BIR) collections increased by 6.92% to P358.4 billion in July from P335.3 billion a year prior. Collections by the Bureau of Customs (BoC) jumped by 7.48% to P91.6 billion in July from P85.2 billion a year earlier.

Nontax revenues declined by 39.92% to P29.6 billion in July from P49.3 billion last year, as Treasury income plunged by 48.31% to P18.8 billion and revenues from other offices fell by 16.38% to P10.8 billion.

The Treasury attributed the decline mainly to the timing of dividend remittances by the Bangko Sentral ng Pilipinas (BSP). The BSP remitted P59 billion in February and P3.4 billion in July this year, compared with P18.9 billion in July 2025.

In July, the NG recorded a primary surplus of P30.9 billion, narrowing by 64.59% from the P87.3-billion surplus a year earlier.

SEVEN-MONTH BUDGET GAP
For the January-to-July period, the fiscal gap widened by 13.85% to P893.1 billion from the P784.4-billion deficit last year, BTr data showed.

This represented 53.84% of the upwardly revised P1.659-trillion deficit ceiling approved by the Development Budget Coordination Committee (DBCC) in May.

Total revenue collections rose by 5.05% to P2.87 trillion in the seven-month period from P2.73 trillion recorded in the same period a year ago. This represented 59.72% of the P4.807-trillion program for the year.

As of end-July, tax revenues increased by 5.66% to P2.595 trillion, as BIR collections went up by 5.31% to P1.99 trillion and Customs collections rose by 7.25% to P583.4 billion.

“The BIR’s improved performance is due to better taxpayer services to support stronger compliance and boost collection,” the Treasury said.

Meanwhile, the BTr said that the increase in BoC collections was driven by “the significant uptick in duties and value-added tax (VAT) collection from imports primarily due to the stronger US dollar and higher crude oil price.”

“In addition, the agency’s sustained collection was supported by improved customs procedures, intensified border protection measures, digital transformation initiatives, and closer collaboration with stakeholders,” it added.

Nontax revenues slipped by 0.31% to P276.1 billion as of end-July, as a 10.97% increase in BTr income to P201.5 billion partly offset the 21.78% drop in other offices’ revenues to P74.6 billion.

For the seven-month period, expenditures increased by 7.02% to P3.764 trillion from P3.517 trillion a year ago. This accounted for 58.21% of the DBCC’s P6.466-trillion disbursement program.

The primary budget deficit widened by 3.36% to P272.2 billion in the first seven months from P263.4 billion in the same period last year.

Francisco Cid L. Terosa, an associate professor and former dean of the University of Asia and the Pacific School of Economics, said the widening deficit could be attributed to greater cash disbursements and expenditures relative to revenue collections.

“Revenue growth was slow due to the economic slowdown in the first half of 2026. Slower consumer spending and capital formation led to sluggish VAT and excise tax collections,” he told BusinessWorld in a Viber message.

“Corporate income tax collections were impeded by slower corporate expansion and downscaled business activities,” he added.

In the first half, the Philippine economy grew by just 2.6%, much slower than the 5.4% expansion a year ago, as elevated inflation dampened household consumption while a steep decline in public construction dragged investment.

“The deficit will continue increasing due to elevated deficit targets by the government, prioritization of public spending and infra rollout to revitalize the economy even if it leads to a larger deficit, and slower forecasted GDP (gross domestic product) growth,” Mr. Terosa said.

THE BANGKO SENTRAL ng Pilipinas (BSP) tightened for a third straight meeting on Thursday, leaving the door open for further hikes amid looming inflationary pressures and solid medium-term growth prospects.

The Monetary Board raised the target reverse repurchase rate by 25 basis points (bps) to 5%, the highest in over a year or since the 5.25% in June 2025. This also matched the benchmark rate set in August 2025.

Rates on the overnight deposit and lending facilities were also lifted by 25 bps each to 4.5% and 5.5%, respectively.

This decision was in line with market consensus, as 19 of the 24 analysts polled by BusinessWorld penciled in another hike.

The BSP noted that underlying inflation risks from volatile oil prices, the looming “Super El Niño,” and a potential wage hike warranted additional preemptive monetary policy tightening.

“The measured increases in the policy rate will continue to anchor inflation expectations and mitigate the risk of further second-round effects,” the central bank said in a statement.

“Despite slow growth in the first half of 2026, the fundamentals for growth appear to be intact over the medium term. With the support of fiscal measures, growth is expected to strengthen in the second half of the year.”

Thursday saw a third consecutive 25-bp hike by the BSP, following the two separate rate hikes in April and June. This brought the BSP’s total increases to 75 bps since it began its series of monetary policy tightening in April amid inflationary pressures from the Middle East war-driven energy shock.

BSP Governor Eli M. Remolona, Jr. said on Thursday they hope they wouldn’t have to hike anew in the coming meetings but remain open to tightening to ensure inflation returns near the 3% target.

“We will tighten as much as we need to bring the inflation rate down to its target,” he said during a briefing.

The BSP now projects headline inflation to settle at 6.1% this year, slower than its earlier estimate of 6.4%.

According to BSP Department of Economic Research Director Lara Romina E. Ganapin, the headline print will likely peak in the fourth quarter of this year before easing back to the tolerance range by the fourth quarter of 2027.

However, the BSP raised its inflation forecast for 2027 to 5.4% from 4.5%, amid a potential wage hike and a looming “Super El Niño.”

The Philippine Atmospheric, Geophysical and Astronomical Services Administration said the country may encounter a “strong” El Niño season from September to November, which could intensify into a “very strong” one between October and January next year.

Ms. Ganapin noted that the El Niño-driven inflation could manifest from lower rice output and higher import prices.

The “Super El Niño” event is projected to slash agricultural output by 20%-30%, according to the Department of Agriculture, as high temperatures take a toll on local crops, livestock, fisheries and aquaculture.   

“Today’s rate hike is a preemptive move because of the risks that we anticipate, including the risk of an El Niño event on food prices and the risk of further minimum wage increases,” Mr. Remolona said.

While volatile global oil prices remain a key inflation risk, the BSP chief said concerns over El Niño and wage hikes now carry a heavier weight in their inflation outlook.

The dual tranche P85 minimum wage hike in Metro Manila was suspended after a Pasig City Regional Trial Court issued a 20-day temporary restraining order on its implementation. The first tranche or P60 was imposed on July 25, while the second tranche or P25 was set to take effect on Jan. 20 next year.

For 2028, the BSP sees inflation returning near its target at 3.3%, although faster than its earlier estimate of 3.1%.

GROWTH
The central bank’s hawkish stance also came on the back of its expectations that domestic growth will rebound by the fourth quarter, with a full recovery underway next year.

“We expect that growth will recover by the fourth quarter of 2026,” Mr. Remolona said. “The fundamentals for growth are still in place. Once growth gets going, we will get going. We think growth will more or less fully recover by next year.”

The Philippine economy grew at a post-pandemic low of 2.3% in the second quarter, bringing first-half growth to 2.6%. It took a major hit from the lingering effects of the flood control mess on investments and public construction. Household spending, the economy’s largest driver, also weakened further as the Middle East war shocks stoked domestic prices.

However, Mr. Remolona said they could hit pause once they are “confident that the inflation rate will move towards the target of 3%.”

Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said the BSP’s third straight interest rate increase was “more of a risk-management move.”

“Today’s 5% rate is defensible, but it could be regarded as the upper end of what the BSP should do under the current circumstances,” he said via Facebook.

For Mr. Peña-Reyes, who penciled a pause for the August meeting, the central bank could stand pat for the rest of the year if inflation expectations stabilize, and the energy shock weakens.

However, monetary authorities should closely watch core inflation, the movement of peso and oil prices, as well as the broader domestic growth in deciding the next policy moves, he added.

“Moreover, the growth side deserves increasing attention,” Mr. Peña-Reyes said. “With GDP already growing only 2.3% in Q2, the cost of another aggressive tightening cycle could become greater than the marginal inflation benefit.”

Meanwhile, Metropolitan Bank & Trust Co. Chief Economist Nicholas Antonio T. Mapa sees the central bank maintaining its measured tightening approach to prevent further dampening growth.

“BSP pushed back on overzealous aggressive rate hikes so (it) looks like they’ll stick to measures tightening,” he said in a Viber message. “Continued tightening will cap growth momentum further which is why BSP opted to tighten but refrain from deploying a more punchy 50-bp increase.”

On the other hand, ANZ Research said the BSP may hold to “wait-and-see” in October, before tightening anew in December as El Niño-driven inflation risks emerge.

“As inflation has moderated in (the) last two months, we expect the BSP will likely adopt a wait-and-see approach in the next policy meeting in October,” ANZ Foreign Exchange Analyst Kausani Basak and Chief Economist for Southeast Asia and India Sanjay Mathur said.

“However, the real policy rate remains in the accommodative zone, providing the BSP with adequate policy space for further rate hikes in case of upside risk to inflation. We expect the BSP to implement a hike in December in response to El Niño related price rises taking the policy rate to 5.25% by yearend,” they added.

The Monetary Board will hold its last two rate-setting meetings this year on Oct. 22 and Dec. 17.

PAGASA said over a dozen areas are expected to experience heavy to intense rainfall due to the effects of the southwest monsoon, according to its 5 a.m. Weather Advisory.

Intense rainfall is expected in La Union, Benguet, Bataan, Zambales, and Occidental Mindoro, where rainfall of 100 to 200 millimeters may be recorded in the next 24 hours.

PAGASA warned that under this rainfall condition, numerous flooding events and landslides are expected in urbanized and low-lying areas.

Meanwhile, Ilocos Sur, Abra, Pangasinan, Pampanga, Tarlac, Nueva Ecija, Bulacan, Metro Manila, Rizal, Cavite, Batangas, Oriental Mindoro, and Antique may receive 50 to 100 mm of rainfall.

Under this rainfall condition, localized flooding events and landslides are expected in high-risk areas.

The LPA enhancing the southwest monsoon was last located 720 kilometers east of Itbayat, Batanes, and is likely to develop into a tropical depression by the weekend, PAGASA said.

If the system enters the Philippine Area of Responsibility (PAR), it will be given the local name Pilandok, making it the country’s 16th tropical cyclone this year.

Although it is not expected to make landfall throughout its duration, PAGASA said. — Edg Adrian A. Eva

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By Justine Irish D. Tabile, Senior Reporter

FILIPINO micro, small, and medium enterprises (MSME) need tailored financing and broader business support to grow more sustainably, Asian Development Bank (ADB) Director for Private Sector Financial Institutions Suhail Y. Khan said.

“Solutions must combine finance with digital tools, risk sharing, skills and access to markets,” Mr. Khan said at the BusinessWorld Insights: Boosting the Philippine MSME Ecosystem forum on Wednesday. “No single institution can deliver this alone.”

MSMEs account for 99.5% of registered establishments in the Philippines, employ more than 60% of Filipino workers and contribute over a third of the country’s gross domestic product.

Despite their importance, Mr. Khan said MSMEs accounted for less than 4% of total bank loans, while more than 83% of reported MSME lending was concentrated in Metro Manila.

“The national numbers therefore conceal a much deeper regional financing gap… Too many viable enterprises remain unserved or underserved,” Mr. Khan said, noting that estimates of the financial gap in the Philippines vary from P67 billion to P180 billion.

The ADB official identified obstacles faced by smaller businesses in accessing financing including lack of collateral, audited financial statements, long operating histories, and formal credit records.

The cost of assessing and monitoring small loans also discourages traditional lenders from serving the sector, he added.

“The Philippine financing gap is not only about the volume of credit. It is also about geography, tenor, collateral, data, product design and the persistent barriers faced by entrepreneurs, particularly women entrepreneurs,” he said.

Mr. Khan said MSMEs need longer loan tenors, revolving working capital, movable-asset lending and risk-sharing facilities designed around their actual operations.

Digital platforms and alternative credit-scoring models could also lower information barriers by allowing lenders to use transaction data instead of relying solely on conventional financial documents.

However, he said credit alone could not address shortages in managerial and technical skills, market information, buyer connections, technology and long-term financing that constrain MSME productivity.

Credit guarantees could encourage financial institutions to lend to viable businesses that do not meet traditional requirements, Philippine Guarantee Corp. (PhilGuarantee) President and Chief Executive Officer Alberto E. Pascual said.

“The challenge is not only the availability of funds, but also how to reduce or mitigate the credit risk of lenders and encourage them to support the financing of MSMEs,” Mr. Pascual said.

“A guarantee is more than protection for the lender,” he said. “It is a bridge that allows a viable enterprise to cross from potential to growth.”

At the end of 2025, more than 90% of PhilGuarantee’s credit guarantees were for MSMEs, he said. The state-run corporation had issued about P13 billion in cumulative MSME guarantees benefiting around 71,000 borrowers. It also issued around P6 billion in guarantees benefiting about 40,000 small farmers and fisherfolk.

Meanwhile, Small Business Corp. (SB Corp.) Vice-President for Innovation and Advocacy Wally Don G. Calderon said access to financing had expanded significantly since the pandemic pushed financing institutions to accept online loan applications.

SB Corp.’s direct borrowers increased to nearly 90,000 from just over 2,000 before the pandemic, he said.

However, the wider availability of loans does not necessarily mean that businesses are receiving financing appropriate to their needs.

“There is financing available. The question is: Is it the right type of financing?” Mr. Calderon asked, noting that some quickly approved digital loans carry high interest rates and aggressive collection practices.

SB Corp. offers financing products tailored to underserved groups, including women and young entrepreneurs. It also provides grace periods and collateral-free business loans of as much as P3 million.

“We would like to believe that because we are stretching the boundary, we are influencing the financing landscape and hopefully we will be able to positively impact [the industry] again with our new products and programs,” he added.

Mr. Calderon said the long-term impact of government support should be measured by whether businesses “graduate” from micro to small and eventually medium-sized enterprises.

Aian Guanzon, chief marketing officer of Global Dominion Financing, Inc., said information asymmetry remains a barrier for both MSMEs and lenders.

Some creditworthy businesses are rejected because they lack traditional proof of income, even though electronic-wallet transactions, supplier receipts, and other business records could provide information about their cash flow and repayment capacity.

“Based on my study on MSME financing, I discovered that 20% of them were creditworthy, but they were initially declined by other financing companies,” Mr. Guanzon said.

“But nowadays, it’s not just about bank statements. It can be an e-wallet transaction record or a purchase receipt from a supplier that gives financing companies more information about their actual cash flow, their capacity,” he said.

Anna Isabelle Magalona-Go, president of But First, Coffee, said access to capital allowed businesses to finance their supply chains, hire employees and carry out expansion plans.

However, expanding a business also requires stronger financial discipline, internal systems, and knowledge of cash flow and profit margins.

“Growth unlocks more challenges and more problems,” she said, noting that scaling a business requires a different set of skills from those needed when starting one.

But First, Coffee grew from a home-based online café established with P6,000 in capital during the pandemic into a nationwide chain with more than 200 branches.

“When you’re growing, whether in terms of the number of branches, employees or your footprint, that does not always equate to success,” Ms. Magalona-Go said. “It’s not always about the number, but also how sustainable and profitable you are.”

BusinessWorld Executive Vice-President Lucien C. Dy Tioco said survival-driven entrepreneurship is no longer sufficient to build lasting economic resilience.

“Moving from sustenance to sustainable growth requires a synchronized effort that unites public policy, corporate partnership and community innovation,” he said.

Mr. Dy Tioco said unlocking the full potential of MSMEs requires a shift toward a “growth-oriented, innovation-led model that empowers local businesses to compete globally.”

“Here in the Philippines, building global competitiveness requires similar interventions, from specialized credit-guarantee schemes that ease collateral requirements to shared research, development and testing facilities that raise product standards,” he added.

FILIPINO FAMILIES saw their average annual income rise by 16.5% in 2025, but their spending grew much faster at 24.7%, data from the Philippine Statistics Authority (PSA) showed.

Preliminary data from the PSA showed that the average annual income of Filipino households went up by 16.5% to P411,350 in 2025 from 353,230 in 2023.

The growth in income was also faster than the 15% increase in 2023 from 2021.

“The increase in average family income likely reflects a combination of factors, including continued labor market improvements, higher wages and salaries, stronger business and entrepreneurial activity, and sustained inflows from remittances,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

Wages and salaries were the main source of total family income with 54.6% of the total, followed by entrepreneurial activities (15.5%), imputed rent (8.7%), cash receipts from abroad (8.5%), and cash receipts from domestic sources (5.3%).

PSA data showed the lowest average annual family income stood at P170,580 in 2025, up by 19% from P143,280 in 2023. The highest family income stood at P1.03 million, rising by 15.6% from P895,470 in 2023.

Mr. Asuncion said inflation also played a role as it lifted nominal incomes over the period.

“The data suggests that household earning capacity continued to improve despite a challenging global environment. It indicates that economic activity remained supportive of job creation and income generation, allowing many Filipino families to recover further from the disruptions experienced in previous years,” he said.

By region, the National Capital Region (NCR) had the highest average annual family income in 2025 at P574,370, up by 11.8%.

Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) followed, with average family income growing by 23.3% to P526,070, while Region III (Central Luzon) saw income jump by 19.2% to P447,310.

On the other hand, the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) had the lowest average family income at P246,050.

“From 2023 to 2025, the average annual family income increased in all regions, with Region II (Cagayan Valley) registering the fastest growth of 25%, while Region XII (Soccsksargen) posted the slowest growth of 3.7%,” PSA said.

Among provinces, Ilocos Norte posted the highest average family income at P619,240 in 2025, while Maguindanao del Sur had the lowest at P177,750.

Among highly urbanized cities (HUCs), Makati City had the highest average annual family income at P796,990, while Zamboanga City recorded the lowest at P309,610.

SPENDING
However, the average annual spending of Filipino families also increased by 24.7% to P321,850 last year from P258,050 in 2023. This was a much faster pace than the 12.8% increase in annual expenses in 2023 from 2021.

The lowest average annual expenditure stood at P155,600 in 2025, up 21.7% from P127,860 in 2023. The highest average family spending stood at P693,810 in 2025, surging 27.2% from P545,660 in 2023.

Food and nonalcoholic beverages made up the biggest share of Filipino families’ expenditures at 33.3%, followed by housing, water, electricity, gas and other fuels at 21.6%; restaurants and accommodation services at 7%; transport at 6.9%; personal care, miscellaneous goods and services at 4.2%, and health at 3.5%.

NCR posted the biggest annual average family spending at P460,500 (up 19.6%), followed by Calabarzon Region at P417,680 (up by 34.6%), and Region III at P378,940 (up by 26.9%).

BARMM also had the lowest average annual family expenditure at P202,170.

“From 2023 to 2025, average annual family expenditure increased across all regions with Region IV-A (Calabarzon) recording the highest growth of 34.6%. On the other hand, the Cordillera Administrative Region (CAR) posted the lowest increase at 7.6%,” PSA said.

At the provincial level, Pampanga (excluding the City of Angeles) had the highest family spending at P473,370, while Sulu had the lowest at P159,480.

For HUCs, Makati had the highest family expenditure at P606,700, while Zamboanga had the smallest at P261,870.

POVERTY INCIDENCE
PSA data also showed the Gini coefficient, which measures income inequality, rose to 0.3910 in 2025 from 0.3909 in 2023. A Gini coefficient of “0” indicates perfect equality while “1” indicates perfect inequality.

Data from the PSA showed poverty incidence declined in all regions in 2025, with BARMM showing the biggest improvement. Poverty incidence in BARMM fell to 12.8% in 2025 from 26% in 2023.

PSA said NCR remained “the least poor” among the regions with poverty incidence among families of 0.6% in 2025.

On the other hand, the Bicol Region posted the highest poverty incidence among families at 16.8%.

Mr. Asuncion said the rise in incomes and the decline in poverty suggest the benefits of economic growth are more broadly felt across households.

“While regional disparities remain, the data points to a generally improving socioeconomic environment and a more resilient household sector. Going forward, sustaining these gains will depend on keeping inflation manageable, supporting job creation, and ensuring that growth remains inclusive,” he said.

Last week, the PSA reported that poverty incidence at the national level fell to 9.7% in 2025 from 15.5% in 2023. This translated to about 11.08 million poor Filipinos, significantly lower than the 17.54 million recorded in 2023.

Poverty incidence among families stood at 6.4%, equivalent to 1.9 million families, down from 10.9%, or about 3 million families, in 2023.

The PSA defines poverty incidence among families as the proportion of families whose incomes fall below the poverty threshold, or the minimum income needed to meet their basic food and nonfood needs.

LOCAL GOVERNMENT UNITS (LGUs) are set to receive a record P1.32 trillion in national tax allotment (NTA) in 2027, up 11% from this year, as the Marcos administration shifts more resources and responsibilities to the local level.

“We only ask that you use it properly,” Executive Secretary Ralph G. Recto said in Filipino at the League of Municipalities of the Philippines Luzon National Congress on Tuesday. “Use it wisely. Above all, use public funds for the people.”

The projected allocation would mark the highest LGU share in national taxes on record.

LGUs in Luzon are expected to receive P676.9 billion of the total, Mr. Recto said.

The Local Government Support Fund (LGSF), which finances infrastructure and development projects, reached a record P57 billion this year. The government is proposing to raise the fund to P58.53 billion in 2027.

Mr. Recto announced the figures as he led the distribution of special allotment release orders under the support fund to municipalities in Luzon.

The fund supports projects such as water systems, farm-to-market roads, health facilities, multipurpose buildings, and other local infrastructure.

“It is not enough for the government to listen; it must act quickly to bring national resources directly to communities without political bias,” Mr. Recto said.

Analysts said that some local governments may struggle to balance and absorb these larger allocations.

Adolfo Jose “AJ” A. Montessa, co-convenor of the People’s Budget Coalition, pointed out that the “absorptive capacity of LGUs is quite uneven.”

“Unfortunately, the feedback we’re usually getting is that either LGUs are prone to maintain surpluses, i.e. not utilize this increased funding; or do not have the necessary capacity to implement the mandates and fill the role the National Government has typically taken,” he told BusinessWorld in a Viber message. 

Mr. Montessa said that while the Mandanas-Garcia ruling grants LGUs a larger share of national revenues alongside increased responsibilities, many localities struggle to execute.

The Supreme Court’s 2019 Mandanas-Garcia ruling, which took effect in 2022, increased the NTA share of LGUs to 40% of all national taxes beyond those collected by the Bureau of Internal Revenue (BIR). This adjustment was intended to enhance the fiscal autonomy of LGUs by granting them a more substantial share of the national tax base.

“A bulk of recent research from multiple institutions have pointed out to the still wide inequality across LGUs,” Hansley A. Juliano, a political science instructor at the Ateneo de Manila University, said in a Facebook Messenger chat.

“Highly urbanized cities and some component cities may be able to, but other component cities, municipalities and even provincial governments struggle to balance resources,” he added.

He warned that without strong local mechanisms, the devolution push could backfire.

“The monitoring should always continue. It is the responsibility of the National Government to do so even in most decentralized or federal countries,” he said.

Palace Press Officer Clarissa A. Castro said that the National Government will continue monitoring programs and projects even after functions and funding are transferred to LGUs.

“The National Government’s obligation does not end simply with the release of funds, everything is subject to monitoring,” she told a news briefing in Filipino. 

“Of course, regarding infrastructure, the Department of Public Works and Highways is involved in the monitoring process. As for the provision of scholarships, the Department of Education, Commission on Higher Education, and Technical Education and Skills Development Authority are also involved,” she said. 

Mr. Montessa also expressed concern over the potential politicization of LGSF, noting that “this fund might be used for early election purposes, another form of pork similar to what we tagged in the soft, hard, and shadow pork, but this time through Malacañang or the executive secretary releasing funds directly to local government units.”

He said that the massive tax allotment reduces national fiscal space, shrinking the government’s ability to fund new programs to respond to global and domestic crises. 

He said that the government must evaluate devolution by measuring actual ground-level health, nutrition, and literacy outcomes rather than simple project delivery.

MOODY’S ANALYTICS slashed its 2026 growth forecast for the Philippines, amid weak consumption and a collapse in private investment.

In its latest Asia-Pacific Outlook report dated Aug. 24, the analytics firm said it now sees Philippine gross domestic product (GDP) expanding by 3% this year, slower than its 4% projection in June.

“We lowered our 2026 GDP growth forecast to 3% from 4% in the June vintage after incorporating the second-quarter GDP result, which was far weaker than expected,” Moody’s Analytics Assistant Director and Economist Sarah Tan said in an e-mailed reply to questions.

The Philippine economy slumped to its worst post-pandemic growth of 2.3% in the April-to-June period, as investments and public construction continued to reel from last year’s flood control corruption scandal. Rising prices from the Middle East war-driven oil shock also strained household spending.

“The economy expanded by just 2.3% year on year, with private consumption showing notable weakness and private investment collapsing,” Ms. Tan noted. “This points to softer underlying domestic demand than we had previously anticipated.”

As of the first half of 2026, the country’s GDP growth averaged 2.6%, well below the government’s 3.5%-4.5% full-year target.

If Moody’s Analytics’ forecast holds true, the government will miss its growth target for a fourth year in a row.

The economy would also further soften from last year’s post-pandemic low growth of 4.4%.

Economists earlier said that reaching even the bottom end of the government’s target entails a steep climb, as it means the economy must grow by at least 4.4% in the second half.

Moody’s Analytics sees growth recovering over the next two years to 4.6% in 2027 and 5.1% in 2028. The government wants full-year expansion to be between 5% and 6% from 2027 to 2030.

Meanwhile, GlobalSource Partners Country Analyst Diwa C. Guinigundo noted that the Philippines could face a more complicated path toward fiscal consolidation if growth remains below potential.

“Slower growth would make fiscal consolidation and debt reduction more difficult,” he said in a Viber message. “The issue is not simply that government revenues would grow more slowly; a weaker economy also means a smaller denominator for the debt-to-GDP ratio.”

This came after Moody’s Ratings, the company’s credit rating arm, affirmed the Philippines’ “baa2” investment-grade rating with a “stable” outlook, but said the economy might struggle to grow above 6% over the medium term.

The country’s debt-to-GDP ratio swelled to an over two-decade-high of 66% in the second quarter as its debt stock hit a fresh high of P19.07 trillion at end-June.

Mr. Guinigundo said a weak growth backdrop means lowering the debt-to-GDP ratio could take longer and may further narrow the government’s fiscal space for infrastructure and social spending.

“In short, lower growth makes the fiscal adjustment more painful and potentially more protracted. The priority, therefore, should be to restore potential growth while maintaining credible fiscal discipline,” he added.

The bleak medium-term growth outlook and lingering fiscal constraints also cloud the government’s target to achieve an “A” level credit rating by 2028, Mr. Guinigundo noted.

“They clearly make the ‘A’ rating target more challenging, because rating agencies look not only at the government’s fiscal numbers but also at the economy’s capacity to generate sustained growth and revenues,” he said.

“If growth remains below the pre-pandemic trend while fiscal pressures persist, the improvement in debt metrics and fiscal strength may be slower than expected. An ‘A’ rating by 2028 should therefore not be treated simply as a fiscal consolidation target; it ultimately depends on convincing markets and rating agencies that the Philippines can deliver stronger, more durable, and more inclusive growth while keeping debt and deficits firmly under control,” he added.

STICKY INFLATION
Meanwhile, Moody’s Analytics slightly raised its inflation forecast for this year to 5.2% from 5.1% previously, citing sticky price pressures.

“Recent data has shown that inflation has been elevated, initially driven by the oil price shock, with price pressures subsequently spilling over into food and other categories,” Ms. Tan said.

“While headline inflation is easing, price pressures remain sticky, with inflation having stayed firmly above the BSP’s target range for the past five months,” she added.

In July, headline inflation eased for a third straight month to 6.2%, but remained above the central bank’s 3% target for the fifth consecutive month. This brought the seven-month inflation print to 5%.

By next year, Moody’s projects inflation to ease to 3.5% before cooling further to 3.2% in 2028.

In a separate report, Bank of America (BofA) Global Research said the BSP may tighten anew as underlying price pressures remain strong.

“Though Indonesia and the Philippines’ inflation surprised to the downside (substantially lower than 10-year historical norm) the underlying cost pressures remain elevated,” BofA said.

“Given their relatively higher betas with oil and dollar, their tightening decision would likely be contingent upon oil and USD (US dollar) swings in the near-term,” it added.

However, BofA said the weak second-quarter growth could prompt the central bank to render its August hike the last for the current cycle.

“In the case of the Philippines, our economists are expecting BSP to hike by 25 bps (basis points) to 5% this month, probably its last hike in the hiking cycle while its GDP growth slowed in 2Q,” it said. “However, the market’s pricing in 50 bps of cumulative hike over six months suggests market-implied expectation of an extension of the hiking cycle beyond the upcoming meeting.”

Based on a BusinessWorld poll conducted last week, 19 of 24 analysts project another 25-bp rate increase on Thursday, while five others are expecting the BSP to stand pat.

The Monetary Board has delivered a total of 50 bps in hikes since it reversed into tightening in April, with the benchmark rate now at 4.75%.

After its Aug. 27 meeting, it is scheduled to review its monetary policy again on Oct. 22 and Dec. 17.

The LPA, located 1,030 kilometers east of Northern Luzon, will be locally called Pilandok once it develops into a tropical depression, according to the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) 5:00 a.m. press briefing.

“As of now, the LPA or the potential tropical cyclone’s indirect effect is that it will enhance the southwest monsoon starting tomorrow until Tuesday,” Leanne Loreto, weather specialist of PAGASA, said during the press briefing in Filipino.

“That is why rainy conditions are expected in Luzon as well as in the western section of Visayas in the next four to five days,” she also said.

As of today, PAGASA placed heavy rainfall warnings over areas of Zambales and Occidental Mindoro due to the southwest monsoon that tropical cyclone Saudel is slightly enhancing. The storm is expected to make landfall in mainland China.

By Friday to Saturday, more areas in Luzon are expected to be placed under heavy rainfall warnings due to the expected enhancement of the LPA by the southwest monsoon.

PAGASA warned of possible flooding and landslides in affected areas, especially those in high-risk locations. — Edg Adrian A. Eva

VEHICLE SALES in the Philippines fell by 2.5% year on year in July, as weak consumer sentiment continued to dampen demand for big-ticket purchases, industry data showed.

In a joint report by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association, total vehicle sales dropped by 2.5% to 37,319 units in July from the 38,295 units sold in the same month last year.

July saw the highest monthly vehicle sales since the 42,870 recorded in December 2025.

Month on month, auto sales inched up by 0.6% from the 37,079 units sold in June.

Including other industry data, CAMPI said total vehicle sales reached 42,880 units in July.

Passenger car sales, which accounted for 20.36% of total sales, fell by 6.4% to 7,600 units in July from the 8,120 units sold in the same month last year. It likewise slipped by 2.7% from 7,814 units sold in June.

Commercial vehicle sales, which made up 79.64% of industry sales, dipped by 1.5% to 29,719 units in July from 30,175 units sold in the same month last year. On a monthly basis, sales rose by 1.6% from 29,265 units sold in June.

In July, sales of light commercial vehicles went up by 1% to 22,744 units, but sales of Asian utility vehicle sales fell by 6.5% to 6,231 units.

Sales of light- and medium-duty trucks in July declined by 25.5% and 19.5% to 452 units and 243 units, respectively. Heavy-duty trucks sales also slumped by 38% to 49 units in July.

In the first seven months of the year, total vehicle sales fell by 10.2% to 241,725 units from 269,207 units a year ago.

As of end-July, passenger car sales dropped by 11% to 47,856 units, while commercial vehicle sales slid by 10% to 193,869 units.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said vehicle demand remains soft as households face high living costs.

“Vehicle demand remains relatively cautious as households continue to contend with elevated borrowing costs, high living expenses, and uncertainty around big-ticket purchases. This can temper demand for conventional vehicles even as overall mobility needs remain strong,” he said in a Viber message.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber chat that the continued year-on-year drop in vehicle sales could mainly be due to higher pump prices caused by the Middle East war.

EV SALES
CAMPI President Jose Maria M. Atienza said demand for electrified vehicles, including hybrid vehicles, continued to grow in July.

“The shift to electrification continues to accelerate, with xEVs (electric vehicles) accounting for 29.5% of the market last July. This is up 18 points from the same month last year,” Mr. Atienza said in a statement.

The xEV segment includes battery EV (BEV), plug-in hybrid EV (PHEV), and hybrid EV (HEV).

In July, xEV sales more than doubled by 161.8% to 7,086 units from the 2,707 units sold last year. Month on month, xEV sales rose by 3.6% from the 6,843 units sold in June.

For the seven-month period, xEV sales surged by 136.4% to 38,286 units from 16,195 units last year.

HEVs, which accounted for 41.83% of sales in July, jumped by 23.4% to 2,964 units, bringing year-to-date sales 55.9% higher to 20,716 units.

BEV sales skyrocketed by 1,315.7% to 2,520 units in July, while PHEV sales surged by 1,151.6% to 1,602 units.

In the seven-month period, BEV sales quadrupled to 10,476 units, while PHEV sales soared by 2,363.2% to 7,094 units.

Mr. Rivera said the surge in sales of electrified vehicles reflects the improved availability in EV models and stronger consumer awareness.

“The market is clearly diversifying even if total vehicle sales remain soft,” he noted.

In the coming months, xEV sales are expected to remain the fastest-growing segment, while sales of gas-powered vehicles may slowly recover if external conditions improve, Mr. Rivera said.

“Car sales may remain broadly stable with modest upside if financing conditions improve, and inflation continues to ease,” he added.

Toyota Motor Philippines Corp. remained the top-selling brand as of end-July despite an 8.2% decline in sales to 118,706 units.

This was followed by Mitsubishi Motors Philippines Corp. which saw sales drop by 16.8% to 42,592 units.

Suzuki Phils., Inc. came in third despite a 13.2% drop in sales to 10,951 units.

Rounding out the top five are Ford Motor Company Phils., Inc. which saw sales fall by 35.5% to 8,587 units, and Nissan Philippines, Inc. which posted a 42% decline in sales to 7,899 units. 

THE PHILIPPINES’ domestic trade in goods declined by 22% in the second quarter as heightened economic uncertainty weakened demand and business sentiment, analysts said.

Preliminary data from the Philippine Statistic Authority’s (PSA) Commodity Flow Survey showed that the value of total domestic trade fell by 21.9% to P745.7 billion in the second quarter from P955.18 billion last year.

By volume, domestic trade slid by 37.9% to 10.57 million tons from 17.02 million tons a year ago.

Domestic trade by value refers to the outflow value of commodities transported from its place of origin to the destination.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the second-quarter domestic trade slump could be linked to softer demand, slower movement of goods, and a more cautious business sentiment.

“Businesses appear to be managing inventories more conservatively amid lingering economic uncertainties, while weaker manufacturing and investment activity likely reduced the shipment of both intermediate and capital goods,” he said in a Viber message.

Rising oil prices caused by the Middle East war that broke out earlier this year drove up the costs of goods, transport and logistics, as well as dampened consumer and business confidence.

Ateneo Center for Economic Research and Development Senior Research Fellow Ser Percival K. Peña-Reyes said the decline in domestic goods trade may be due to weaker industrial activity during the quarter.

“The domestic trade slump in Q2 (second quarter) could be seen primarily as a transport/logistics and shipment-composition phenomenon, especially involving maritime trade, with weaker overall industrial activity potentially contributing — but not sufficient by itself to explain the magnitude of the decline,” he said in Facebook Messenger chat.

PSA data showed the value of commodities transported by road rose by 9.8% to P542.73 billion, accounting for 72.8% of the total.

The value of goods transported through water plunged by 56% to P202.42 billion (27.1% market share), while those transported by air dropped by 16.9% to P560 million (0.1% market share).

“There appears to be a dramatic contraction in sea/coastal movement of goods and possibly a shift from water to road transport, rather than a simple collapse in Philippine economic activity,” Mr. Peña-Reyes said.

By commodity, machinery and mechanical appliances reported the highest outflow value at P183.41 billion or a 24.6% share to the total value of domestic trade during the period.

This was followed by prepared foodstuffs at P147.64 billion (19.8% market share), and optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments at P93.11 billion (12.5% market share).

In the April-to-June period, Calabarzon posted the highest outflow value of traded goods at P331.63 billion, representing a 44.5% market share. This was followed by the National Capital Region (NCR) at P115.89 billion (15.5% market share), and Central Luzon with P108.41 billion (14.5% market share).

On the other hand, the Zamboanga Peninsula saw the lowest outflow value of traded goods during the quarter, which amounted to P2.01 billion or a market share of 0.3%.

Meanwhile, the NCR recorded the largest inflow value in the second quarter at P361.56 billion, making up 48.5% of the total. Calabarzon followed with an inflow value of P82.13 billion or 11% of the total, and Central Visayas with P38.7 billion or a 5.2% market share.

PSA data showed that Calabarzon saw the largest trade balance — the difference between outflow value and inflow value — in the second quarter at P249.5 billion.

Mr. Ravelas noted that this reflects Calabarzon’s pivotal role as a manufacturing and logistics hub.

Other regions that posted a large trade balance include Central Luzon (P71.94 billion) and the Negros Island Region (P32.89 billion).

Mr. Ravelas said stronger infrastructure spending and improved macroeconomic fundamentals would help boost domestic trade.

“Moving forward, stronger infrastructure spending, easing inflation, and a more supportive interest rate environment will be key to reviving domestic trade and strengthening economic momentum in the second half of the year,” he said.

In an Aug. 24 report, OCBC Group Research slashed its 2026 gross domestic product (GDP) growth forecast for the Philippines to 3.2% from 3.8% previously.

This would position the Philippines as the second-slowest growing economy in ASEAN-5, and the only country seen to face a sharp slowdown from last year’s 4.4% growth.

The ASEAN-5 (Association of Southeast Asian Nations) region includes the Philippines, Indonesia, Malaysia, Thailand, and Vietnam.

If OCBC’s projections are realized, the Philippines will surpass only Thailand, which is expected to expand by 2.3% this year from 2.4% in 2025.

OCBC projects ASEAN-5 to expand by an average of 4.9% this year and 5% in 2027.   

The bank sees Vietnam posting the fastest growth among ASEAN-5 economies, raising its forecast to 8.2% from 7.3% for this year.

It also raised its GDP growth forecast for Indonesia to 5.2% from 5% and kept its outlook for Malaysia at 5.2%.

“Despite differing fiscal policy responses to higher global oil prices, the balance of revisions remains skewed towards growth upgrades rather than downgrades,” OCBC said.

“This supports our view that monetary policy across the region is likely to remain on a tightening path, with further rate hikes expected in the second half of 2026 and first half of 2027,” it added.

If realized, the 3.2% GDP growth will be the Philippines’ worst economic performance since the COVID-19 pandemic in 2020, when it contracted by 9.5% and last year’s post-pandemic low of 4.4%.

Excluding the pandemic, this would be its weakest expansion in 17 years or since the 1.4% in 2009.

“Second-quarter 2026 GDP growth presented a mixed picture across the region,” OCBC said. “Growth strengthened in Vietnam and Malaysia relative to the first quarter of 2026, while Indonesia, the Philippines, and Thailand recorded further moderation.”

Philippine GDP growth eased for a fourth consecutive quarter after settling at 2.3% in the April-to-June period from 2.8% in the first quarter and 5.4% a year ago.

This was the country’s slowest quarterly performance since the 3.8% decline recorded in the first quarter of 2021. Outside the pandemic, it was the weakest in over 16 years or since the 1.8% in the fourth quarter of 2009.

Economy Secretary Arsenio M. Balisacan had said the flood control fallout continued to weigh on public construction and investments, while the energy crisis from the Middle East war strained household spending.

According to Mr. Balisacan, the economy must grow by at least 4.4% in the second half to hit the lower end of the government’s 3.5%-4.5% full-year target; a feat analysts said requires a major turnaround.

For 2027, OCBC sees the Philippine economy recovering to grow by 4.6%, although slightly slower than its previous 4.8% estimate. 

This projection means the economy might still be the second-slowest growing in ASEAN-5 next year, trailing Vietnam (8.3%), Indonesia (5%), Malaysia (4.8%). It would only outperform Thailand with 2.5%.

The Development Budget Coordination Committee wants Philippine GDP growth to be between 5% and 6% next year until 2030. 

HIKES ON THE TABLE
Despite expectations of tepid growth, OCBC still anticipates the Bangko Sentral ng Pilipinas (BSP) to raise its policy rate by 25 basis points (bps) for a third straight meeting on Thursday.

OCBC’s forecast matches the call of 19 of the 24 analysts and economists polled by BusinessWorld last week. Only five economists penciled in a pause.

If realized, the key policy rate would hit an over one-year high of 5%, bringing the Monetary Board’s total hikes since it began tightening in April to 75 bps.

However, the Singaporean bank is also pricing in two more 25-bp increases to bring the BSP’s benchmark rate to 5.5% by yearend. 

OCBC expects the BSP to reverse its policy path and begin easing next year to bring benchmark borrowing costs to 5% by end-2027.

BSP Governor Eli M. Remolona, Jr. has left the door open for further tightening, noting that their inflation fight is still on as they have yet to see a sustained disinflation trend.

However, the “disappointing” second-quarter growth means the central bank can be less aggressive in controlling price pressures, he added.

The BSP has repeatedly signaled its commitment to steering inflation back to its 3% goal using all necessary monetary policy actions, with the headline print averaging 5% as of July.

Its latest projections show inflation could blow past its target for three consecutive years at 6.4% this year, 4.5% in 2027, and 3.1% in 2028.

The Monetary Board has three more rate-setting meetings this year scheduled for Aug. 27, Oct. 22, and Dec. 17. — Katherine K. Chan

MOODY’S RATINGS said the Philippines’ medium-term growth outlook seems bleak as its slow investment recovery and vulnerability to climate-driven shocks may derail its economic rebound.

In a statement following its latest rating action on the Philippines, the debt watcher said the country’s gross domestic product (GDP) growth is expected to hover below its pre-pandemic level of around 6% over the medium term.

“The Philippines’ medium-term growth will continue to be underpinned by favorable demographics, resilient remittances and service exports, and a gradual strengthening of investment as confidence recovers, with electronics and other goods exports providing a more marginal offset,” Moody’s Ratings said late on Monday.

“Even so, we expect medium-term potential to settle somewhat below the near-6% pace recorded before the pandemic, as investment recovers only gradually and the economy remains exposed to recurrent natural disasters and climate-related shocks,” it added.

Moody’s slashed its Philippine GDP growth forecast for this year to 3.6% from 5.5%. This falls near the bottom end of the government’s 3.5%-4.5% target for the year.

In the second quarter, GDP growth tumbled to a new post-pandemic low of 2.3%, bringing average growth to 2.6% in the first half.

The fourth consecutive quarter of slowing growth came as investments continued to reel from last year’s flood control corruption scandal, while rising prices amid the Middle East war squeezed household spending.

Moody’s Ratings noted that the Middle East war shocks and investment slump are “largely cyclical,” with an investment-driven recovery expected later this year. 

“The recovery from the second half of 2026 should be led by a rebound in public investment as the government resumes stalled disbursements and normalizes spending execution,” it said.

Moody’s Ratings said that local investments should focus on public infrastructure and public-private partnerships, especially in renewable energy “as the country diversifies its energy mix in response to the recent shock.”

The government’s recent reforms should also eventually boost investment and productivity as their benefits are realized, the debt watcher said.

These include the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act, foreign investment liberalization, and allowing more private and foreign participation in sectors such as renewable energy.

By 2027, Moody’s Ratings expects GDP to expand by 5.3%, although still slower than its previous estimate of 5.6%.

The Development Budget Coordination Committee sees the country’s GDP expanding between 5% and 6% next year until 2030.

Moody’s on Monday affirmed the Philippines’ “Baa2” credit rating with a “stable” outlook on the back of its projection that gradual growth recovery and fiscal consolidation efforts will stabilize the country’s fiscal position over the next two years.

In separate statements, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. and Finance Secretary Frederick D. Go welcomed Moody’s rating affirmation.

“Moody’s assessment confirms our strong macroeconomic fundamentals, and that the reforms we’ve put in place are working,” Mr. Go said.

For his part, Mr. Remolona vowed that the central bank will ensure inflation eases back to its target and strengthen the country’s financial system.

“On the part of the BSP, we will continue working to bring inflation back close to target, safeguard the soundness of the country’s banking system, promote a safe and efficient payments and settlements system, and prudently manage the country’s international reserves,” the central bank chief said in a separate statement.

“These efforts help preserve macroeconomic and financial stability, which supports sustainable and inclusive growth,” he added.

So far, Moody’s Ratings is the sole major debt watcher that maintained its rating and outlook for the Philippines.

In April, S&P Global Ratings downgraded the Philippines’ credit outlook to “stable” from “positive,” although it affirmed the country’s “BBB+” long-term investment grade rating and “A-2” short-term rating.

Fitch Ratings likewise revised its outlook to “negative” from “stable,” but retained its “BBB” long-term foreign-currency rating.

The National Government is aiming to secure an “A” level credit rating by 2028 or the end of the Marcos administration.

University of Asia and the Pacific Economist Marco Antonio C. Agonia said achieving the “A” rating may be more difficult as the Philippines’ weak medium-term prospects threaten the government’s fiscal consolidation efforts.

“A persistent subdued growth narrative may imperil the country’s debt consolidation plans and its bid towards ‘A’ credit rating status,” he told BusinessWorld in an e-mail.

Mr. Agonia noted that the lack of substantial growth could prevent the country from narrowing its debt-to-GDP ratio down to the 60% threshold deemed sustainable for developing countries.

“Historically, fiscal consolidation plans were focused on outgrowing the increase in debt stock through sustained increases in economic growth. In the absence of substantial growth, we may not be able to quickly return below the 60% debt-to-GDP level,” he said.

In the second quarter, the country’s debt-to-GDP ratio ballooned to its highest in over two decades at 66% as its debt stock swelled to an all-time high of P19.07 trillion at end-June.

The government expects the country’s debt-to-GDP ratio to settle between 60% and 63% this year, according to the Philippine Development Plan 2023-2028 Midterm Update. It is projected to decline to 59%-62% next year and fall further to 58%-61% by 2028.

“We are no longer monitoring any tropical cyclone or low-pressure area within PAGASA’s monitoring domain,” PAGASA weather specialist Chenel Dominguez said during the 5 a.m. press briefing in Filipino.

“However, we still expect the storm we previously monitored, Obet, which is now outside PAGASA’s monitoring domain, to continue enhancing the southwest monsoon, which will bring rains to a large part of Luzon,” she added.

PAGASA has hoisted a heavy rainfall warning over Zambales, where rainfall of 50 to 100 millimeters is expected within the next 24 hours.

Localized flooding and landslides are possible in high-risk areas, the agency warned.

The agency also warned of thunderstorms in Metro Manila and the rest of Luzon due to the effects of the southwest monsoon.

More areas may be placed under heavy rainfall warnings due to the potential intensification of the southwest monsoon. — Edg Adrian A. Eva

THE PHILIPPINE government is stepping up efforts to reduce electricity losses, allocating about P7.5 billion to curb nontechnical losses while developing a plan to address technical losses.

Energy Secretary Sharon S. Garin said on Monday the government will address nontechnical system losses — or losses arising from pilferage, billing issues, and other nontechnical factors — in stages.

“This system loss action plan will be reinforced by a broader package of policy and institutional measures. This includes stronger coordination with the Department of Energy (DoE), National Electrification Administration (NEA), Energy Regulatory Commission (ERC), electric cooperatives, and private distribution utilities on pilferage enforcement,” she said during a briefing.

The government has allocated P4 billion for the first phase to cut nontechnical losses by 25%. Another P1 billion each will be allocated to the next two phases, which target reductions of 50% and 75%, while P1.5 billion is earmarked for the final phase to eliminate nontechnical losses.

Ms. Garin said the government will explore various funding options, either through National Government funds or loans.

To achieve these targets, the program will focus on seven key areas: anti-pilferage enforcement, consumer education and information, education and communication campaigns, billing and collection efficiency, meter management and auditing, consumer database cleansing, institutional strengthening, and policy and regulatory reforms.

System loss is the difference between the electric energy delivered to the distribution system and the energy delivered to the end-users. The costs arising from electricity losses are charged to consumers.

Nontechnical system losses are the result of electricity theft and illegal connections, while technical system losses are unavoidable and occur because of the laws of physics.

In his State of the Nation Address (SONA) in late July, President Ferdinand R. Marcos, Jr. called for the removal of system loss charges to ease the burden on consumers amid elevated electricity prices.

Energy Undersecretary Rowena Cristina L. Guevara said nontechnical system losses are expected to be reduced by 50% by the time Mr. Marcos delivers his SONA in July 2027. This is later than the DoE’s earlier projection that the system loss charge could be scrapped from power bills before the next SONA.

Ms. Guevara said technical losses account for the largest share in the charges, with more than 6% of electricity distributed by electric cooperatives, compared with about 3-4% attributed to nontechnical losses.

“We will prioritize the nontechnical system losses first because those are the ones we can address quickly. There is not much analysis needed because meters with problems are easy to identify,” she said.

The DoE is set to craft a distribution development plan in coordination with the NEA, ERC, and electric cooperatives in a bid to increase efficiency and economically decrease technical losses.

The plan will cover the optimal routing and capacity of sub-transmission lines and primary feeders, as well as the optimal location and capacity of substations, secondary lines and capacitors.

The plan is expected to be completed in the first half of 2027 and submitted through the NEA to the ERC for approval in July 2027.

“It would take two to three years before we could minimize technical system loss,” Ms. Garin said.

‘REPORT ELECTRICITY THEFT’
Electricity consumers, who bear the cost of nontechnical losses, can now report suspected illegal electrical connections, jumpers, and tampered electricity meters through the eGovPH platform.

The DoE on Monday launched “Brigada Kontra Jumper,” a government initiative aimed at strengthening the fight against electricity theft and nontechnical system losses.

The agency said the initiative forms part of its broader System Loss Reduction Action Plan.

“Electricity theft is not a victimless act. Illegal connections and meter tampering contribute to losses in the distribution system, with legitimate consumers potentially bearing part of the cost,” Ms. Garin said.

“Through Brigada Kontra Jumper, we are bringing government, utilities, and consumers together to address this problem more decisively,” she added.

Acting Budget Secretary Kim Robert C. De Leon said most government agencies were on track in implementing their projects, but infrastructure programs, particularly those under the Department of Public Works and Highways (DPWH), were behind schedule.

“By the middle of the year, there should be at least 50% obligation if we follow the linear calendar. But nationwide, we’re just about 20%-30% owing to the late release of these allotments,” he said at the Philippine Economic Briefing in Davao City on Monday.

Across the National Government, allotment releases from all funding sources reached P6.182 trillion as of end-July, equivalent to 91% of the P6.793-trillion obligation program for the year.

For the DPWH, allotments released under the 2026 national budget reached P527.666 billion, equivalent to 99.5% of its P530.115-billion adjusted program.

However, the DBM’s disbursement report showed P403.3 billion for various DPWH infrastructure projects was released only in May, leaving agencies less time to complete procurement and obligate funds.

Mr. De Leon said agencies would need another one to two months to complete procurement, paving the way for infrastructure project implementation to pick up later in the year.

“We’re optimistic that by the third quarter and hopefully by the fourth quarter, we have all these projects awarded,” he said.

The Development Budget Coordination Committee programmed P251.3 billion in infrastructure and other capital outlays for the third quarter, 2.2% lower than the P256.9 billion spent a year earlier.

For the fourth quarter, infrastructure and other capital outlays are programmed to increase by 49.4% to P328.44 billion from P219.8 billion a year earlier.

However, actual infrastructure and other capital outlays reached only P269.4 billion in the January-to-May period, down 42.9% from P471.5 billion a year earlier.

Mr. De Leon said the delayed releases came as the DBM and DPWH strengthened safeguards in response to the irregularities involving some infrastructure projects in 2025.

The Philippines was rocked by a corruption scandal last year involving allegedly nonexistent or substandard flood control projects linked to public officials and private contractors.

“We really have to institute stronger reforms, not only from our end at the DBM, but also at the end of the DPWH,” Mr. De Leon said.

However, he said tightening controls must be balanced with the need to release funds and implement legitimate projects on time.

“It’s not always about closing all the doors and putting more controls. In fact, that is one of the reasons why the economy has actually slowed down for the first two quarters,” he said.

The Philippine economy grew by just 2.6% in the first half, slower than the 5.4% expansion recorded a year earlier and below the government’s 3.5%-4.5% full-year target.

Finance Secretary Frederick D. Go, speaking at the same event, said lower government spending was a principal reason for the slower economic growth recorded in the second half of 2025 and the first half of this year.

Mr. Go said the government intends to address the spending slowdown in the second half, and “resume business as normal” in 2027.

“As the shocks ease and we resume public infrastructure spending, we will be back on track to our previous growth rates of 5% to 6% per year,” Mr. Go said.

For 2027, Mr. De Leon said all DPWH projects included in the National Expenditure Program were required to have complete supporting documents to ensure that they are ready for implementation.

Complete documentation would allow implementing agencies to conduct early procurement this year and award contracts once the 2027 national budget is approved, he added.

“When you do early procurement this year for 2027 projects, once the President approves the budget, immediately by January, we can start awarding and implementing those projects,” he said.

Mr. Go said the government is also addressing infrastructure bottlenecks through the Public-Private Partnership (PPP) Code and the Accelerated and Reformed Right-of-Way Act.

“A lot of our infrastructure projects in the Philippines are delayed. And if you really look at the reason why, it’s because of right-of-way,” he said.

Mr. Go said 49 of the government’s 209 infrastructure flagship projects are under the PPP program.

“These investments will expand access to education, healthcare, transportation, and build a more connected, more resilient Philippines,” he added. — Justine Irish D. Tabile

EARLY MEASURES to protect agricultural production from what could be the worst El Niño on record could help prevent supply disruptions from fueling inflation, a Bangko Sentral ng Pilipinas (BSP) official said on Monday.

BSP Deputy Governor Zeno Ronald R. Abenoja said supply-side interventions, especially those from the government, should safeguard agricultural production and help cushion the country’s food supply from the looming “Godzilla El Niño.”

“And not only in terms of supply, but this upcoming risk factor to agriculture, the so-called ‘Godzilla El Niño,’” Mr. Abenoja said during the Philippine Economic Briefing in Davao City on Monday. 

“That’s something that our government is looking at very carefully and has already started preparations. So, that hopefully can help mitigate the inflation pressures across regions, across the country,” he added.

The Philippine Atmospheric, Geophysical and Astronomical Services Administration said the weak to moderate El Niño conditions in the tropical Pacific could intensify into a strong El Niño in the third quarter. From October until January next year, the Philippines may encounter “very strong” El Niño conditions.

El Niño is expected to strengthen the southwest monsoon and tropical cyclones as well as cause severe dry conditions to parts of the country, which may significantly impact the agriculture sector.

Mr. Abenoja noted that the National Government has already begun active preparations to protect the local agricultural sector and mitigate the looming inflationary pressures from another potential food shock.

“And so, they’re looking at shifting the calendar for planting season, supporting water resources like irrigation. They are looking at drought-tolerant varieties of food, of crops, so that the food industry can maintain its productivity even in these adverse weather conditions,” he said.

The Department of Agriculture earlier said that agricultural output may be slashed by about 20% to 30% once the “Super El Niño” materializes.

Mr. Abenoja flagged regional inflation disparities, with Mindanao facing heavier price pressures due to logistical inefficiencies amplified by rising fuel costs amid the recent energy shock.

“So, there’s a lot of heterogeneity that we are observing. And what we have observed is that because transportation costs have increased quite dramatically, that has affected some prices for food supply,” Mr. Abenoja said.

“And this is something that the National Government is looking at very carefully, making sure that the supply of food items remains adequate moving forward,” he added.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said El Niño-driven food inflation in the coming months could prompt the BSP to resume monetary tightening later in the year.

“In terms of what would warrant further tightening, I suspect that it would come from food inflation risks, especially if El Niño materializes late this year or early next, affecting crop yields and sending food prices up substantially,” he told BusinessWorld in an e-mail.

“But I think it’s still too early to say that the worst-case scenario on this front is likely to be the main outcome.”

However, Mr. Chanco noted that the National Government could also opt to address potential food price shocks with non-monetary policies “as it has done in recent years.”

In July, inflation for the food and nonalcoholic beverages index, which holds 37.75% or the highest share in the consumer basket, steadied at 5.2%. However, rice inflation hit a two-year high of 17.1%.

Mr. Abenoja earlier said the potential impact of the super El Niño is among the risks the BSP is weighing as they reevaluate their full-year inflation outlook.

The BSP’s latest forecast shows inflation may settle at 6.4% by yearend, although this has yet to account for the projected impact of the upcoming El Niño.

The BSP expects inflation to ease to 4.5% next year before moving closer to its target at 3.1% in 2028.   

Meanwhile, in its latest Monetary Policy Report, the central bank noted that potentially costlier rice due to El Niño-driven disruptions could drive the headline print to stay above its 3% target over the medium term.

In the seven months to July, inflation averaged 5%, sharply faster than the 1.7% clip recorded in the same period last year.

On the other hand, Deutsche Bank Research noted that second-order effects are still feeding through the economy, with around 80% of the items in the country’s consumer basket, by weight, recording above-trend inflation since the war broke out in March.

“This suggests that inflationary pressure in the Philippines is still broad-based and that spillover effects are likely still working their way through the economy, in our view,” it said in an Aug. 21 report.

“We see another 25-basis-point (bp) policy rate hike to 5% from the BSP on Aug. 27 as necessary to further dampen the impact of price pressures on consumers and stabilize real incomes,” it said.

Capital Economics said it sees a 25-bp hike on Thursday which would put an end to the central bank’s tightening cycle, as it balances inflation and growth woes.

“All told, we think policymakers will opt for a further 25-bp hike next week to add to the 50 bp of tightening delivered so far in this cycle,” Capital Economics Deputy Chief Emerging Markets Economist Jason Tuvey said in a separate report.

“But, so long as oil prices drop back as we expect, that is likely to mark the end of the tightening cycle as the BSP shifts its attention to supporting the economy,” he added.

The central bank has raised key borrowing costs by a cumulative 50 bps since it began tightening in April, with the benchmark rate now at 4.75%.

Based on a BusinessWorld poll conducted last week, 19 of 24 analysts project another 25-bp rate increase on Thursday, with the remaining five expecting the BSP to pause.

The Monetary Board will hold its fourth rate-setting meeting on Thursday, followed by two more reviews scheduled for Oct. 22 and Dec. 17.

MOODY’S RATINGS on Monday affirmed the Philippines’ investment grade credit rating with a “stable” outlook on expectations that the country’s fiscal position will stabilize as the economy gradually recovers and the government continues its fiscal consolidation efforts.

In a statement, Moody’s Ratings said it kept its “Baa2” local and foreign currency issuer and senior unsecured ratings for the Philippines, as well as its “stable” outlook.

A stable outlook means the debt watcher’s rating for the Philippines will likely remain unchanged over the next 12 to 18 months.

“The ratings affirmation reflects our expectation that stabilization in the Philippines’ fiscal metrics over the next two years will be supported by a gradual recovery in economic growth from the current cyclical slowdown and the government’s continued commitment to fiscal consolidation,” Moody’s Ratings said.

It added that the country’s access to local and global financing markets as well as its ample international reserves could cushion it against volatility in global capital flows.

These buffers, Moody’s said, will temper the impact of weakening debt affordability, institutional weakness, low-income levels, and the country’s vulnerability to physical climate risks.

Moody’s Ratings maintained its “stable” outlook on the Philippines, citing the country’s medium-term growth potential and strong credit fundamentals even as it may struggle to regain confidence.

“These strengths are balanced against the risk that a more persistent slowdown or pre-election spending pressures weigh on fiscal consolidation, or that reform momentum and confidence recover more slowly amid political noise ahead of the 2028 election, or that debt affordability continues to deteriorate beyond our baseline expectations,” it said.

The Philippines has held a “Baa2” credit rating and “stable” outlook from Moody’s for over a decade or since December 2014, when the debt watcher upgraded the country’s “Baa3” rating with a “positive” outlook.

Saudel exited PAR at around 9:30 p.m. Monday and was located 1,180 kilometers east-northeast of Extreme Northern Luzon as of 3:00 a.m., PAGASA said in its 5:00 a.m. press briefing.

It also weakens to 150 kilometers per hour (kph) of maximum sustained winds and 185 kph gustiness.

Despite exiting PAR, Typhoon Saudel is still expected to intensify the southwest monsoon, threatening all of Luzon.

PAGASA placed a heavy rainfall warning over areas of La Union, Benguet, and Pangasinan, where rainfall between 50 and 100 millimeters is expected within the next 24 hours.

Under this warning, localized flooding and landslides are possible in high-risk areas.

Metro Manila and the rest of Luzon are also forecasted to experience thunderstorms due to the effects of the southwest monsoon.

Meanwhile, PAGASA is still monitoring tropical depression Atsani (international name) and LPA, formerly locally known as tropical cyclone Neneng, outside PAR.

Atsani is likely to move near the boundary of PAR, and its entry is not being ruled out.

It was located 1,760 kilometers East of Northern Luzon, with 55 kph of maximum sustained winds and gusts of 70 kph, PAGASA said.

PAGASA earlier said that the weather disturbance and the LPA are not expected to directly affect the country. — Edg Adrian A. Eva

“This tropical cyclone is currently at near-Super Typhoon category and further intensification into a Super Typhoon prior to entry or while within PAR is not ruled out,” the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said in its 11 a.m. storm advisory.

The typhoon has maintained its strength, packing maximum sustained winds of 175 kilometers per hour (kph) and gustiness of up to 215 kph.

PAGASA said Saudel is likely to enter the northeastern boundary of PAR by Monday afternoon and will be given the local name Obet. It is the country’s 15th tropical cyclone this year.

Its center was located 1,480 kilometers east-northeast of Extreme Northern Luzon.

Typhoon Saudel is expected to be short-lived, as it will likely exit PAR by Monday evening or early Tuesday morning. PAGASA said it is less likely to directly affect the country’s weather and sea conditions over the next three days.

It is also likely to weaken after reaching its peak intensity. — Edg Adrian A. Eva

GlobalSource Partners Country Analyst Diwa C. Guinigundo said the Philippines needs to diversify the country’s foreign currency revenue streams to ensure it can weather global shocks.

“The bigger issue is direction: if BoP deficits persist and reserves continue to fall, external vulnerability could increase and put greater pressure on the Philippine peso,” he said in an Aug. 21 commentary.

Mr. Guinigundo said the peso’s recent movement is testing confidence in the Philippines’ external position, particularly whether the BoP deficit is temporary and manageable and whether the country’s foreign exchange reserves remain sufficient to cushion external shocks.

“The immediate reaction should therefore not be alarm, but rather, the strengthening of sustainable foreign exchange earnings through exports, services, tourism, remittances and FDI (foreign direct investment),” he added.

The latest Bangko Sentral ng Pilipinas (BSP) data showed the country’s seven-month BoP gap stood at $5.347 billion, narrowing from the $5.756-billion gap a year ago, largely driven by its continued trade-in-goods deficit and net hot money outflows.

BoP refers to the country’s economic transactions with other nations. A deficit shows that the country spent more than it received, while a surplus indicates more funds entered into the country.

The country’s trade-in-goods balance, or the difference between the values of exports and imports, stood at a $30.81-billion gap as of end-June, widening from $24.48 billion last year.

Meanwhile, net outflows of foreign portfolio investments, also known as hot money, reached $4.005 billion in the first half of 2026, a reversal from the $1.542-billion hot money inflows seen in the previous year.

Gross international reserves (GIR) declined annually for a fifth straight month to an 18-month low of $103.317 billion as of July.

Still, the BSP noted that this level of GIR still translates to 6.7 months’ worth of imports of goods and payments of services and primary income and could cover about 3.7 times the country’s short-term external debt based on residual maturity.

“So, neither the BoP deficit nor the GIR decline, taken separately, suggests an immediate crisis. The concern lies in the interaction between the two,” Mr. Guinigundo said.

“If the BoP remains persistently in deficit, reserves will eventually have to absorb part of the pressure unless the gap is financed by sustained capital and financial inflows. A continuing drawdown in reserves would gradually reduce the country’s external buffer and could make markets more sensitive to global risk aversion, higher US interest rates, energy-price shocks, geopolitical tensions and sudden capital outflows,” he added.

While the latest figures do not reflect an economic crisis, the narrowing financial buffers require heightened vigilance, said Mr. Guinigundo.  

“The current numbers therefore call for vigilance, not alarm,” he said. “The Philippines is not facing an external-payments crisis. But the widening BoP deficit and declining GIR are early warnings that should not be ignored.”

The BSP projects the BoP deficit to widen to $10.7 billion or -2.1% of gross domestic product (GDP) by yearend as its foreign reserves could fall to $104 billion this year.

Meanwhile, Mr. Guinigundo noted that the peso’s recent depreciation near the P62-a-dollar mark may be normal as global conditions remain volatile.

This came after the peso touched an intraday low of P61.995 to close at P61.815 against the dollar on Aug. 19, marking the local unit’s weakest finish since July 24, or when it plunged to a record low of P61.847 versus the greenback.

“But this was not simply a story of a stronger US dollar,” Mr. Guinigundo said in a separate commentary on Friday. “The immediate trigger was a combination of higher oil prices, renewed Middle East tensions and global risk aversion, amplified by the Philippines’ own external vulnerabilities.”

While the currency’s weakness signals a lack of market confidence, Mr. Guinigundo noted that the country’s substantial reserves and steady remittance inflows still provide a buffer against temporary shocks.

However, he also said the country remains vulnerable to external threats due to its heavy reliance on energy imports, financing needs, and weak FDI environment.

The central bank likewise faces a monetary policy challenge, as interest rate hikes intended to support the currency could eventually dampen domestic demand.

“This underscores an important point: interest rate differentials cannot by themselves solve an exchange rate problem driven largely by an external oil shock and strong structural demand for dollars,” Mr. Guinigundo said.

“Indeed, using monetary policy too aggressively to defend the peso could come at the cost of weaker domestic demand. But allowing the depreciation to feed too strongly into fuel, transport and electricity prices could reignite inflation and eventually require tighter monetary policy anyway,” he added.

Since it began tightening in April, the Monetary Board has lifted key borrowing costs by a total of 50 basis points (bps) to 4.75%.

A BusinessWorld poll conducted last week showed 19 of the 24 analysts surveyed expect the BSP to deliver a third straight 25-bp hike at its Aug. 27 meeting, while the remaining five analysts priced in a pause. — Katherine K. Chan

THE Philippines must strengthen its productive capabilities and diversify an economy still heavily reliant on consumption and services to become more resilient to external shocks and advance toward high-income status, economists said.

Economists said manufacturing, agribusiness, renewable energy, digital services, and creative industries could attract more investment, boost exports and create higher-quality jobs, but this would require stronger workforce skills, better infrastructure and deeper integration of local firms into domestic and global supply chains.

Ateneo de Manila University economics professor Leonardo A. Lanzona said diversification alone would not ensure broad-based development if new industries failed to build local capabilities and capture more income domestically.

“Diversifying the Philippines’ growth drivers beyond consumption and services is important for sustaining growth and reaching high-income status, but I would suggest that building and diffusing productive capacities should be the primary objective, rather than diversification itself,” Mr. Lanzona told BusinessWorld via e-mail.

“If policy focuses only on shifting toward new sectors — such as manufacturing or exports — without strengthening the capabilities of workers and firms, diversification may simply produce new enclaves with weak domestic linkages, limited income capture, and continued reliance on routine tasks,” he added.

Mr. Lanzona said the Philippines should prioritize investments in skills, technology and innovation, infrastructure, productive finance, and stronger backward and forward linkages, particularly involving micro, small, and medium enterprises.

“These capabilities allow firms to move into higher-value, non-routine tasks and diffuse upgrading across the economy,” he said.

“Thus, manufacturing, sophisticated services, agribusiness, and other tradable sectors should be viewed as vehicles for capability building, with diversification emerging as an outcome of broad-based structural transformation rather than as the objective itself,” he added.

Francisco Cid L. Terosa, an associate professor and former dean of the University of Asia and the Pacific School of Economics, said broadening the country’s economic growth drivers would help shield it from geopolitical and economic shocks.

“Diversifying economic growth drivers will enhance resiliency to external shocks, strengthen resistance to domestic political and economic instability, and promote efficient adaptation to rapidly changing economic and business environments,” he told BusinessWorld in a Viber message.

Mr. Terosa said domestic and foreign investment, agribusiness, skilled labor-intensive manufacturing, renewable energy, data center hosting, and technology-driven personal and professional services could help fuel growth.

However, supporting these new sources of growth would require the effective implementation of regulatory and policy reforms.

Mr. Terosa said the country should streamline business and investment processes, fully implement investment liberalization and strengthen frameworks against red tape, corruption and unfair competition to bolster investor confidence.

He also called for the modernization of agriculture and agribusiness infrastructure, the regional dispersal of production activities, the development of energy and technology infrastructure, and the upgrading of workforce skills to meet changing industry needs.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said a broader set of growth drivers would help the country move toward high-income status.

“Consumption and services have been important sources of resilience, and the next step is to complement these strengths with stronger investment, higher productivity, and deeper participation in higher-value activities,” he told BusinessWorld in a Viber message.

“Beyond advanced manufacturing, electronics and semiconductors, agribusiness, renewable energy, tourism, and digital services, we should also develop our orange economy (creative industries, entertainment and media, design, gaming, animation, music, film, and other content-driven sectors),” he said.

The objective should not be to replace the country’s traditional strengths but to complement them with new sources of growth, Mr. Rivera said.

“This will require continued investment in skills, digital and physical infrastructure, intellectual property protection, innovation financing, and a predictable business environment,” he added.

The Philippines was recently reclassified as an upper-middle income country by the World Bank, closing in to its regional counterparts, after it posted a record gross national income (GNI) per capita of $4,850.

Earlier, Department of Economy, Planning, and Development (DepDEV) Secretary Arsenio M. Balisacan said the Philippine economy’s heavy reliance on consumption and services is a central structural challenge.

Citing the experience of successful economies, he said sustained progress requires mobilizing other sources of growth, including investment, exports, agriculture and industry.

However, the Philippines continues to trail neighboring economies such as Vietnam, Thailand, Malaysia and Indonesia in gross fixed capital formation and exports, the DepDEV chief said.

From 2016 to 2025, the country recorded $957 billion in gross fixed capital formation and $1.171 trillion in exports, Mr. Balisacan said.

PERSISTENT inflation pressures may warrant a third straight rate hike from the Bangko Sentral ng Pilipinas (BSP) this week, even as economic growth remains tepid, analysts said.

Based on a BusinessWorld poll conducted last week, 19 of the 24 analysts surveyed expect the Monetary Board to raise the target reverse repurchase rate anew by 25 basis points (bps) on Thursday, Aug. 27.

If realized, the key policy rate would climb to 5% from the current 4.75%, the highest in over a year or since the 5.25% in June 2025. It would also match the benchmark rate set in August last year.

On the other hand, five analysts see the Monetary Board standing pat as the weak economic growth backdrop clouds the BSP’s policy path. 

The Monetary Board began tightening in April as the energy shock dimmed its inflation outlook, delivering two 25-bp rate hikes in a row to bring its benchmark interest rate to 4.75%.

Most analysts said the BSP must continue tightening to contain broadening price pressures, especially with headline inflation holding above its target.

However, the sluggish gross domestic product (GDP) growth may keep the Monetary Board from acting aggressively.

“Weaker GDP growth in Q2 and softer inflation in July have reduced the case for a larger move,” Oxford Economics Assistant Economist Jun Hao Ng said in an e-mail.

“However, rising food prices and persistent tensions in the Middle East are likely to keep inflation elevated through the second half, while second-round effects remain a concern. In our view, this will warrant further tightening,” he added.

Risks of faster imported inflation amid renewed pressure on the peso likewise warrant another 25-bp rate increase, Moody’s Analytics Assistant Director and Economist Sarah Tan said.

“While weak second-quarter GDP growth could prompt a pause, we think the odds are tilted towards another 25-basis-point hike,” she said via e-mail. “Inflation remains sticky and well above the BSP’s target range, while renewed peso weakness adds to imported inflation pressures and complicates the path back to price stability.”

INFLATION A KEY CONCERN
Meanwhile, some analysts noted that inflation concerns could outweigh growth woes, adding that the central bank will likely prioritize its inflation-targeting mandate.

“The weak Q2 GDP print will unlikely derail BSP’s hiking cycle given its orthodox approach to its inflation-targeting framework,” Nomura Chief ASEAN Economist Euben Paracuelles said in an e-mail. “BSP remains very much on the ball in trying to anchor inflation expectations and bring back inflation to the target.”

Headline inflation cooled for a third straight month at 6.2% in July. This was, however, the fifth month in a row that inflation settled above the central bank’s 3% target.

As of July, the headline print averaged 5%, still below the BSP’s 6.4% estimate for the year.

On the other hand, core inflation, which excludes volatile food and energy prices, eased to 4.2% in July from 4.4% in June, but accelerated from 2.3% a year earlier.

Marites M. Tiongco, a professor at De La Salle University’s (DLSU) Carlos L. Tiu School of Economics, noted inflation persistence and expectations will be among the BSP’s top considerations for its next policy decision.

“First, the BSP will look at the persistence of inflation, not just the headline rate,” she said in a Viber message. “The crucial question is whether inflation is broadening into core goods and services, or whether current price pressures remain concentrated in food, energy, transport, and other supply-side components.”

“Second, it will assess whether inflation expectations remain anchored. If households, firms, and wage setters begin to expect persistently high inflation, the case for further tightening becomes stronger because temporary shocks can become embedded in wages and prices,” Ms. Tiongco added.

Earlier this month, BSP Governor Eli M. Remolona, Jr. said inflation expectations remain well anchored, with the BSP’s latest Survey of External Forecasters showing headline inflation could ease to 5.4% over the next 12 months from the 6% estimate as of June.

Still, Mr. Remolona left the door open for further hikes to bring inflation back to their target, but noted that the tepid second-quarter growth print means they can be less aggressive in taming price pressures.

“A final hike would reinforce the BSP’s commitment to price stability while preserving policy credibility,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said.

PAUSE?
Meanwhile, the analysts calling for a pause on Thursday said the BSP may opt to wait-and-see as tighter monetary policy risks further straining the already fragile economy.

“The case for a hold is getting stronger because the economy is already operating below potential, leaving little evidence of demand-driven inflation that would warrant another immediate hike,” China Banking Corp. Chief Economist Domini S. Velasquez said in an e-mailed note.

For Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, the BSP could strike a balance between inflation and growth concerns by standing pat while communicating its inflation-driven policy path ahead.

“It allows the BSP to assess the cumulative effects of past tightening while preserving flexibility,” he said in an e-mail.

“Keeping rates unchanged would still represent a restrictive monetary stance, and the BSP could clarify that future decisions will depend on whether inflation continues its path back toward the target range or whether new inflationary pressures emerge,” he added.

In the second quarter, GDP growth slowed to 2.3% from 5.4% a year ago and 2.8% in the previous quarter as the oil shock-driven inflation dampened household spending and lingering governance issues weighed on investments.

This was the fourth consecutive quarter of economic slowdown, marking the economy’s worst performance since the pandemic or when it contracted by 3.8% in the first quarter of 2021. Excluding the pandemic, it was the slowest expansion in over 16 years or since the 1.8% in the fourth quarter of 2009.

In the first half of 2026, GDP growth stood at an average of 2.6%.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco likewise noted that headline inflation as well as the second-order effects may have peaked, giving the BSP more reason to hold for now.

“Clearly, the worst of the inflation spike from the war is over, and the economy is still battling with an ongoing slowdown in headline growth,” he said in an e-mail. “It’s worth highlighting too the minor slip in core inflation in July, which indicates that second-round effects have probably topped out.”

According to Mr. Chanco, full-year inflation could settle at 5.3% this year and return to the BSP’s target at an average 2.7% next year. These are slower than the central bank’s forecasts of 6.4% and 4.5%, respectively.

“If we’re right about the BSP pausing (this) week, then this stand-still could hold for the foreseeable future, until the middle of next year, when we expect its postwar tightening to be reversed,” he added.

TIGHTENING ROOM
For S&P Global Market Intelligence Principal Economist Harumi Taguchi, the BSP still has room to deliver up to a fourth 25-bp rate hike as inflation remains well above target.

“Persistent inflationary pressures from elevated global oil and fertilizer prices, along with the potential impact of El Niño, would support further BSP tightening,” Ms. Taguchi said via e-mail.

“Conversely, signs of weaker economic growth — such as slower remittances, FDI (foreign direct investment), lending, industrial production, exports, and GDP growth — could signal an end to the tightening cycle,” she added.

Deepali Bhargava, regional head of research for Asia-Pacific at ING Bank NV, likewise sees the BSP only ending its tightening cycle once the benchmark rate hits 5.25%.

“Persistent core inflation, rising wages and lingering food-price risks should keep policymakers focused on ensuring inflation expectations remain anchored, supporting our expectation of further rate hikes by the BSP,” she said in an e-mail. “We expect one final hike by BSP in 4Q taking the terminal rate to 5.25%.”

On the other hand, Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. expects additional rate hikes through yearend, citing lingering price risks and an anticipated growth recovery in the second half.

“We see at least two more hikes after (the) Aug. 27 hike,” he said in a Viber message. “Recent oil prices (and) El Niño risk remain elevated. We also think growth will improve in 2H2026 although still below our usual 4% to 6% growth.”

However, DLSU’s Ms. Tiongco said the BSP should end its tightening cycle at a 5% terminal rate, even if headline inflation remains above target, to avoid the ill effects of excessive tightening.

“The BSP must be careful not to fight yesterday’s inflation with tomorrow’s recession,” she said. “With GDP growth at only 2.3% and seasonally adjusted inflation showing virtually no month-on-month increase, the question is no longer simply whether inflation is high, but whether another rate hike would materially reduce inflation or merely deepen the slowdown.”

After its August meeting, the Monetary Board is scheduled to hold its last two regular policy reviews this year on Oct. 22 and Dec. 17.

“As we enter the era of modern technology, let us ensure that our national language is not left behind but remains a tool for knowledge and digital innovation,” she said in Filipino in a statement on Sunday, marking Buwan ng Wikang Pambansa.

This year’s National Language Month is themed “Wikang Filipino at AI: Kasangkapan sa Pananaliksik at Tulay sa Yaman ng Impormasyon,” highlighting the role of Filipino in research and access to information amid the growing use of AI.

Ms. Duterte said the Filipino language serves as a reflection of the country’s history and culture, while also helping foster unity among Filipinos.

She also linked the observance to her broader call for a country where children are safe and educated, and families are not left in poverty.

Ms. Duterte also urged Filipinos to celebrate their identity through the national language.

“Let us celebrate our identity as Filipinos together, using the voice that gives life to our race wherever we may be in the world,” she added. — Mark Joseph M. Sanchez

“Typhoon Saudel is expected to enter PAR this morning or afternoon,” PAGASA weather specialist Aldczar D. Aurelio said during a 5:00 a.m. press briefing in Filipino, adding that it will be given a local name, Obet. It is the country’s 15th tropical cyclone this year.

“Based on our forecast track, it is expected to develop into a super typhoon while it is inside PAR,” he added.

Typhoon Saudel was last located 1,600 kilometers east-northeast of extreme Northern Luzon, based on its 3:00 a.m. location. It has maximum sustained winds of 175 kilometers per hour (kph) and gusts up to 215 kph.

Mr. Aurelio said the typhoon is expected to exit PAR on Tuesday.

Meanwhile, the southwest monsoon is expected to bring heavy rains and thunderstorms over Luzon as it is still being enhanced by Tropical Depression Gaenari, formerly locally known as Neneng.

“The southwest monsoon is currently affecting northern and central Luzon. The effects of the southwest monsoon mostly in Luzon are expected to persist in the next four days,” Mr. Aurelio said.

Batanes is expected to receive heavy rains or rainfall between 50 and 100 millimeters in the next 24 hours, posing a risk of localized flooding and landslides in high-risk areas based on PAGASA’s 5:00 a.m. weather advisory.

Other parts of Luzon such as Metro Manila, Ilocos Region, Cordillera Administrative Region, Central Luzon, the rest of Cagayan Valley, Cavite, Batangas, and Rizal are expected to experience thunderstorms in the next 24 hours, also due to the southwest monsoon.

PAGASA warned of possible flooding and landslides during occasional heavy rains.

Gaenari was last located 520 km North-Northwest of Itbayat and is moving toward China.

PAGASA is also monitoring a third tropical depression, located 1,330 km East of Southeastern Luzon, packing 55 kph of maximum sustained winds and 70 kph of gustiness.

Mr. Aurelio said that the tropical depression has a low chance of entering PAR as it is likely to move generally northwestward towards Typhoon Saudel. — Edg Adrian A. Eva

Preliminary poverty estimates based on the 2025 Family Income and Expenditure Survey showed that poverty incidence among the population dropped to 9.7% from 15.5% in 2023.

This translated to about 11.08 million poor Filipinos, significantly lower than the 17.54 million recorded in 2023.

“For the first time, fewer than one in ten Filipinos is living below the poverty line,” Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan said in a statement.

“Reaching this milestone ahead of schedule demonstrates that expanding economic opportunities, complemented by effective social protection, can make a meaningful difference in people’s lives,” he added.

The latest figure was below the government’s 2025 poverty incidence target of 12.9-13.2% under the Philippine Development Plan 2023-2028 Midterm Update Results Matrices, released in May.

DEPDev said the country achieved its goal of reducing poverty incidence to a single-digit level three years ahead of schedule, although the 9.7% rate remained above the 2028 target of 8.8-9%.

Poverty incidence among families stood at 6.4%, equivalent to 1.9 million families, down from 10.9%, or about 3 million families, in 2023.

The PSA defines poverty incidence among families as the proportion of families whose incomes fall below the poverty threshold, or the minimum income needed to meet their basic food and nonfood needs.

For 2025, the average monthly poverty threshold for a family of five increased by 5.5% to P14,634 from P13,873 in 2023.

The PSA attributed the decline in poverty incidence to household incomes growing faster than the poverty threshold between 2023 and 2025.

Mean annual per capita income rose by 22% to P104,072 in 2025 from P85,291 in 2023, outpacing the 5.5% increase in the annual per capita poverty threshold to P35,121 from P33,296.

Income growth was also faster among families near the poverty line. Mean annual per capita income among families in the first and second income deciles rose by 23.8% and 22.7% to P30,902 and P45,050, respectively.

However, the average income of families in the poorest decile remained below the annual per capita poverty threshold.

DEPDev said the increase in nominal incomes across income deciles between 2023 and 2025 exceeded the cumulative inflation rate of 5% over the same period.

“This indicates that income growth was broadly inclusive, benefiting households across the income distribution,” it said.

The department attributed the improvement to expanding economic opportunities amid sustained economic growth, moderating inflation and generally favorable labor market conditions.

In 2024 and 2025, the country’s gross domestic product growth averaged 5.1%, while inflation and unemployment averaged 2.5% and 4%, respectively, DEPDev said.

Mr. Balisacan said government programs such as the Pantawid Pamilyang Pilipino Program, Social Pension Program, KADIWA, Walang Gutom Program, Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD) and the DOLE (Department of Labor and Employment) Integrated Livelihood and Emergency Employment Program helped narrow income gaps.

“These interventions have made poverty reduction more responsive to economic growth,” he said.

However, he cautioned that the pace of poverty reduction could moderate amid a more challenging economic environment this year.

“Current developments may slow the pace of poverty reduction, but early indications do not point to a reversal of the gains we have achieved,” he said.

“As we enter the final years of the administration, our priority is to ensure that families who have moved out of poverty do not fall back into it,” Mr. Balisacan added.

He said sustaining these gains would require a recovery in economic growth, increased investment, higher productivity and job creation, upskilling and reskilling, and timely support for businesses and workers affected by economic and climate-related disruptions.

The Philippine economy grew by 2.6% in the first half as an oil price shock fueled inflation and weighed on household consumption, while a sharp decline in public construction dragged down investment.

In the first seven months, inflation averaged 5%, faster than the 1.7% recorded in the same period last year.

Meanwhile, the unemployment rate rose to 4.9% in June from 4.8% in May and 3.7% a year earlier. The number of unemployed Filipinos increased to 2.59 million from 1.95 million in June 2025. — Justine Irish D. Tabile

“We’re looking at launching the physical cards later this year. Maybe later early next year, but the goal really is around November, December,” Palawan Group of Companies President and Chief Executive Officer Karlo M. Castro told reporters in an interview on Thursday.

“Q4 is the target but of course, there are a lot of moving parts. Tech is almost done, but there’s a lot of regulatory requirements,” he added.

The company’s physical Visa card aims to provide more flexible point-of-sale and in-store payments with a ‘minimum’ foreign exchange fee for users worldwide.

“It’s really not just a Visa card, it’s also with banknotes, so you can withdraw at the ATM (Automated Teller Machine) so there’s going to be a minimal fee to have a card but most of the features are actually available digitally,” Mr. Castro said.

“It’s just the usual Visa charge, the forex fees, but it’s going to be very minimal. We’ll make sure that it’s affordable,” he added.

The expansion of the digital payment platform into physical cards comes after the launch of its Visa virtual card last year.

With the virtual card, users could pay for online transactions on e-commerce platforms, subscription services, and bill payments. The digital card also allows users to cash in for free at more than 3,500 Palawan Express branches nationwide.

“All the services, whether it’s pawning, it’s buying insurance, whether it’s renewing their pawns or any other service, buying insurance, it’s really interconnected,” Mr. Castro said.

“You can use PalawanPay for any of the services of the Palawan group and vice versa so really, that’s the advantage,” he added.

In June, the company’s virtual card added Google Wallet support, allowing users to make contactless payments in stores through their mobile phones instead of a physical card.

“I personally linked my PalawanPay Visa card virtually to Google Pay so I can really pay in terminals and even abroad,” Mr. Castro said. “We’re a couple of months away from Apple Pay, but we launched Google Pay a few months ago.”

PalawanPay currently has 23 million users since its launch in 2022. Of these, 1.8 million have activated and used their virtual cards. — Almira Louise S. Martinez

THE RECOVERY in the National Government’s (NG) spending on infrastructure and other capital outlays is not expected until the fourth quarter, with outlays programmed to remain below year-earlier levels through September before surging toward yearend.

The Development Budget Coordination Committee programmed P251.30 billion in infrastructure and other capital outlays for the third quarter, 2.2% lower than the P256.9 billion spent a year earlier. 

In the fourth quarter, infrastructure spending is then expected to jump by 49.4% to P328.44 billion, from P219.8 billion a year ago.

This would bring second-half infrastructure spending to P579.74 billion, up 21.6% from P476.7 billion in the same period last year.

The figures exclude infrastructure spending coursed through subsidies and equity to government-owned and -controlled corporations, as well as transfers to local government units.

Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said the fourth-quarter infrastructure spending target was possible but ambitious and would require a significant acceleration in project implementation.

“A 49.4% year-on-year increase is not impossible because infrastructure spending is typically back-loaded toward the latter part of the year,” he told BusinessWorld via Facebook Messenger.

“However, the government would need to overcome the factors that have held spending back during the first three quarters: procurement delays, project implementation bottlenecks, right-of-way issues, and the more cautious pace of infrastructure releases following the scrutiny over flood control projects,” he added.

Latest data showed infrastructure and other capital outlays reached only P269.4 billion in the January-to-May period, down 42.9% from P471.5 billion a year earlier, amid tighter oversight in the aftermath of last year’s corruption scandal.

To meet the P351.8-billion first-half spending program, June outlays would need to reach P82.4 billion, still 44.6% lower than the P148.8 billion spent in the same month last year.

For the full year, NG infrastructure and other capital outlays are programmed at P931.54 billion, which is 15.1% lower than the P1.097 trillion spent in 2025.

The Department of Budget and Management (DBM) said the government remains committed to accelerating infrastructure spending in the second half to support economic growth.

“We expect public construction to pick up as agencies ramp up project implementation and disbursements,” the DBM told BusinessWorld via Viber.

“We will continue to closely monitor spending performance and work with implementing agencies to address bottlenecks and help keep the infrastructure program on track,” it added.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said spending could rebound strongly in the fourth quarter as agencies catch up on delayed projects, speed up procurement and disbursements, and implement projects prepared earlier in the year.

However, he identified major risks to the outlook, namely, absorptive capacity, procurement bottlenecks, right-of-way issues, project readiness and tighter validation following the recent scrutiny of infrastructure spending.

“If these are not resolved early, simply pushing more spending into the fourth quarter could create implementation pressure,” Mr. Rivera told BusinessWorld.

Mr. Peña-Reyes said achieving the target would depend on project readiness, agencies’ execution capacity and weather and seasonal disruptions.

Projects that have already been awarded and have secured their right-of-way and technical requirements could generate spending relatively quickly, while projects entering procurement only in the fourth quarter are much less likely to contribute significantly, he said.

“A substantial fourth-quarter acceleration is likely, but the risk of undershooting the target is meaningful,” Mr. Peña-Reyes said.

“If the government falls materially short, it would reinforce the concern that the problem is not a lack of budgetary resources but weak implementation capacity and delays in converting appropriations into actual economic activity,” he added.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas also described the spending target as ambitious but achievable if the government accelerates project implementation and clears spending bottlenecks.

He said delays in procurement, project readiness and implementation could slow disbursements.

“The real challenge is not just spending more in the fourth quarter, but spending efficiently and translating that spending into stronger economic growth,” Mr. Ravelas told BusinessWorld via Viber.

Mr. Peña-Reyes also said the concentration of spending  toward yearend raises the risk that agencies could prioritize faster disbursements over spending quality.

This raises risks such as rushed procurement, weaker project selection, problems in construction quality, errors and leakages, and additional carryovers into 2027.

“The problem arises when the acceleration is too large relative to implementation capacity. It would be helpful to distinguish between healthy catch-up spending and forced catch-up spending,” Mr. Peña-Reyes said.

Healthy catch-up would involve payments for properly procured projects already progressing, rather than rushing new projects simply to meet the annual target, he added.

“It is better to miss part of the fourth-quarter disbursement target than to meet it through low-quality, poorly prepared or rushed infrastructure projects,” he said.

The public should monitor physical accomplishment, project completion rates and procurement quality alongside the headline disbursement figure, Mr. Peña-Reyes added.

THE GOVERNMENT is waiting for more favorable market conditions before proceeding with a retail Treasury bond (RTB) offering this year, amid elevated interest rates and tensions in the Middle East.

National Treasurer Sharon P. Almanza told reporters on Monday that the government is still looking to issue RTBs within the year.

“There will always be a market for RTBs, particularly with maturities coming due this year. The domestic market remains liquid, although the market sentiment is still affected by geopolitical tension in the Middle East as well as developments in the global financial market particularly the US Treasury,” she said in a follow up Viber message.

The government’s last RTB offering was in August 2025 when it raised P507.16 billion from five-year notes.

Ms. Almanza also told BusinessWorld on Monday that they aim to raise less than the amount generated from last year’s issuance.

She noted the planned offering will be made available again on GCash via the GBonds feature.

Ms. Almanza said there will also be a bond exchange program similar to last year, but noted that the new money raised from the coming issuance will likely be smaller.

Analysts said the market environment remains supportive for an RTB issuance this year amid easing inflation, strong liquidity, and investors looking to lock in yields before rates move lower.

“The market environment for a potential RTB issuance later this year remains broadly supportive, particularly if inflation expectations continue to stabilize and if monetary policy becomes less restrictive,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

“An RTB issuance would likely benefit from easing domestic interest rates, ample system liquidity, and strong demand from retail investors seeking relatively safe and predictable returns,” he added.

Mr. Asuncion said investor preference has leaned more towards shorter tenors amid interest rate and inflation uncertainty, suggesting that a three- to five-year RTB could attract strong demand while helping the government manage its funding requirements efficiently.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message that the five-year tenor could be the sweet spot, but noted that “the geopolitical climate could shift anytime.”

Mr. Asuncion added that market sentiment will continue to be guided by market volatility, inflation developments, policy expectations, and global interest rate movements.

“The government is expected to remain opportunistic and launch the offering when financing conditions are most favorable,” he added.

Meanwhile, a trader said in a text message that the government could issue the RTB in September, when there are several scheduled maturities.

GLOBAL ISSUANCE
On next year’s planned issuance, Ms. Almanza said the government remains open to global bond issuances depending on market conditions.

“Of course, we are looking at other currencies, but depending on the market, depending on the conditions, it can be euro, yen, or the usual US dollar,” she told reporters.

Ms. Almanza said the government has $5-billion eligible government bonds that can be included in JPMorgan Chase & Co.’s Government Bond Index-Emerging Markets (GBI-EM).

The Philippines is scheduled to enter the GBI-EM on Jan. 29, 2027. The index will include Philippine peso-denominated government bonds issued since 2023 with tenors of up to 20 years.

THE National Government’s proposed tax reforms, if enacted, risk further delaying the country’s fiscal consolidation, especially given its widening budget deficit and record debt-to-gross domestic product (GDP) ratio, Moody’s Ratings said.

Moody’s Ratings Assistant Vice-President for Ratings Young Kim said that net gain from the measures under the Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability (ProGRESS) bill will likely prove marginal.

“The government’s proposed ProGRESS package would raise the personal income tax exemption threshold and ease the burden on micro and small enterprises, offset by higher excises on sweetened beverages, tobacco and alcohol, a new plastics levy, and a 15% minimum tax on large multinationals,” Mr. Kim told BusinessWorld in an e-mailed response to questions.

“While this could bring additional offsetting revenue, it also introduces some uncertainty, as the net gain may prove smaller and the package still needs to pass Congress as proposed,” he added.

The Department of Finance (DoF) is proposing the so-called ProGRESS bill, a comprehensive tax reform package involving a set of tax breaks, new or updated levies on sin products and excise tax, as well as a wealth tax, among others.

Under the proposed bill, the DoF is pushing for new or higher taxes on sweetened beverages, e-cigarettes, flexible plastic products, luxury vehicles, and private aircraft.

This package alone is projected to generate an average revenue of P129.68 billion annually from 2027 to 2030.

It was designed to offset the estimated P81.73-billion annual losses from President Ferdinand R. Marcos, Jr.’s call to raise the threshold for income tax exemptions to P350,000 from P250,000 for low- and middle-income earners and the minimum corporation income tax exemption for micro and small enterprises.

Although the proposed tax relief measures are still pending in Congress, Mr. Kim warned that they could further undermine the country’s already fragile fiscal position.

“The tax relief measures — if enacted without offsetting revenue measures, though it is still too early to assess the full fiscal impact — would erode revenue and further delay the government’s fiscal consolidation,” he said.

In mid-2022, the Marcos administration unveiled the Medium-Term Fiscal Framework 2022-2028, where it targeted an economic growth of 6.5%-8%, a debt-to-GDP ratio of 51.1% and fiscal deficit-to-GDP ratio of 3% by end-2028.

However, Mr. Kim noted that the government’s fiscal consolidation path has been under strain amid the economy’s tepid growth and ballooning debt stock.

“Weaker near-term growth adds to this pressure, as softer economic activity weighs on revenue buoyancy and, in turn, the pace of deficit reduction,” he said.

The country saw its worst economic performance since the pandemic as it grew by 2.3% in the second quarter amid a major investment slump and subdued household consumption.

This was the slowest pace recorded since the 3.8% contraction in the first quarter of 2021, and since the 1.8% growth in the fourth quarter of 2009 outside the pandemic.

“Against this backdrop, the debt-to-GDP, which rose materially during the pandemic, has yet to meaningfully reverse, while debt affordability is weakening, interest payments as a share of revenue are rising as cheaper pandemic-era debt is refinanced at today’s higher yields,” Mr. Kim said.

“Sustained revenue erosion without offsets would therefore weigh on fiscal strength,” he added.

In the second quarter of 2026, the country’s debt-to-GDP ratio rose to 66% from 65.2% in the first quarter. This was the highest ratio in over two decades or since the 71.6% seen at end-2004.

This came as its debt stock swelled to an all-time high of P19.07 trillion at end-June, inching up by 2.8% from P18.55 trillion as of end-May. Year on year, it also rose by 10.41%.

Based on the Philippine Development Plan 2023-2029 Midterm Update released in May, the government expects the country’s debt-to-GDP ratio to settle between 60% and 63% this year. By next year, it could fall to 59%-62% before declining further to 58%-61% by 2028.

Meanwhile, the government’s debt is expected to hit P19.77 trillion by yearend and further increase to a record P21.48 trillion by end next year due to higher principal repayments and continued budget deficit, according to the 2027 Budget of Expenditures and Sources of Financing.

For Mr. Kim, the risks tied to the ProGRESS bill will hinge on whether the government can set measures that would compensate for foregone revenues and its capacity to boost revenue mobilization and spending efficiency. 

“That said, the near-term 2026 measures appear broadly revenue-neutral, reflecting spending reprioritization and a measured approach to support despite weak growth,” he said.

“Ultimately, the key risk is the credibility of the medium-term consolidation path, which will depend on offsetting the proposed tax exemptions, further revenue mobilization and spending efficiency through reforms and digitalization, and management of growing spending pressures tied to physical climate risks,” he added.

As of mid-August, about 40 bills related to the ProGRESS package have been filed under the House of Representatives, with only two measures hurdling committee level, while seven were filed in the Senate.

THE Philippines’ balance of payments (BoP) position swung to a deficit for the first time in three months in July, data from the Bangko Sentral ng Pilipinas (BSP) showed.

According to central bank data released late on Wednesday, the country’s BoP position stood at a $1.47-billion deficit in July, a reversal from the $3.403-billion surplus in June.

Year on year, the BoP gap ballooned from $167 million.

This was the first time since April that the monthly BoP position stood at a deficit.

“The overall balance of payments, which captures the transactions of the country with the rest of the world, recorded a $1.5-billion deficit in July 2026,” the BSP said in a statement.

BoP refers to the country’s economic transactions with other nations. A deficit shows that the country spent more than it received, while a surplus indicates more funds entered into the country.

“The July BoP deficit reflected the country’s persistent trade gap, portfolio investment outflows, and external debt-related payments, particularly after June benefited from sizeable foreign borrowing inflows,” Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., attributed the month-on-month reversal to higher foreign exchange outflows, including external debt payments and stronger dollar demand for imports.

“While the year-on-year deterioration looks significant, monthly BoP figures are often influenced by the timing of large transactions and should not be viewed in isolation,” he added via Viber.

In the seven months to July, the country’s deficit stood at $5.347 billion, narrower than the $5.756-billion gap in the comparable year-ago period.

“The year-to-date BoP position reflected the continued trade-in-goods deficit and net outflows from foreign portfolio investments,” the central bank said.

“These were partly offset by the sustained net inflows from personal remittances of overseas Filipinos (OFs), foreign borrowings by the NG (National Government), trade in services, and foreign direct investment,” it added.

The Philippines’ trade-in-goods balance, or the difference between the values of exports and imports, ballooned to a $30.81-billion gap as of end-June from $24.48 billion a year ago.

UnionBank’s Mr. Asuncion said the narrower year-to-date deficit shows the Philippines’ external position remained manageable.

“Moving forward, developments in global financial markets, trade flows, remittances, tourism receipts, and foreign investments will be key determinants of the BoP outlook,” he added.

On the other hand, Mr. Ravelas noted that the country has to keep a healthy balance between its foreign exchange earnings and import needs to shield its external position against persistent global risks.

“The Philippines continues to benefit from strong structural dollar inflows, but maintaining a healthy balance between foreign exchange earnings and import requirements will be crucial to keeping the external position stable amid ongoing global economic and geopolitical uncertainties,” he said.

The central bank has noted that trade imbalances and tighter financial conditions will continue to strain the country’s external position until next year.

It projects the BoP deficit to widen to $10.7 billion or -2.1% of gross domestic product (GDP) by yearend from $5.7 billion or -1.2% of GDP in 2025.

18-MONTH LOW GIR
Meanwhile, the central bank’s dollar reserves amounted to $103.317 billion as of July, down nearly 2% from the $105.418 billion logged the prior year, revised data showed.

This was the lowest gross international reserves (GIR) it held in 18 months or since the $103.271 billion logged in January 2025.

It was likewise the fifth straight month that the GIR level slipped on an annual basis.

Month on month, the BSP’s dollar reserves fell by 1.36% from $104.745 billion.

The lower reserves were largely due to the central bank’s net foreign exchange operations, according to the BSP, as the weak peso during the period required its intervention.

As of end-July, the local unit stood at P61.432 versus the greenback, about 7.2% or P4.126 weaker than P57.306 in the same period last year, according to BSP data.

The central bank also said its GIR fell after the National Government withdrew from its foreign currency accounts with the BSP to pay its external debts, with its total withdrawals exceeding its deposits.

However, the drags were partly tempered by “income from the BSP’s investments abroad and upward valuation adjustments in the BSP’s gold holdings due to the increase in the price of gold in the international market.”

Dollar reserves are the central bank’s foreign assets held mostly as investments in foreign-issued securities, foreign exchange and monetary gold, among others.

These are supplemented by claims to the International Monetary Fund (IMF) in the form of reserve position in the fund and special drawing rights (SDRs).

The Philippines’ reserve position in the IMF stood at $725.2 million as of July, reflecting a 0.52% year on year dip from $729 million.

Meanwhile, the BSP’s gold holdings also climbed to a two-month high of $17.49 billion, jumping by 26.89% from $13.783 billion a year earlier.

Its SDRs — or the amount the Philippines can tap from the IMF’s reserve currency basket — also increased by 1.22% to $3.937 billion from $3.89 billion.

In the seven-month period, the BSP’s securities slipped by 7.95% to $67.157 billion from $72.958 billion a year ago. This refers to highly liquid and marketable debt securities, excluding investments under the Asian Bond Fund (ABF) and Bank for International Settlements Investment Pool (BISIP).

However, the central bank’s foreign currency and deposits plunged by about 75% to $1.879 billion during the period from $7.516 billion last year.

On the other hand, the BSP’s other reserve assets nearly doubled (85.4%) to $12.129 billion as of July from the $6.542 billion a year ago. These include overnight investment — repurchase agreement pool, due from or to brokers, accrued interest receivables, and investments under ABF and BISIP.

At end-July, the country’s GIR level translated to 6.7 months’ worth of imports of goods and payments of services and primary income, more than double the three-month standard.

It could also cover about 3.7 times the country’s short-term external debt based on residual maturity.

The BSP sees its foreign reserves shrinking to $104 billion this year from the $110.8 billion it held in 2025.

With severe flooding and high tides disrupting their daily lives and rendering roads impassable, families find it difficult to leave their homes and secure basic necessities. Through OMF and its partners in disaster response such as Meralco PowerGen Corp. (MGEN), Meralco business centers, Meralco’s animal welfare initiative CATropa, and local governments, the initiative reached 2,500 affected families across the municipalities of San Miguel, Balagtas, Calumpit, and Hagonoy in Bulacan, as well as Bacoor City and Tanza in Cavite, and San Mateo in Rizal. Distribution efforts will continue over the coming days.

Partnering with the Balagtas municipal government led by Mayor Andy “Andrews” Santiago, OMF and the Meralco Balagtas Business Center waded through deep waters aggravated by high tide to deliver food packs directly to the doorsteps of residents stranded in Barangay San Juan.

“Maraming salamat po sa One Meralco Foundation sa inyong ipinagkaloob na relief goods para sa ating mga kababayan,” Mayor Santiago said. “Malaking tulong po ito sa ating mga pamilyang nangangailangan. Maraming salamat po sa inyong malasakit at pakikiisa.”

In Hagonoy, Bulacan, a joint relief effort was made possible through a resident-led initiative, spearheaded by community coordinator Gelvien Montalla who reached out to OMF online to seek help for his community. OMF’s swift response brought immediate relief to families whose livelihoods were disrupted by the deep floods. Lilibeth Roberto, a single mother caring for her child with a disability, shared how the flooding halted the operations of her small eatery. “Malaking bagay [itong relief] dahil wala akong kabuhayan ngayon,” said Roberto.

Relief operations also helped evacuation sites and frontline responders. In Bacoor City, Cavite, OMF and the Meralco Bacoor Business Center provided relief packs to evacuated families from Barangays Aniban 1, Aniban 2, and Ligas 1, as well as municipal traffic enforcers whose own homes were flood-submerged. Additional food supplies were also turned over to Bacoor City Mayor Strike B. Revilla for distribution across other affected barangays. Meanwhile, OMF and Meralco Rosario Business Center also worked with the local government of Tanza, Cavite, led by Mayor Archangelo Matro, to help distribute relief packs to affected residents.

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OMF also worked with the local government of Calumpit, with Vice-Mayor Zacarias “Doc Zar” Candelaria joining the efforts with the Meralco Malolos Business Center. In Barangay Balungao in Calumpit, OMF, with the Philippine Animal Welfare Society (PAWS) and CATropa, also provided relief packs with rice for families and supplies for pets, with volunteers wading through floods to reach out to those in need.

MGEN volunteers from its MTerra Solar and MGEN Renewables Bulacan Solar also distributed relief packs to disaster-hit residents in San Miguel, Bulacan. In Marikina City, residents of Brgy. Guinayang also received relief packs from OMF and Meralco Marikina Business Center.

The initiative is part of OMF’s broader disaster response efforts to deliver immediate relief to affected communities.

“In times of disaster, our responsibility to communities extends far beyond restoring physical light — it is about restoring hope. As heavy rains and the Habagat disrupt lives across the nation, we remain steadfast in our commitment to stand by our fellow Filipinos when they need us most,” OMF President Jeffrey Tarayao said.

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The Philippines’ balance of payments (BoP) position swung to a deficit for the first time in three months in July, data from the Bangko Sentral ng Pilipinas (BSP) showed.

According to central bank data released late on Wednesday, the country’s BoP position stood at a $1.47-billion deficit in July, a reversal from the $3.403-billion surplus in June.

Year on year, the BoP gap ballooned from $167 million.

This was the first time since April that the monthly BoP position stood at a deficit.

“The overall balance of payments (BOP), which captures the transactions of the country with the rest of the world, recorded a $1.5-billion deficit in July 2026,” the BSP said in a statement.

BoP refers to the country’s economic transactions with other nations. A deficit shows that the country spent more than it received, while a surplus indicates more funds entered into the country.

In the seven months to July, the country’s deficit stood at $5.347 billion, narrower than the $5.756-billion gap in the comparable year-ago period.

“The year-to-date BoP position reflected the continued trade-in-goods deficit and net outflows from foreign portfolio investments,” the central bank said.

“These were partly offset by the sustained net inflows from personal remittances of overseas Filipinos (OFs), foreign borrowings by the NG (National Government), trade in services, and foreign direct investment,” it added.

The Philippines’ trade-in-goods balance, or the difference between the values of exports and imports, ballooned to a $30.81-billion gap as of end-June from $24.48 billion a year ago.

The central bank has noted that trade imbalances and tighter financial conditions will continue to strain the country’s external position until next year.

It projects the BoP deficit to widen to $10.7 billion or -2.1% of gross domestic product (GDP) by yearend from $5.7 billion or -1.2% of GDP in 2025.

18-MONTH LOW GIR
Meanwhile, the central bank’s dollar reserves amounted to $103.317 billion as of July, down nearly 2% from the $105.418 billion logged the prior year, revised data showed.

This was the lowest gross international reserves (GIR) it held in 18 months or since the $103.271 billion logged in January 2025.

It was likewise the fifth straight month that the GIR level slipped on an annual basis.

Month on month, the BSP’s dollar reserves fell by 1.36% from $104.745 billion.

The lower reserves were largely due to the central bank’s net foreign exchange operations, according to the BSP, as the weak peso during the period required its intervention.

As of end-July, the local unit stood at P61.432 versus the greenback, about 7.2% or P4.126 weaker than P57.306 in the same period last year, according to BSP data.

The central bank also said its GIR fell after the national government withdrew from its foreign currency accounts with the BSP to pay its external debts, with its total withdrawals exceeding its deposits.

However, the drags were partly tempered by “income from the BSP’s investments abroad and upward valuation adjustments in the BSP’s gold holdings due to the increase in the price of gold in the international market.”

Dollar reserves are the central bank’s foreign assets held mostly as investments in foreign-issued securities, foreign exchange and monetary gold, among others.

These are supplemented by claims to the International Monetary Fund (IMF) in the form of reserve position in the fund and special drawing rights (SDRs).

At end-July, the country’s GIR level translated to 6.7 months’ worth of imports of goods and payments of services and primary income, more than double the three-month standard.

It could also cover about 3.7 times the country’s short-term external debt based on residual maturity.
The BSP sees its foreign reserves shrinking to $104 billion this year from the $110.8 billion it held in 2025.

Tropical Depression Neneng continues to head into Taiwan, located 450 kilometers north of Itbayat, Batanes, with a strength of 45 kilometers per hour (kph) of maximum sustained winds and 55 kph of gustiness as of 8:00 a.m., the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said in its storm outlook.

PAGASA said this causes thinning of the cloud cover associated with the southwest monsoon, thereby lessening the areas affected by it.

“So, we are expected within today that our weather conditions will generally improve today,” Leanne Loreto, PAGASA weather specialist, said on a 5:00 a.m. press briefing in Filipino.

“We also notice that the cloud formations over large areas of Visayas and Mindanao, as well as in the Southern Luzon area, have also decreased,” she added.

However, PAGASA cautioned that heavy rainfall is still expected in Batanes, Ilocos Norte, Ilocos Sur, La Union, Pangasinan, Zambales, and Bataan. It also warned of possible flash floods and landslides in high-risk areas.

Monsoon rains are also expected to resurge by Sunday due to the enhancement of Tropical Storm Saudel, causing widespread rains over Luzon and the western section of the Visayas.

“We are seeing that by Sunday or Monday, we are starting to see an enhancement or it will intensify the southwest monsoon,” she said. “So, let’s expect next week that there will be rains over large portions of Luzon and the western section of the Visayas.”

Tropical Storm Saudel was last located 2,800 kilometers East of Eastern Visayas, packing 75 kph of maximum sustained winds and 90 kph of gustiness, as of 8:00 a.m. Ms. Loreto said that Saudel is likely to intensify into a typhoon category over the weekend and will enter the Philippine Area of Responsibility (PAR) between Sunday and Monday.

If it enters the PAR, it will be given the local name Obet, making it the country’s 15th tropical cyclone of 2026. PAGASA said that Obet is not expected to make landfall in any part of the country. — Edg Adrian A. Eva

PROLONGED MONSOON RAINS are expected to weigh on the third-quarter operations of consumer-facing and construction companies, while logistics and mining firms could face higher costs and delays, analysts said.

“The prolonged monsoon rains are likely to create a modest but noticeable drag on third-quarter corporate activity,” Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said in a Viber message on Wednesday.

He said the impact would vary across industries and would likely remain temporary unless severe weather persists through much of the quarter or causes significant damage to infrastructure and supply chains.

Heavy rainfall and flooding have affected parts of Metro Manila and Luzon in recent weeks, disrupting roads and prompting work and class suspensions.

He said retailers, mall operators, and restaurants could experience weaker customer traffic as prolonged rainfall makes travel more difficult and discourages discretionary spending.

He identified SM Prime Holdings, Inc., Robinsons Land Corp., Ayala Land, Inc., SM Investments Corp., Robinsons Retail Holdings, Inc., and Puregold Price Club, Inc. as among the companies that could see softer physical traffic during periods of heavy rainfall.

The impact would depend on their business formats, he added.

“Large destination malls and discretionary retailers are more vulnerable to consumers postponing visits, whereas supermarkets and essential retailers tend to be more defensive because purchases are necessities and consumers can shift the timing rather than eliminate spending altogether,” Mr. Arce said.

The earnings impact on mall operators would likely remain limited if weather-related closures are infrequent because rental income is partly protected by fixed leases, he said.

Mr. Arce said businesses tied more directly to customer spending, including tenant sales, cinemas, entertainment, and parking, could be more affected. Repeated disruptions could also hurt smaller tenants with limited financial buffers, he added.

BDO Securities Corp. President John Tristan D. Reyes likewise said retailers could see weaker foot traffic and sales.

Transportation problems could also disrupt store operations, while demand for basic goods could increase as households prepare for severe weather.

Philippine Seven Corp. (PSC) said the bad weather had already affected some of its stores. Same-store sales at some 7-Eleven branches fell by as much as 20% on particularly rainy days over the past two weeks, although the company said its overall sales momentum remained intact in July.

Speaking during the second day of the Philippine Stock Exchange’s Strengthening Access and Reach investor briefing on Tuesday, PSC Finance and Investor Relations Head Lawrence M. De Leon said same-store sales remained “okay” in July, supported partly by the company’s annual 7-Eleven Day promotion on July 11.

The effect of bad weather was cushioned by the geographic mix of 7-Eleven stores, with weaker traffic in some areas offset by activity in residential locations, he said.

Mr. Reyes said restaurants could experience fewer dine-in customers during prolonged rainfall, although delivery and takeout services could provide some support.

“Delivery and takeout orders may help offset some of the decline, but overall foot traffic tends to weaken during prolonged bad weather,” Mr. Reyes said in a Viber message.

He added that same-store sales growth among quick-service restaurants is generally slower in the third quarter.

Food manufacturers are relatively less exposed in the near term because consumers continue buying staple products, Mr. Reyes said. Prolonged rainfall, however, could affect agricultural production and raise raw-material costs.

“Most companies maintain sufficient inventories to cushion short-term supply disruptions,” he said.

Mr. Arce said flooding and excessive rainfall could damage crops and disrupt their transport, potentially pushing up agricultural commodity prices. Higher input costs could subsequently affect food manufacturers and restaurant operators if agricultural losses become widespread enough to influence food prices.

CONSTRUCTION, LOGISTICS
Construction and property companies could face more direct operational difficulties because persistent rainfall reduces workable days and could delay project completion and turnover, Mr. Arce said.

“Heavy rainfall can slow excavation, concrete work and other outdoor construction activities, while flooding can restrict workers’ access to project sites and disrupt deliveries of construction materials,” he said.

He identified Ayala Land, SM Prime, Megaworld Corp., Filinvest Land, Inc., and Vista Land & Lifescapes, Inc. as companies that could experience delays in construction schedules or project completions.

“The financial effect may show up less as permanently lost revenue and more as timing differences,” he said.

Some construction work, property turnovers, and related revenue recognition could shift into later periods rather than disappear entirely, Mr. Arce added.

Infrastructure contractors and construction-material suppliers face similar timing risks, Mr. Arce said. Fewer workable days could affect project progress and third-quarter billings, while extended delays could pressure companies that continue incurring fixed costs despite slower construction activity, he added.

Severe weather could eventually generate additional work for contractors and suppliers through repairs, drainage improvements, and flood-control projects, Mr. Arce said.

He also said logistics companies could face higher operating expenses as flooding and traffic congestion lengthen delivery times and increase fuel use.

Disruptions at ports and airports could also temporarily delay the movement of goods, he added.

Airlines and airport-related businesses could experience flight delays or cancellations during severe weather, although Mr. Arce said these disruptions would have to persist for an extended period to materially affect full-quarter earnings.

MINING, POWER
Mining companies are among the sectors most exposed to heavy rainfall because bad weather can disrupt extraction, transportation, and shipments, Mr. Reyes said.

Flooding and difficult access to mining sites could also raise costs and delay production.

The power sector could experience weaker demand during extended rainy periods as cooler weather reduces electricity consumption, he added.

“Cooler temperatures and weather-related disruptions typically reduce electricity consumption, which can soften power demand and electricity prices,” Mr. Reyes said.

He noted that historical third-quarter electricity demand has been about 6% lower than in the second quarter, while remaining about 8% higher than in the first quarter and 2% higher than in the fourth quarter.

Mr. Arce said the effect on utilities could vary. Greater water availability could support hydroelectric generation, while flooding could damage power-distribution facilities and increase repair and maintenance expenses.

Telecommunications companies could also incur additional costs when severe weather damages network facilities. The effect on revenue would generally remain limited because communication services are essential, he added.

Banks are expected to have less direct operational exposure as customers increasingly use digital services instead of physical branches. A prolonged period of flooding could nevertheless affect borrowers in agriculture, small businesses, and other weather-sensitive sectors, Mr. Arce said.

LIMITED BROAD IMPACT
Despite the sector-specific risks, the analysts said the rains alone do not warrant a broad reduction in third-quarter earnings forecasts.

“I would therefore avoid assigning a large across-the-board downgrade to third-quarter earnings solely because of the prolonged rains,” Mr. Arce said.

For companies that can quickly resume normal operations, the effect is more likely to involve postponed activity and additional costs than a permanent loss of demand, he added.

Mr. Arce said the impact could become more significant if unusually heavy rainfall continues through the rest of the quarter, as repeated disruptions could compound construction delays, reduce customer traffic, and raise logistics costs.

“The bigger concern would be if the rains remain unusually severe through the remainder of the third quarter,” Mr. Arce said.

Under that scenario, fewer construction days could delay project completions, repeated mall disruptions could weaken tenant sales, agricultural losses could raise food prices, and reduced mobility could weigh more heavily on discretionary consumption, he added.

TOTAL DEPOSITS in Philippine banks rose by 8% year on year as of end-June as the banking system remained healthy, but challenging economic conditions moderated quarter-on-quarter growth, analysts said.

Latest central bank figures showed deposits in the local banking system reached a combined value of P22.395 trillion at end-June, up 8.34% from P20.671 trillion in the same period last year.

However, the growth in deposits was slower than the 10.2% annual increase at end-March.

Quarter on quarter, the value of bank deposits inched up by around 0.8% from P22.218 trillion.

The number of deposit accounts jumped by 20.48% to 190.952 million from 158.494 million a year earlier.

Domestic lenders also onboarded more depositors at end-June, with a 7.82% climb to 28.768 million from 26.682 million the previous year. 

“The growth in bank deposits reflects continued confidence in the Philippine banking system, supported by household savings, business liquidity needs, and ongoing digitalization efforts,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, noted that the growth in deposits was largely driven by depositors’ stable income flows and decision to safeguard funds amid heightened economic risks.

“Growth was likely supported by continued income flows from employment and remittances, corporate cash balances, and households’ preference to keep funds in relatively safe and liquid instruments amid economic uncertainty,” he said via Viber.

Economic expansion weakened to a new post-pandemic low of 2.3% in the second quarter amid the lingering effects of the flood control scandal and shocks from the ongoing Middle East war.

The weaker second-quarter economic performance may also be behind the slowing deposit growth versus the first quarter, Mr. Asuncion noted.

“The slower pace relative to the first quarter is likely due to base effects and softer economic activity, but the overall expansion in deposits remains consistent with a banking sector that continues to enjoy ample liquidity and a stable funding base,” he said.

Mr. Rivera said deposits may have moderated from the previous quarter due to increased spending and depositors turning to higher-yielding platforms.

“Slowdown from Q1 may reflect base effects, stronger household and business spending, and some shifting of funds toward higher-yielding alternatives such as government securities and other investment products,” he said. “It may also indicate that deposit accumulation is normalizing after a stronger earlier pace.”

The bulk of the industry’s deposit liabilities as of end-June were in savings deposits, which grew by 3.47% to P9.276 trillion from P8.965 trillion in the comparable year-ago period.

This consisted of regular savings amounting to P7.594 trillion, kiddie and teen savings at P56.599 billion, and other savings worth P1.594 trillion.

Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., noted that more favorable economic conditions, including manageable inflation alongside rising employment and income growth, as well as better bank savings products will be key to healthier deposit growth ahead.

“Going forward, maintaining healthy deposit growth will require keeping inflation under control, sustaining job and income growth, and ensuring banks continue to offer competitive, accessible, and technology-driven savings products,” he said in a Viber message.

“Strong deposit growth remains important because it provides the funding needed to support lending, investment, and overall economic expansion,” he added.

Meanwhile, 28.804 million Filipinos have a basic deposit account (BDA) as of June, 7.89% higher than the 26.696 million accounts recorded a year ago.

Basic deposits edged up by 6.02% year on year to P30.927 billion from P29.17 billion.

As of March, 177 banks are offering BDAs, according to separate Bangko Sentral ng Pilipinas (BSP) data presented during the Development Budget Coordination Committee’s briefing for the 2027 National Budget at the House of Representatives on Monday.

“This is one of the ways that we at the BSP promote financial inclusion,” BSP Deputy Governor Zeno Ronald R. Abenoja told the briefing.

The BDA, introduced in 2018, is meant to address the needs of the unbanked and underserved Filipinos, with a low opening amount of P100 or less, no maintaining balance requirement, no dormancy charges, a maximum balance of P50,000, and requires only simple identification documents. In 2022, the BSP directed lenders to limit BDAs to one per depositor.

Central bank data also showed demand deposits stood at P6.224 trillion, increasing by an annual 8.48% from P5.737 trillion.

On the other hand, time certificate of deposits went up by 15.67% to P5.961 trillion from P6.895 last year.

Of the total deposits as of end-June, universal and commercial banks cornered P20.816 trillion, up by 7.85% from the P19.302 trillion a year ago.

Large banks had 96.512 million depositors holding a total of 104.524 million accounts as of June.

Deposits held by thrift banks rose by 8.11% annually to P1.061 trillion. Thrift bank depositors reached 10.525 million, while accounts hit 10.772 million.

Meanwhile, rural and cooperative banks booked P345.727 billion deposits at end-June, jumping by 24.72% from P277.199 billion a year prior. They had 31.351 million depositors with 31.56 million accounts.

Deposits in digital banks surged by 55.42% to P171.545 billion from P110.375 billion the previous year. Digital banks also onboarded more depositors as of end-June with 29.608 million, holding 44.096 million accounts.

THE Bureau of Customs (BoC) is confident it can meet its P1.075-trillion revenue target for 2027 as it tightens assessments.

“I think we can do it,” Customs Commissioner Ariel F. Nepomuceno told BusinessWorld in an interview.

Customs is also targeting P1.011 trillion in collections for this year. Next year’s target represents a 6.3% increase from this year’s program.

“The key is how do we make sure that assessment will be very strict, meaning we will have to ensure that there will be no misdeclaration and misclassification, which will lead to undervaluation,” he added.

Under the 2027 Budget of Expenditures and Sources of Financing, value-added tax (VAT) on imports will remain the BoC’s biggest revenue source. Import VAT collections are projected to rise by 5.6% to P692.31 billion next year from this year’s P655.89-billion program. This would account for about 64% of the agency’s overall target.

Mr. Nepomuceno said the increase would be driven by an expected rise in import volumes next year.

Finance Secretary Frederick D. Go said during a budget hearing on Monday that the BoC is on track to breach the P1-trillion mark this year.

“With the Bureau of Internal Revenue (BIR) and BoC’s continued strong performance, we expect total National Government tax revenues to reach P4.4 trillion by the end of 2026,” he added.

BUDGET
Meanwhile, Mr. Nepomuceno said the BoC would seek to recover some of the funding excluded from the 2027 National Expenditure Program (NEP).

According to Mr. Nepomuceno, the agency sought P28 billion of funding for 2027, however, only P5.902 billion were carried over to the 2027 NEP.

“We will try to appeal. Our original proposal is for the modernization — P28 billion. The only thing left is P5.902 billion,” he told reporters.

The proposed total agency budget for next year is 9.7% lower than the P6.534-billion current program for 2026.

Excluding automatic appropriations, the BoC’s budget would decline by 13% to P4.283 billion next year from P4.922 billion under the 2026 General Appropriations Act.

Mr. Nepomuceno said the original proposal included funds for scanning machines and radiation detectors at every port.

He said the lower allocation could delay the agency’s modernization program. The BoC cannot easily implement the projects through public-private partnerships because stakeholders are not charged for scanning and x-ray services.

The agency will seek the restoration of funding for projects that cannot be pursued through PPP arrangements, he added.

PORT CONGESTION
Meanwhile, Mr. Nepomuceno said he hopes a joint administrative order designed to ease port congestion and regulate cargo-handling charges will be signed this month, ahead of the expected year-end surge in imports.

“I am hoping that August should be the latest month to have it approved because we will need to organize and campaign within September, as the surge in imports is in October,” he added. “If this instead comes out in September, the room for preparation will be squeezed.”

Mr. Nepomuceno said the order could help increase government revenues by improving the movement of goods through ports.

“If we are able to deliver the needed logistics efficiencies, the faster the trade goes, the higher the revenues that will be collected by both BIR and BoC, and the lower the cost for consumers in the long term,” he said.

Finance Undersecretary Rolando T. Ligon, Jr. said the department would seek to have the order signed as soon as possible, citing the expected congestion during the “ber” months.

PEDESTRIANS waded through floodwaters while motorists cautiously drove through submerged roads in Metro Manila on Monday, as heavy southwest monsoon rains once again exposed the capital’s vulnerability to flooding.

A Facebook post showed severe monsoon flooding had turned España Boulevard in Manila into a rushing waterway, with children swimming and residents navigating chest-deep water alongside a floating refrigerator — a stark scene that captured the chaos of the capital’s recurring urban floods.

For the government, Monday’s flooding raised a larger question. After a year of controversy over public works spending, how much should the country spend on flood control, where should it spend the money, and how can the public be assured that projects are properly selected, implemented and maintained?

At a House of Representatives budget hearing, lawmakers questioned the proposed return of more than P100 billion in flood control funding under the 2027 national budget. The proposed allocation comes after cuts to flood control projects following a public works corruption scandal that raised questions over how infrastructure projects are selected and funded.

The spending puts flood control at the center of a balancing act. The Philippines needs infrastructure to protect communities and businesses from increasingly disruptive flooding, but it also needs stronger safeguards after allegations that politicians and contractors pocketed billions of pesos in public works funds.

“Not to belittle the amount involved, but the fundamental flaw in the government’s flood control approach is that it seems to be ad hoc and reactive only,” Michael Henry Ll. Yusingco, a senior research fellow at the Ateneo Policy Center, told BusinessWorld via Facebook Messenger. “It’s not anchored on scientific grounds. Clearly, there is no long-term view in the crafting of programs to address flooding.”

The scale of the proposed allocation makes that concern more urgent. A large budget does not automatically mean less flooding. Flood management depends on whether projects are placed in the right locations, whether waterways and drainage systems are maintained, whether structures are completed as designed and whether individual projects work together as part of a wider system.

‘THE NOW AND THE FUTURE’
The Metropolitan Manila Development Authority reported flooding on several major roads. Some sections of Roxas Boulevard were flooded to several inches, while portions of G. Araneta Avenue and Ma. Clara Street in Quezon City reached waist-deep levels and became impassable to light vehicles. Parts of Valenzuela, Las Piñas and Parañaque also recorded flooding.

The rains were brought by the southwest monsoon, so the flooding cannot be attributed to a single failed project. But the disruption illustrates why flood control remains a perennial public investment concern in a densely populated metropolitan area where roads, homes, businesses and transport networks are tightly connected.

“The government should follow the many engineering studies done before instead of just letting politicians in cahoots with Department of Public Works and Highways (DPWH) district engineers and other corrupt officials decide,” former Budget and Socioeconomic Planning Secretary Romulo L. Neri said in a Viber message, citing the Flood Management Master Plan for Metro Manila prepared by the government in 2012 with technical and financial support from the World Bank.

Mr. Yusingco said the measures being implemented today were designed for the scale of flooding years ago.

“Obviously, it’s very different now, and inundation will likely get worse in the years to follow,” he said. “So, the government’s approach must address both the now and the future. But our current political leaders have no wherewithal to see the problem this way.”

President Ferdinand R. Marcos, Jr. acknowledged the problem during a visit to flood-hit Las Piñas City last week, saying flooding there appeared less severe than in the past because of dredging and drainage-clearing efforts. He also said more work was needed and ordered a review of the long-delayed Las Piñas spillway.

Dredging, drainage maintenance, clearing waterways, restoring spillways and improving existing systems can be just as important as building new flood control facilities.

“The government must prioritize the rehabilitation, dredging and rigorous maintenance of existing infrastructure over building new structures to deliver immediate relief and stop wasting public funds,” Dennis C. Coronacion, chairman of the Political Science department of the University of Santo Tomas (UST), said in a Messenger chat.

“While new, large-scale engineering projects sound impressive, they become expensive monument projects if the baseline drainage systems we already have are blocked, neglected, and failing,” he added.

That makes the proposed 2027 allocation more than a question of how much money is available. It is also a question of how the government defines flood control spending and how it measures whether projects actually reduce flood risk.

At the House hearing, Party-list Rep. Antonio L. Tinio questioned the size and distribution of the proposed flood control allocation and warned that changes during congressional deliberations could create room for insertions.

Budget Acting Secretary Kim Robert C. de Leon defended the proposed figures, saying the Department of Budget and Management based them on its assessment of actual project requirements.

‘POLITICAL CASH COW’
The exchange highlights a problem that has shadowed flood control for years: Even when infrastructure is clearly needed, public confidence can weaken when project selection, costs and budget changes are difficult to trace.

“The P107.4-billion flood control budget is fully justified as an engineering necessity, but completely unjustified if treated as a political cash cow,” Mr. Coronacion said.

“Because of our chronic flood problems, we cannot afford to defund our flood defenses. Instead of removing or cutting the flood control budget, the government must guarantee that every single peso goes into real concrete infrastructure and not to the pockets of our corrupt politicians and DPWH officials,” he added.

Mr. Coronacion said the state is spending heavily on flood control but often does so through fragmented projects.

“For instance, millions are spent repeatedly repairing the exact same riverbanks after every typhoon season,” he said. “Also, substantial funds are funneled into localized, small-scale projects that serve political interests. This is why we need a master plan, not band-aid solutions.”

“Instead of funding isolated projects that merely push floodwaters from one town to the next, we must fund a single, synchronized flood control system,” he added.

For flood control projects, transparency is not simply about publishing a budget figure. It means making it possible to follow a project from proposal to construction: why a location was chosen, what flooding problem it is supposed to solve, how much it costs, who will build it, when it should be completed and whether it actually works.

For residents who see roads submerged after heavy rain, the value of flood control spending is not measured in contracts awarded or kilometers of drainage built. It is measured in whether they can get home, whether businesses can open, whether schools can operate and whether homes remain dry.

The government faces two pressures at once. It needs to restore flood control investment after a period of reduced spending, but it must do so in a way that responds to demands for cleaner and more accountable infrastructure programs.

The proposed P107.4-billion allocation under the DPWH for 2027 is likely to face close scrutiny in Congress. Lawmakers will have to decide whether the projects proposed by the Executive branch are properly targeted, sufficiently documented and capable of being implemented.

At the House hearing, lawmakers pointed to the country’s classroom shortage as one competing priority. Others have raised concerns about underspending, particularly if agencies receive larger capital budgets without the capacity to implement projects on schedule.

That creates a paradox: The Philippines may need to spend more on flood protection, but simply spending more is not enough.

‘THERE NEEDS TO BE ACCOUNTABILITY’
The country needs a flood control system planned across cities and watersheds, maintained after construction and evaluated based on outcomes. It needs clear standards for choosing projects and stronger monitoring of whether contractors deliver what was promised.

Monday’s floods brought the issue back into public view in the most visible way possible: Streets disappeared beneath water while traffic stalled around them.

The return of flood control funding to the 2027 budget is therefore not simply a return to construction. It is a test of whether the government can spend at scale while earning back public trust.

“It is hard to talk about how to balance these types of infrastructure spending when the real issue is the misuse and abuse of public funds by politicians and contractors alike,” Zy-za Nadine Suzara, an independent researcher at the International Budget Partnership, said in an e-mailed reply to questions.

“Before we can even talk about lessons from the flood control controversy, there needs to be accountability. Unfortunately, no one has been held accountable for the whole flood control mess except small fishes,” she added.

Dex Anderson Frogoso, a UST Biochemistry freshman, was stranded for hours on Aug. 17 after floods made España Boulevard impassable. He sheltered at Jollibee P. Noval for six hours before returning to UST, where students remained stranded as floodwaters receded by 10 p.m. “It was very draining,” he told BusinessWorld.

For millions of people living, working and studying in flood-prone areas like him, the measure of success will be much simpler. When the next heavy rain comes, they will want the roads to remain roads, not rivers. — with assistance from Mark Joseph M. Sanchez

THE Philippine peso weakened against the dollar on Wednesday after touching a fresh intraday record low near the P62 level as escalating tensions in the Middle East heightened inflation and interest rate concerns.

The currency slipped by three centavos to close at P61.815 versus the greenback from its P61.785 finish on Tuesday, data from the Bankers Association of the Philippines’ website showed.

This was the peso’s lowest close in more than three weeks or since its record-low finish of P61.847 on July 24.

Year to date, the peso has depreciated by P2.995 or 4.85% from its P58.79-finish on Dec. 29, 2025.

The local unit opened Wednesday’s session sharply weaker at P61.85 per dollar and reached an intraday low of P61.995, surpassing its previous lowest level of P61.85 also on July 24.

Its intraday best was at P61.73 against the greenback.

Dollars exchanged rose to $1.888 billion from $1.336 billion previously.

“The peso reached near the P62-level on safe-haven demand after the  60-day MoU (memorandum of understanding) between the US and Iran expired, which triggered renewed market concerns,” a trader said in a Viber message.

Reuters reported that US President Donald Trump on Tuesday said no talks were taking place with Iran and insisted the Strait of Hormuz was open, contradicting Iran’s assertion that it remained shut to shipping.

The receding prospects of a deal to end the nearly six-month conflict drove up oil prices again on Tuesday, while stock markets sagged and borrowing costs for major economies including the US hit multi-decade highs, amid concerns about the long-term inflationary and fiscal impact of the crisis.

The US dollar was also generally stronger on Wednesday as investors positioned ahead of the release of the minutes of the US Federal Reserve’s last policy meeting, Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

Mr. Ravelas noted the US dollar remains the world’s preferred safe-haven currency.

“The peso’s weakness is largely externally driven, reflecting higher oil prices, heightened geopolitical tensions, and broad US dollar strength. As a major oil importer, the Philippines faces increased demand for dollars when energy prices rise,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

The Philippines is a net oil and gas importer, with 98% of its oil imports sourced from the Middle East.

The trader said the Bangko Sentral ng Pilipinas (BSP) could intervene when the local unit hits the P62 per dollar level, but noted this is not yet imminent due to still high uncertainty ahead of the BSP’s policy decision next week.

Meanwhile, Mr. Asuncion said the BSP is likely to intervene only to smoothen excessive volatility.

“While peso depreciation may add to inflation risks through higher import costs, the BSP is likely to remain focused on inflation and market stability, with FX intervention aimed at smoothing excessive volatility rather than defending a specific exchange-rate level,” he said.

BSP Governor Eli M. Remolona, Jr. has said the central bank only intervenes in the foreign exchange market to prevent inflationary swings rather than defend a specific level.

Analysts said the peso’s sharp decline could prompt the BSP to increase borrowing costs for a third time this year.

“The weaker peso definitely adds to inflationary pressure. I guess that is something to consider for BSP in next week’s policy meeting. It looks like the pros for a measured 25-bp (basis-point) rate hike currently outweigh the cons,” a second trader said in a text message.

Mr. Ravelas said a 25-bp hike next week could be a “good defense” against the dollar.

A third trader said in a Viber message that signals of a rate hike by the BSP could support the local unit.

Mr. Remolona last week signaled a less aggressive monetary stance following weaker-than-expected second quarter-economic growth, but noted they need to see a clearer and more sustainable slowdown in inflation.

Since April, the Monetary Board has raised rates by 50 bps through two consecutive 25-bp hikes in April and June to bring the policy rate to 4.75%. Its next review is on Aug. 27.

For Thursday, the third trader sees the peso moving between P61.65 and P61.90 against the dollar, while Mr. Ricafort expects it to range from P61.75 to P61.95. — with Reuters

INFLATION in the Philippines is expected to remain elevated through the rest of 2026 as rising global commodity prices, supply disruptions linked to the Middle East war, weather-related risks and domestic production constraints continue to push up costs, according to a discussion paper by the Congressional Policy and Budget Research Department (CPBRD).

The House research arm projected inflation could range from 6.37% to 7.32% in the third quarter and from 5.91% to 7.31% in the fourth quarter, remaining well above the Bangko Sentral ng Pilipinas’ (BSP) 2%-4% target.

“Even with volatility, it is highly unlikely that inflation will fall below 6% in 2026,” the think tank said.

Inflation remained above the central bank’s goal for the fifth consecutive month in July. However, easing oil prices and better food supply conditions helped inflation ease to 6.2% during the month, but the seven-month inflation average stood at 5%.

The CPBRD noted that said multilateral institutions’ projected 2026 inflation rates for the Philippines, which range from 4.2% to 6%, are the highest among five Association of Southeast Asian Nations (ASEAN) members.

“Across the four multilateral institutions, expectations in the change of commodity prices on average will almost reach 6% for 2026 from an original estimate of around 3%, or double than the initial estimates for the Philippines followed by Thailand, Vietnam and Singapore,” it said.

The BSP sees headline inflation averaging 6.4% this year, before easing to 4.5% in 2027 and 3.1% in 2028.

“(Inflation) risks to the upside include weaker-than-expected harvests in Q3 and Q4 (particularly due to the monsoon, a super El Niño, and fertilizer constraints) and continued commodity supply constraints arising from the Iran war,” CPBRD said.

If the super El Niño persists until early 2027, it said that the drop in agricultural output may drive up prices on rice, corn, vegetables and livestock feed.

“Lower reservoir levels may likewise constrain hydropower generation, increasing reliance on more expensive thermal power plants and placing further upward pressure on electricity prices,” it said.

The think tank also noted the continued depreciation of the peso drives up the cost of imported fuel, fertilizers, food commodities, industrial inputs, and capital goods.

“Given the Philippines’ reliance on imported energy and agricultural inputs, sustained peso weakness could amplify imported inflation and delay the return of headline inflation toward target,” it said.

The CPBRD also noted that inflationary pressures have intensified due to soaring oil prices and shipping disruptions since the Middle East conflict started in late February.

“These disruptions could increase the landed cost of imported fuel, fertilizers, grains, and other intermediate inputs, resulting in broader cost-push inflation across agriculture, manufacturing, and transportation,” it said.

A hike in daily wages could also generate additional inflationary pressures, as businesses pass on higher operating costs to consumers, the CPBRD said.

To address persistent inflationary pressures, the CPBRD said the government should consider “a more conservative fiscal policy which involves a leaner, smart National Budget to avoid more taxes which are non-deflationary in nature.”

The think tank said the government should focus on increasing the supply of goods and services, including strengthening domestic food production, developing a more resilient energy grid and adopting affordable and reliable mass transportation.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said fiscal restraint would be feasible if the government distinguishes between productive spending and lower-priority or poorly executed expenditures.

“The objective should not be across-the-board cuts, but better prioritization protecting targeted assistance for vulnerable households while improving the efficiency of spending elsewhere,” Mr. Rivera said in a Viber message.

He said fiscal policy could be more effective in addressing inflation if price pressures are largely supply-driven, noting that monetary policy has limitations in dealing with supply constraints.

“Higher interest rates can restrain demand and anchor expectations, but they cannot produce food, lower electricity costs, or fix supply bottlenecks,” Mr. Rivera said, adding that fiscal policy can directly address price pressures through “targeted subsidies, logistics improvements, and supply-side interventions.”

Former Finance Undersecretary Cielo D. Magno cautioned that fiscal restraint should not come at the expense of government spending on development priorities, particularly as economic growth slows.

“Fiscal restraint should not constrain government from spending on development priorities, especially when the growth rate is slowing down,” Ms. Magno said in a Viber message.

Calixto V. Chikiamco, president of the Foundation for Economic Freedom, said fiscal conservatism may be ineffective in addressing inflation driven by supply-side constraints.

“Fiscal conservatism is a poor and inefficient tool to curb supply side cost push inflation,” Mr. Chikiamco said in a Viber message. “Fiscal conservatism seeks to curb demand when it’s supply side shortages or broken supply chains that’s causing the problem.”

He said the government should instead focus on measures that increase supply, including easing restrictions on agricultural imports and lowering tariffs.

CASH REMITTANCES could post its slowest growth since the pandemic this year as overseas Filipino workers (OFWs) are affected by heightened geopolitical risks arising from the Middle East war, Maybank Investment Bank said.

In a report on Monday, Maybank Chief Economist Suhaimi Ilias and economist Azril Rosli said they now expect Philippine cash remittances to rise by 2.2% to $36.4 billion by end-2026, slower than their earlier projection of 2.4% to $36.5 billion.

If realized, this would be the slowest remittance growth since 2020, when it contracted by 0.8% to $29.903 billion. This is also weaker than the Philippine central bank’s 2.7% growth projection for cash remittances this year.

The Maybank economists noted that remittances may be losing momentum as global conditions become more uncertain as the Middle East war remains unresolved.

“Downside risks from heightened geopolitical tensions, particularly in the Middle East, remain elevated and could contribute to greater month-to-month volatility,” Mr. Ilias and Mr. Rosli said.

In June, cash remittances climbed by 1.7%, the slowest pace recorded in over four years, to $3.039 billion from $2.987 billion in the same month last year. However, the monthly level stood at a six-month high.

In the first half, remittances jumped by 2.4% to $17.149 billion, from $16.753 billion a year ago.

“This suggests that underlying remittance flows remain intact despite softer growth momentum and a challenging external environment,” the Maybank economists said.

Mr. Ilias and Mr. Rosli noted that OFWs’ wide array of host countries and relatively stable labor demand overseas have cushioned remittance flows against global economic and geopolitical risks.   

“Collectively, the broad-based positive growth across major source markets points to continued resilience in remittance dynamics,” they said.

“Although headline growth has softened, the diversification of remittance sources remains an important buffer against external shocks, helping sustain overall OFW remittance inflows amid heightened global uncertainty,” they added.

Bangko Sentral ng Pilipinas (BSP) data showed Filipinos based in the United States continued to send the bulk (39.4%) of the total cash remittances in the first half, with large inflows also recorded from host countries in the Middle East, Asia, and Europe.

Inflows from Singapore made up 7.2% of the total cash remittances during the period, followed by Saudi Arabia (6.3%), Japan (5.1%), the United Kingdom (4.8%), the United Arab Emirates (4.4%), Canada (3.3%), Qatar (3%), Taiwan (2.8%), and South Korea (2.8%).

Still, the Philippines will likely see a slow pace of expansion in remittances throughout the year as global economic conditions remain tight and geopolitical uncertainties persist, according to Mr. Ilias and Mr. Rosli.

REMITTANCE-TO-GDP
Meanwhile, BSP Deputy Governor Zeno Ronald R. Abenoja told BusinessWorld on Monday that the consecutive year-on-year slowdown of remittance inflows might have a near-term effect on economic growth.

However, they are still looking to establish if the recent easing of inflows already constitutes a trend.

The BSP will also revisit its full-year remittance forecast next month to account for their updated outlook on global developments including the Middle East war, Mr. Abenoja added.

The BSP’s latest projection showed cash remittance growth could slow to 2.7% to $36.6 billion this year, from the 3.3% increase to $35.6 billion last year.

In the second quarter, cash remittances made up 7.1% of the country’s gross domestic product (GDP), the same ratio logged a year ago but slightly lower than the 7.4% in the previous quarter.

Meanwhile, personal remittances accounted for 8% of the second-quarter GDP, down from 8.2% in the first quarter but slightly higher than 7.9% a year earlier.

Ser Percival K. Peña-Reyes, senior research fellow at the Ateneo Center for Economic Research and Development, said if remittances’ share in the country’s GDP continues to decline at the same degree over the next two quarters, economic growth could be trimmed by as much as 0.3 percentage point.

He noted that remittances typically fuel household consumption, which accounts for over 70% of the country’s GDP.

“If the Middle East conflict continues to restrain OFW income growth and the remittance-to-GDP ratio slips toward 6.8% in H2, one could view it as a modest downside risk of roughly 0.2 percentage point to full-year GDP growth, with perhaps 0.3 pp as a more adverse case,” Mr. Peña-Reyes told BusinessWorld via Facebook Messenger.

“It would likely show up first in consumption-sensitive sectors such as retail, housing-related spending, and other services,” he added.

However, Mr. Peña-Reyes noted that a lower remittance-to-GDP ratio could simply reflect GDP growth outpacing remittances, rather than an actual decline in remittance inflows.

“In other words, the more concerning scenario is persistent low-single-digit or near-zero remittance growth, rather than simply the ratio moving from 7.1% to 6.8%,” he added. “That would weaken one of the country’s most reliable supports for household demand and make an already-soft growth outlook more vulnerable.”

In the second quarter, GDP expanded by 2.3% — the slowest growth since the pandemic, which brought first-half growth to 2.6%. This comes as household spending growth weakened to a post-pandemic low of 2.8% in the April to June period.

The government wants to achieve 3.5%-4.5% growth this year, which means it has to grow by at least 4.4% to hit the bottom end of the target range.

ARTIFICIAL INTELLIGENCE (AI) could slow employment growth in the Philippine business process outsourcing (BPO) industry, as companies automate routine tasks and hire fewer entry-level workers, experts said.

Philippine AI Business Association Director for AI Ethics and Data Governance Dominic Vincent D. Ligot said AI poses a “significant but manageable” threat to the Philippine industry.

“The immediate danger is not the disappearance of the sector, but the automation of routine tasks, fewer entry-level positions, and growth in revenues without comparable growth in employment,” he told BusinessWorld. “The outcome will depend on how quickly we respond.”

Mr. Ligot said the most vulnerable services include basic customer inquiries, password resets, data entry, transcription, appointment scheduling and templated chat and e-mail support as these tasks are repetitive, rules-based and highly standardized.

Simple claims processing, billing and first-line technical support are also exposed to automation, he added.

“By contrast, work requiring judgment, accountability, empathy, domain expertise, and complex problem-solving will remain more resilient,” Mr. Ligot said.

The IT and Business Process Association of the Philippines (IBPAP) said basic customer service, simple back-office processing, data entry and other transactional functions face the greatest exposure.

“AI is not simply eliminating work. It is fundamentally changing the kind of work that clients value,” the industry group told BusinessWorld.

IBPAP said AI is accelerating the Philippine information technology and business process management industry’s transition “from capacity to capability and from volume to value.”

“As routine work becomes increasingly automated, demand is growing for higher-value services that combine AI with human judgment, domain expertise, critical thinking, creativity, empathy, and complex customer engagement,” it added.

These assessments echo the World Bank’s warning that AI could weaken demand for workers in the Philippines’ BPO industry as companies in advanced economies automate more office and knowledge-based tasks.

In its World Development Report 2026: The Promise of Artificial Intelligence, the multilateral lender said economies that rely heavily on call centers and back-office services face growing pressure from automation.

Stratpoint Technologies, Inc. Head of Cloud and Data Business Zosimo Richard S. Carlos III said the impact would vary across the BPO industry.

Higher-tier services such as software development, data analytics and technology consulting are relatively more resilient because workers in these fields are more accustomed to learning and adopting new technologies, he said.

“At least from our specific BPO within the higher tier industry in software, we’re more secure because the tech adaptability of our people is naturally higher and inclined to learn all this new stuff,” Mr. Carlos told BusinessWorld in an interview.

Contact center companies are also incorporating AI as a supplemental tool for their employees rather than treating it solely as a replacement for human workers, the Stratpoint Technologies executive said.

However, human agents would likely remain necessary when customers have complex or sensitive concerns, particularly those involving financial matters, he added.

Meanwhile, Analytics & Artificial Intelligence Association of the Philippines President Michelle Alarcon said it would be misleading to treat the BPO industry as a single category because software development, voice services, back-office operations and creative work face different degrees of exposure.

“There is high exposure for some of these traditional jobs because of AI,” she said, citing data encoding and medical transcription as services that have already been transformed by technology.

Although certain roles may disappear, workers could still be retained and retrained for new functions as companies shift toward technical support and other higher-value services, Ms. Alarcon said.

Large BPO companies may be better positioned to manage the transition because they have the resources and support from their global headquarters to retrain employees, she said.

Also, smaller providers, particularly those with 1,000 seats or fewer, may have to pivot to different services to remain competitive. Some are considering moving into technical support, which would require agents to acquire more advanced technical skills, Ms. Alarcon added.

MOVING UP THE VALUE CHAIN
IBPAP said the priority should not be to resist AI but to make the Philippines one of the world’s best BPO destinations with an AI-enabled workforce.

One of its priorities is to attract more global capability centers by positioning the Philippines as a strategic hub for technology, finance, analytics, cybersecurity, engineering and other knowledge-intensive functions.

The industry should also expand AI-enabled and specialized services in customer experience, healthcare, information technology, finance and accounting, and human resources.

IBPAP also called for deepening the country’s competitive advantage in healthcare and financial services, where specialized expertise commands higher value.

“[We should also] diversify our markets by expanding beyond traditional sources of demand and attracting new investors across Europe, Japan, the Middle East, and the broader Asia-Pacific region,” it said.

IBPAP said it aims to build a pool of two million AI-enabled Digital Filipino Workers equipped with AI fluency, digital skills, industry knowledge, problem-solving ability, communication skills and adaptability.

“The future does not belong to people who compete with AI. It belongs to people who know how to work with it,” it said.

IBPAP recently revised its 2028 workforce forecast to between 1.85 million and 2.14 million full-time employees, from its previous target of 2.5 million.

It also cut its 2028 revenue forecast to between $43.3 billion and $50.5 billion from the previous target of $59 billion.

However, Mr. Ligot said upskilling alone would not be sufficient because employers typically train workers for their existing roles rather than preparing them for entirely new careers.

“The government must therefore support genuine reskilling through portable credentials, updated Technical Education and Skills Development Authority and university curricula, apprenticeships, job matching, and transition assistance,” he said.

“Investment incentives should also reward research, local intellectual property, advanced services, and innovation, not merely headcount,” he added.

BPO companies should identify automatable tasks early, redesign jobs and give employees paid opportunities to acquire skills in AI, data, process design and specialized industries, Mr. Ligot said.

“With agentic AI, career value will increasingly shift from execution to orchestration,” Mr. Ligot said. “The valuable worker will be someone who can define objectives, direct AI systems, verify their output, manage exceptions, and remain accountable for results.”

“The Philippines cannot prevent AI from automating BPO work,” he added. “Its choice is whether to remain a source of low-cost task execution or become a center for AI-enabled expertise, business ownership, and innovation.”

THE Department of Finance (DoF) is open to proposals to reduce or repeal some taxes, including the value-added tax (VAT), provided the resulting revenue losses are offset by alternative sources, Finance Secretary Frederick D. Go said.

“My categorical position on any tax removal is: I am not opposed to any tax removal for as long as a replacement revenue source is identified,” he said at a budget hearing on Monday.

“I am neutral to all the taxes, but we do have a national expenditure budget of P7.2 trillion, which we have to fund. So, if we remove any tax measure, the request is that your honor identify another tax source,” he added.

The Finance chief made the statement after Party-list Rep. Sarah Jane I. Elago sought an update on proposals to reduce or remove VAT to ease the impact of soaring fuel prices on Filipino consumers.

Ms. Elago also asked about proposals to extend the excise tax exemption to other petroleum products after the Development Budget Coordination Committee previously exempted only liquefied petroleum gas and kerosene.

Ms. Elago noted that minimum wages in seven regions remain below the poverty threshold of around P480 a day for a family of five outside the National Capital Region.

“This is concerning because it means that one breadwinner is not enough to support a family of five,” she said.

Meanwhile, Mr. Go said the country’s effective VAT rate is only half the statutory rate because of numerous exemptions.

“Our VAT rate is actually 12%, but our effective VAT rate is only half. It is only 6% because there are so many exemptions on VAT,” he said.

However, Asian Consulting Group Founding Chairman and Chief Tax Adviser Raymond “Mon” A. Abrea said the Philippines imposes one of the highest VAT rates in Southeast Asia.

“Yet, our VAT collection efficiency is only around 35-40%, versus roughly 57% for Association of Southeast Asian Nations (ASEAN),” he told BusinessWorld via Viber.

“That tells us the bigger problem is not the tax rate, but leakages and weak collection efficiency,” he added.

The government expects VAT and related sales tax collections to hit P762.42 billion this year, up 12.2% from the P679.64 billion collected in 2025.

In 2027, revenues from VAT and related sales tax are projected to increase by an annual 12.8% to P860.03 billion.

“For next year, we are hoping that the economy will bounce back and that the spending on infrastructure will start by the second half of this year,” DoF Undersecretary Rolando T. Ligon told BusinessWorld in an interview.

“Because if you spend on infrastructure, you will create jobs and that will help the economy. That is why we expect bigger collections from VAT, because VAT is based on transactions,” he added.

Mr. Abrea said that the “ambitious but achievable” goal could no longer just depend on consumption alone.

“A recovery in consumption and imports will help, but the bigger upside should come from full e-invoicing, real-time sales reporting, data matching and risk-based audits,” he said.

E-invoicing was mandated under the Tax Reform for Acceleration and Inclusion law, but its implementation remains incomplete years later with the deadline for covered taxpayers under the current rollout extended to Dec. 31.

Mr. Abrea said the 2027 target might reflect expectations of a recovery in consumption, but meeting it should not require consumers to spend more.

“Our policy priority should be to raise VAT efficiency before raising taxes — fully implement e-invoicing, rationalize unnecessary exemptions, use artificial intelligence and integrated data to detect underreporting, and collect what is already legally due,” he said.

“The Philippines does not need higher VAT. It needs a more efficient VAT system,” he added.

Separately, Mr. Go said the DoF would study a proposal to impose a billionaire’s tax equivalent to 1% for every P1 billion in taxable income.

“I think we can continue that discussion internally. We will study that internally,” he added.

The proposal would be separate from the wealth-related measures under the DoF’s Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability package.

These include creating a 75% automobile excise tax tier for vehicles worth more than P8 million and raising the tax on nonessential goods by five percentage points.

The lone storm within PAR, Tropical Depression Neneng, was located 675 kilometers east of Itbayat, Batanes, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said in its 5:00 a.m. press briefing.

It has maximum sustained winds of 55 kilometers per hour (kph) and gustiness of up to 70 kph.

PAGASA said Neneng is not expected to cause any direct effects in the country as it is projected to move toward and make landfall in Taiwan by Friday.

Another tropical depression also developed outside PAR and was located 670 kilometers east of Calayan, Cagayan.

It is also not expected to have any direct effects on the country as it moves toward China.

The third tropical depression was located 3,090 kilometers east of northeastern Mindanao and is likely to enhance the southwest monsoon by next week, bringing rains to large parts of the country, PAGASA said.

“For our countrymen, always check the updates being released by PAGASA, especially regarding the development of these three tropical depressions,” Chenel Dominguez said in a press briefing in Filipino.

Meanwhile, the southwest monsoon will bring heavy to intense rains across numerous areas in Luzon and Visayas, with heavy rainfall warnings in effect.

According to PAGASA’s 5:00 a.m. weather advisory, intense rainfall, or 100 to 200 millimeters (mm) of rainfall, is expected over Zambales, Bataan, and Occidental Mindoro.

PAGASA warned of possible flooding in urbanized, low-lying, and near-river areas under these rainfall conditions.

Areas such as Metro Manila, La Union, Benguet, Pangasinan, Ilocos Sur, Abra, Tarlac, Pampanga, Bulacan, Nueva Ecija, Cavite, Batangas, Laguna, Rizal, and Oriental Mindoro will experience heavy rains, or rainfall of 50 to 100 mm.

Under these rainfall conditions, localized flooding is likely, especially in urbanized, low-lying, and near-river areas.

PAGASA said that the rest of Luzon, Antique, and Aklan will be affected by thunderstorms also caused by the southwest monsoon, posing a risk of flooding and landslides. — Edg Adrian A. Eva

The President has directed the DAR to complete the distribution of the remaining land titles by 2027 and finish all remaining debt condonation this year.

“My deep gratitude goes to the President for his continued trust and for giving us a clear directive,” Mr. Estrella said.

“We will not rest until every qualified agrarian reform beneficiary receives their title and is completely freed from the burden of debt. This is our firm commitment,” he added.

Mr. Estrella also stressed that securing a land title is only the beginning.

“A land title alone is not enough. Our farmers also require irrigation, farm machinery, farm-to-market roads, and access to credit to make the land truly productive. This is the comprehensive agrarian reform package entrusted to us by the President,” he said.

The Secretary assured the public that the DAR is intensifying its field operations and inter-agency coordination to meet the 2027 target.

“The President has set a clear deadline for us. We will meet it. Our farmers have already waited far too long,” Mr. Estrella said.

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PERSISTENTLY high inflation could reverse the Philippines’ recent gains in poverty reduction by eroding the purchasing power of poor and low-income households, the Department of Economy, Planning, and Development (DEPDev) said.

Preliminary estimates showed that poverty incidence among Filipinos sharply dropped to 9.7% in 2025 from 18.1% in 2021, DEPDev Secretary Arsenio M. Balisacan said on Monday.

“These gains reflect not only the recovery of incomes and employment but also the sustained implementation of social protection programs,” he said during economic managers’ briefing on the 2027 National Expenditure Program at the House of Representatives.

“However, these hard-won gains remain vulnerable particularly to high inflation, which disproportionately affects poor and low-income households,” he said.

Headline inflation accelerated to 4.1% in March from 2.4% in February and peaked at 7.2% in April as the Middle East conflict sent global crude oil prices surging. It has since eased for three straight months, reaching 6.2% in July but above the Bangko Sentral ng Pilipinas’ (BSP) 3% target.

Year-to-date, inflation averaged 5%, still below the BSP’s 6.4% estimate for 2026.

“High inflation erodes household purchasing power, disproportionately affecting poor and low-income families,” he said. “If inflation remains elevated, it could slow or even reverse our recent gains in poverty reduction.”

Mr. Balisacan said the sharp slowdown in economic growth posed another threat to the country’s recent development gains.

“Following the pandemic, economic growth averaged 5.8% from 2022 to 2025. However, momentum weakened sharply beginning in the second half of 2025, with growth slowing further to 2.6% in the first half of this year,” he said.

“This sharp deceleration defines our immediate challenge: to recover growth without losing the important development gains already achieved,” he added.

Mr. Balisacan cited the Philippines’ reclassification as an upper-middle income status after nearly four decades as a lower-middle income economy.

“Reaching upper-middle income status is an important achievement, but it is not an end in itself.

The greater challenge is to translate this progress into better jobs, higher incomes, and improved living standards for Filipinos,” he added.

The recent economic slowdown has also affected the labor market, Mr. Balisacan said. He noted economic expansion between the first half of 2022 and the first half of 2026 generated four million net jobs.

“However, as growth slowed, total employment declined by 166,000 in the past year. The unemployment rate also rose to 4.2% in June from 3.1% a year earlier,” he said.

“These recent developments underscore the urgency of restoring economic momentum and generating more and better quality jobs,” he added.

Protecting the country’s progress in reducing poverty would require addressing both emerging risks and the economy’s persistent structural constraints, Mr. Balisacan said.

“Beyond immediate concerns of slower growth and elevated inflation, persistent structural constraints continue to limit the economy’s productive capacity and resilience,” he added.

These constraints include the economy’s heavy reliance on household consumption on the demand side, and on services on the production side of the economy.

“The experience of successful economies shows that sustained progress requires mobilizing other sources of growth, notably investment, exports, agriculture, and industry,” he said.

“We must therefore broaden the source of growth by strengthening investment and exports, while revitalizing agriculture. The urgency of this task is evident from our performance relative to our ASEAN peers,” he said, adding that other constraints include weak infrastructure and productivity growth.

The Philippine economy is expected to grow by 3.5-4.5% this year and by 5-6% from 2027 onward.

“Achieving the growth targets will require us to manage significant domestic and external risks,” Mr. Balisacan said.

Domestic risks include tepid consumer and business sentiment, underspending and delays in project implementation, and an intensifying El Niño.

External risks include unresolved Middle East tensions, global trade policy uncertainty, and volatile global capital flows amid heightened uncertainty.

“In the first half, our deficit-to-GDP ratio improved to 5.46%, compared with 5.65% in the same period last year and we remain on track to meet our fiscal deficit target for 2026,” Finance Secretary Frederick D. Go said at a budget hearing on Monday.

“We project a deficit-to-GDP ratio of 5.44% in the second half of 2026, bringing the full year to 5.45%, our lowest deficit-to-GDP ratio since the start of the administration,” he added.

The Marcos administration is aiming to bring the deficit-to-GDP ratio down to 3.5% by 2030 through fiscal consolidation.

“To stay the course amid growing geopolitical tensions and the need to fund the government’s priority programs without relying on new taxes, we strengthened revenues,” Mr. Go said.

As of end-June, government revenues had reached P2.388 trillion, equivalent to 49.7% of the P4.807-trillion full-year target.

“As the country’s needs to continue to grow, we are also mobilizing additional sources of revenues to help fund government priorities,” he said.

Mr. Go said one important revenue source is the privatization of idle or noncore government assets.

Under the 2027 Budget of Expenditures and Sources of Financing (BESF), the government expects privatization proceeds to jump by 166.4% to P101.5 billion next year from the P38.1-billion program for 2026.

“In addition to privatization, we are also maximizing returns from government-owned or -controlled corporations (GOCCs),” he said. “This year, as we have last year, we have called on GOCCs to continue remitting dividends at 75% of their annual net earnings.”

Meanwhile, government disbursements stood at P3.175 trillion as of end-June, representing 49.1% of the P6.466-trillion full-year program.

“As resources are limited and the country’s needs continue to grow, we must be deliberate in directing public funds towards higher quality expenditures with greater multiplier effects, those that strengthen productive capacity, stimulate economic activity, and deliver long-term benefits to the people,” the Finance chief said. “The objective is not to spend less, it is to spend better.”

Mr. Go said the government’s revenue measures and more deliberate spending had helped narrow the deficit-to-GDP ratio to 5.6% in 2025 from 8.6% in 2021.

“This continued reduction in the deficit is an important indicator that the fiscal discipline we are pursuing is translating into concrete results. And because we continue to manage our fiscal deficit responsibly, our debt levels remain sustainable,” he said.

Despite the narrowing deficit, the National Government’s outstanding debt rose by 2.8% to P19.07 trillion at end-June from P18.55 trillion at end-May.

This brought the debt-to-GDP ratio to 66% in the second quarter, the highest since 2004.

Mr. Go said the ratio remained below the World Bank’s 70% indicative threshold for emerging markets. The government expects the ratio to ease to 63% by 2030.

However, next year’s BESF showed that the outstanding debt is projected to increase to P21.48 trillion by end-2027 from the P19.766 trillion expected at end-2026.

“More importantly, on our debt, we have maintained a prudent debt mix, predominantly domestic debt, predominantly carrying fixed interest rates and predominantly structured with long repayment terms,” Mr. Go said.

“In 2027, when we project borrowing requirements to reach P3.3 trillion, we will carry the same principles of our debt strategy into our borrowing program and make it even more sustainable,” he added.

Next year, 72% of the government’s borrowings will come from domestic sources, while the remaining 28% will be raised externally through loans and global bonds.

“This borrowing strategy allows us to keep the cost of borrowing low while helping broaden our investor base, maintain access to key international markets, and support the continued development of our local bond market,” he added.

Of the proposed P7.2-trillion national budget for 2027, P1.114 trillion or 15.9% would go to financial expenses, including interest payments on domestic and foreign debt, supervision and trusteeship fees, guarantees, bank charges and commitment fees.

The DoF is also seeking reforms to make the revenue system more efficient, equitable and sustainable.

These include the proposed tax-relief and revenue-generating measures under the Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability tax package, as well as the proposed multinational minimum tax and tax amnesty bills. — Justine Irish D. Tabile

THE Bangko Sentral ng Pilipinas (BSP) left the door open for further monetary policy action as broadening price pressures are expected to keep inflation elevated in the near term, delaying its return to target until 2028.

BSP Governor Eli M. Remolona, Jr. on Monday told lawmakers that inflation may only gradually ease over the medium term as threats of second-round effects continue to cloud their outlook.

“Over the medium term, we expect inflation to ease gradually. However, risks remain tilted to the upside,” Mr. Remolona said during economic managers’ briefing for the 2027 National Expenditure Program at the House of Representatives.

The central bank sees headline inflation averaging 6.4% this year, before easing to 4.5% in 2027 and 3.1% in 2028.

BSP Deputy Governor Zeno Ronald R. Abenoja flagged inflation risks from elevated global oil prices and rising inflation expectations. 

“The BSP sees upside inflation risks, and this could emanate largely from the higher global oil prices and higher inflation expectations,” he said. “If you look at private sector inflation forecasts, they will also see higher inflation in the near term. But this could revert to near the 3% level by 2028 or 2029.”

Mr. Remolona noted that they stand ready to adjust their monetary policy further to eventually bring inflation near their 3% target. 

Inflation remained above the central bank’s goal for the fifth consecutive month in July. However, easing oil prices and better food supply conditions helped inflation ease to 6.2% during the month, but year-to-date, inflation averaged 5%.

The BSP chief attributed sticky inflation to the continued pass-through of global supply shocks to domestic prices.

“As you know, oil price shocks are not just about energy. They are also about food prices because oil is also the source of much of our fertilizer,” Mr. Remolona said.

The BSP has held onto its hawkish yet measured stance since the Middle East war erupted in late February. The central bank began tightening in April as the faster-than-expected transmission of oil shocks worsened its inflation outlook.

The Monetary Board has delivered a total of 50 basis points in hikes via two straight meetings, bringing the key policy rate to an over one-year high of 4.75% in June.

“To contain price pressures, the BSP has responded by tightening monetary policy twice this year,” Mr. Remolona said. “These were carefully calibrated moves to help slow down inflation, anchor inflation expectations, while recognizing the temporary weakness in growth.”

Mr. Abenoja likewise noted that their measured approach was set to complement the government’s fiscal measures to ramp up consumption and boost business confidence.

The BSP shifted to a tightening cycle even amid a weak economic growth backdrop since late last year.

Gross domestic product growth slowed to 2.3% in the second quarter, as investments continued to take a toll from the lingering effects of the flood control mess and household spending dampened due to rising consumer prices.

This marked the economy’s worst performance since it contracted by 3.8% in the first quarter of 2021. Excluding the pandemic, it was the slowest growth in over 16 years or since the 1.8% in the fourth quarter of 2009.

“We look at all the evidence and we are prepared to take further steps as necessary to ensure that inflation returns to target,” Mr. Remolona said.

Last week, the central bank governor noted that the dismal second-quarter growth meant they can now be less aggressive in adjusting their monetary policy to curb inflation.

However, Mr. Remolona noted that the inflation fight is still ongoing even as inflation expectations prove broadly well-anchored.    

According to Mr. Abenoja, broadening price pressures, as reflected in the sticky core inflation, have weighed on their inflation outlook over the next two years.

“Where do we see inflation going this year and next year in 2027? The inflation outlook has deteriorated amid the challenging external environment and amid the faster-than-expected broadening of price pressures,” he said.

“We can see this, for example, from what we call core inflation numbers. Our analysis points to stronger second round effects and a wider pass-through of earlier supply shocks to the different components of the consumption basket,” he added.

Core inflation cooled for the first time in eight months as it settled at 4.2% in July from the 31-month high of 4.4% in June.

Core inflation excludes volatile oil and food prices, allowing policymakers to determine whether prevailing consumer price movements reflect short-lived disruptions or a long-term trend.

The Monetary Board will hold its fourth regular policy review this year on Aug. 27, with two more to follow on Oct. 22 and Dec. 17.

CASH REMITTANCES from Filipinos abroad expanded at its slowest pace in over four years in June even as the monthly level reached a six-month high, Bangko Sentral ng Pilipinas (BSP) data showed.

Overseas Filipino workers (OFWs) sent home $3.039 billion in cash remittances in June, rising by 1.7% from $2.987 billion a year ago.

This was the highest monthly remittance inflows since December last year, when it reached $3.522 billion.

However, June saw the weakest annual remittance growth in four years and four months or since the 1.3% in February 2022.

“Cash remittances reached $3.04 billion in June 2026, the highest monthly cash remittance level recorded in the first half of 2026,” the central bank said in a statement on Monday.

Month on month, cash remittances increased by 12.02% from $2.713 billion.

Meanwhile, personal remittances amounted to $3.388 billion in June, up 1.8% from $3.329 billion the prior year.

“Seasonally adjusted personal remittances, which include cash sent through banks and informal channels as well as remittances in kind, likewise increased in June 2026,” the BSP said.

Land-based OFWs sent home bulk of the cash remittances in June with $2.48 billion, climbing by 1.8% from $2.43 billion a year earlier.

On the other hand, remittances from sea-based workers inched up by 1.4% to $560 million in June from $550 million a year ago.

Analysts said the significantly slower annual growth in June does not raise any major red flag as it merely mirrors the highly volatile global economic conditions, with remittances still resilient.

“The slowdown in remittance growth to 1.7% in June is more a story of moderation than a cause for concern,” Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said in a Viber message.

“A combination of base effects, softer economic conditions in some host countries, geopolitical uncertainties in parts of the Middle East, and timing-related factors likely weighed on growth during the month,” he added.

Meanwhile, SM Investments Corp. Vice-President and Group Economist Robert Dan J. Roces noted that remittances continued to support household spending, despite slower growth.

“From a business perspective, the steady rise in remittances is supportive because these flows go directly into household spending,” he also said via Viber.

“Even at a modest 1.7% growth, remittances provide a reliable income buffer for OFW families and help sustain consumption across food, retail, housing and other services. This provides some underlying support for consumption and suggests household demand can hold up even in a more challenging inflation environment,” he added.

In June, inflation remained above the BSP’s 3% target for a fourth straight month at 6.4%. This brought the country’s first-half headline inflation to 4.8%.

FIRST HALF REMITTANCES
In the first half of 2026, cash remittances climbed by an annual 2.4% to $17.149 billion from $16.753 billion.

Of the total, remittances from the United States accounted for 39.4% of the total inflows in the January-to-June period. This was followed by Singapore (7.2%), Saudi Arabia (6.3%), Japan (5.1%), the United Kingdom (4.8%), the United Arab Emirates (4.4%), Canada (3.3%), Qatar (3%), Taiwan (2.8%), and South Korea (2.8%).

Cash remittances from land-based workers reached $13.7 billion in the January to June period, 2.4% more than the $13.38 billion sent a year ago.

Meanwhile, sea-based workers’ cash remittances increased by 2.2% annually to $3.45 billion in the six-month period from $3.38 billion.

Personal remittances also rose by 2.4% to $19.123 billion in the period ending June from $18.672 billion last year.

“These inflows continued to support recipient households’ income, spending, and overall domestic demand,” the central bank said.

For Mr. Ravelas, remittance inflows will likely show resilience and continue to drive economic growth as global labor market conditions remain stable.

“That said, remittances continue to expand and remain one of the most resilient sources of support for the Philippine economy,” he said.

“While growth has slowed, the underlying trend remains positive. As long as global labor markets remain relatively stable, remittances should continue to support household spending, which remains a key driver of economic growth,” he added.

The BSP sees cash remittances rising by an annual 2.7% to $36.6 billion this year, slower than the 3.3% to $35.6 billion in 2025.

The LPA inside the Philippine Area of Responsibility (PAR) was spotted 1,115 kilometers East of Northern Luzon, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said in its 5:00 a.m. press briefing.

It has a high chance of developing into a tropical depression within the next 24 hours.

PAGASA is also monitoring a newly developed LPA outside PAR, located exactly 295 kilometers west-northwest of Laoag City, Ilocos Norte. It has a medium chance of developing into a tropical depression within the next 24 hours and is not expected to enter PAR as it will likely move away from the country’s landmass.

Meanwhile, the southwest monsoon that triggered widespread flooding in Metro Manila and nearby areas on Monday is expected to drench large parts of Luzon and Visayas, with heavy rainfall warnings being raised in several areas.

“Rains are more intense mostly along the western section of Luzon and Visayas, which includes Metro Manila,” Veronica C. Torres, weather specialist of PAGASA, said in the briefing in Filipino.

PAGASA said that areas of Benguet, La Union, Pangasinan, Zambales, Bataan, Cavite, and Batangas, and Occidental Mindoro are expected to experience heavy rains today, ranging between 100 to 200 millimeters (mm) of rain.

Under these conditions, numerous flooding events are likely, especially in urbanized, low-lying, and near-river areas.

Heavy rains, or 50 to 100 mm of rainfall, are expected over Metro Manila, Ilocos Sur, Abra, Tarlac, Pampanga, Bulacan, Nueva Ecija, Laguna, Oriental Mindoro, and Antique.

PAGASA warned of possible localized flooding, especially in urbanized, low-lying, and near-river areas.

Similar areas are expected to experience heavy downpours until Thursday, PAGASA said.

The southwest monsoon, which triggered widespread flooding on Monday, poured 201.7 mm of rainfall in just five hours in Metro Manila, or an equivalent of 49,985 Olympic-size swimming pools, according to a Facebook post shared by the Metro Manila Development Authority (MMDA) on Tuesday.

The equivalent is nearly half the 455 mm poured by Tropical Cyclone Ondoy in Metro Manila in 24 hours in September 2009. — Edg Adrian A. Eva

Cash remittances from Filipinos abroad grew by its slowest pace in over four years in June even as the monthly level stood at a six-month high, Bangko Sentral ng Pilipinas (BSP) data showed.

Overseas Filipino workers (OFWs) sent home a total of $3.039 billion in cash remittances in June, rising by 1.7% from $2.987 billion a year ago.

This was the highest monthly remittance inflows since December last year, when it reached $3.522 billion.

However, the 1.7% growth was the weakest annual growth in four years and four months or since the 1.3% in February 2022.

“Cash remittances reached $3.04 billion in June 2026, the highest monthly cash remittance level recorded in the first half of 2026,” the central bank said in a statement on Monday.

This brought the first-half cash remittances to $17.149 billion, up by 2.4% from $16.753 billion.

Meanwhile, personal remittances amounted to $3.388 billion in June, up 1.8% from $3.329 billion the prior year.

“Seasonally adjusted personal remittances, which include cash sent through banks and informal channels as well as remittances in kind, likewise increased in June 2026,” the BSP said.

As of June, personal remittances went up by 2.4% to $19.123 billion from $18.672 billion last year.

“The United States remained the top source of inflows, followed by Singapore and Saudi Arabia, based on reported remittance transactions by origin,” the central bank said.

The BSP sees cash remittances rising by an annual 2.7% to $36.6 billion this year, slower than the 3.3% to $35.6 billion in 2025.

“(The management) will mainly be in Ramon’s (Ramon S. Ang) hands. He will be the CEO,” Mr. Pangilinan said on the sidelines of an event last week when asked about the management of the merged company.

He said MPTC is expediting merger talks with SMC as the two sides negotiate the ownership structure of the combined tollway business.

“We are trying to expedite it. Things move slowly in the country. We are just keeping pace, there is a lot of goodwill on both sides,” he said.

Mr. Pangilinan said SMC is still expected to take majority ownership of the planned joint venture, although the final stake could change depending on the valuation.

MPTC said in June that it expected the merger with SMC to be completed by the third quarter, with negotiations moving into the valuation stage.

The company previously said SMC was likely to take a 55% stake in the combined tollway business.

“But that could change from the final valuation,” Mr. Pangilinan said.

He said he remains optimistic that the merger would be completed within the year.

The proposed transaction will combine the country’s two biggest toll road operators.

Mr. Pangilinan previously said that under the latest negotiations with Ang-led SMC, the merger would cover only MPTC’s domestic assets.

MPTC’s investments in Indonesia and Vietnam will remain outside the proposed combination.

SMC, through its SMC Infrastructure unit, manages and operates the South Luzon Expressway, Skyway System, Tarlac-Pangasinan-La Union Expressway (TPLEX), Southern Tagalog Arterial Road (STAR Tollway), and NAIA Expressway (NAIAX).

MPTC operates the North Luzon Expressway (NLEX), Subic-Clark-Tarlac Expressway (SCTEX), NLEX Connector, Manila-Cavite Toll Expressway (CAVITEX), Cavite-Laguna Expressway (CALAX), and Cebu-Cordova Link Expressway (CCLEX).

MPTC is the tollway arm of Metro Pacific Investments Corp., one of the Philippine units of Hong Kong-based First Pacific Co. Ltd., alongside Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., holds a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose

The sector’s combined resources climbed by 8.91% to P38.309 trillion at end-June from P35.174 trillion a year ago.

Month on month, it went up by 1.78% from the previous all-time high of P37.638 trillion.

The financial system’s resources include the funds and assets of banks and nonbank financial institutions (NBFIs) such as deposits, capital, and bonds or debt securities, but exclude those from the central bank.

Banks alone held the bulk or P31.962 trillion of the industry’s resources, up 9.96% from the P29.067 trillion logged a year prior.

Broken down, universal and commercial banks’ resources were 9.29% higher at P29.652 trillion as of end-June from P27.132 trillion last year.

Resources held by thrift banks also increased by 10.7% to P1.515 trillion as of June from P1.369 trillion a year ago.

Meanwhile, digital banks had P208.4 billion in resources, surging by 46.66% annually from P142.1 billion.

The latest available central bank data showed the resources of rural and cooperative banks stood at P587 billion as of March, 8.06% more than P543.2 billion it held in the previous year.

On the other hand, nonbanks’ resources inched up by 7.26% year on year to P6.347 trillion as of end-2025 from P5.917 trillion. There was no data for nonbanks as of end-June this year.

NBFIs include investment houses, finance companies, security dealers, pawnshops and lending companies, nonstock savings and loan associations, credit card companies, private insurance firms, and authorized agent banks of foreign exchange corporations.

State-run institutions such as the Philippine Guarantee Corp., Small Business Corp., Social Security System, and Government Service Insurance System are also considered nonbank financial firms.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the increase in the industry’s financial resources mirrored the sustained expansion of banks’ assets and lending.

“This could be largely attributed to the continued growth in banks’ total assets, especially driven by banks’ loan growth consistently near +10% in recent months amid some hedging activities before prices and interest rates or borrowing costs go up further,” he said in a Viber message.

At end-June, the banking sector’s combined assets grew by 10.34% year on year to a fresh-high of P31.128 trillion from P28.211 trillion.

Meanwhile, big banks extended a total of P14.882 trillion in loans, up by an annual 9.8% from P13.553 trillion.

“For the coming months, developments in the Middle East would determine global crude oil prices, inflation, and interest rates that, in turn, would determine the trend in banks’ loans, deposits, and earnings,” Mr. Ricafort noted.

The central bank has so far lifted its key interest rate by 50 basis points (bps) to 4.75% since the start of the Middle East war, with monetary authorities maintaining a hawkish stance amid heated inflation. 

However, BSP Governor Eli M. Remolona, Jr. on Friday said the weaker second-quarter growth may prompt them to be less aggressive in tightening, although the lack of sustained disinflation leaves them in a cautiously hawkish position.

He noted that the latest growth print was “quite disappointing” after slumping to a new post-pandemic low of 2.3% amid sluggish investments and muted household spending due to rising prices.

Inflation has been above the BSP’s 3% target for five straight months but eased for a third straight month to average 5% as of July. The BSP expects inflation to hit 6.4% by yearend.

The Monetary Board will have its fourth rate-setting meeting this year on Aug. 27. — Katherine K. Chan

THE PHILIPPINES must ensure regulatory predictability and secure reliable power and water to effectively position itself as a major manufacturing hub, according to executives of global management consulting firm Kearney.

“We believe that the Philippines, while perhaps not as strong as Vietnam and others, has a track record of success in manufacturing. So, it’s proven that we can play in this particular space,” Kearney Philippines Country Head Marco de la Rosa said in an interview with BusinessWorld last week.

Mr. de la Rosa said that the Philippines must diversify its revenue streams as its key growth drivers — particularly the business process outsourcing sector — face growing uncertainties from artificial intelligence (AI)-related disruptions.

Mr. de la Rosa noted that the country’s inclusion in the Washington-led Pax Silica has opened a rare opportunity for the Southeast Asian nation to become a key player in digital infrastructure and semiconductor manufacturing.

“The geopolitics have all come together to create an opportunity for the Philippines to play a distinctive role in this industry through Pax Silica, as well as the global digital infrastructure industry,” he said.

“We cannot miss this boat. This is a once in a lifetime opportunity that the Philippines needs to take advantage of.”

In April, the Philippines joined Pax Silica, a coalition of 24 signatory countries seeking to establish a framework to create partnerships in chip manufacturing, AI hardware, and data centers.

Under the Pax Silica framework, Manila and Washington are building a 1,619-hectare AI-native acceleration hub in New Clark City, Tarlac, to produce critical components for global AI infrastructure.

However, the Pax Silica initiative faces growing backlash due to concerns over its heavy energy and water requirements, potential environmental impact, and the possible displacement of local farmers.

Amid the need to attract investors while addressing public concerns, high-tech industrial developments like Pax Silica must guarantee policy predictability and transparency, said Shigeru Sekinada, Kearney region chair for Asia-Pacific, and chairman for Japan.

These include enforcing clear rules, cutting red tape, reducing logistics costs, and ensuring accessible and affordable water and power supply.

The Philippines and the US are in talks to create the long-term framework governing the Pax Silica hub in Tarlac, which both sides plan to finalize this year.

Citing his recent talks with multiple chief executive officers (CEOs) during Kearney’s CEO Retreat in Bangkok, Thailand last June, Mr. Sekinada said that key leaders are actively seeking manufacturing options across the region.

“Some of the participants mentioned that Southeast Asia and the Philippines might be the place to have more manufacturing business,” he told BusinessWorld. 

The CEOs also said that “maybe Japan and some countries have more capability in AI, data centers, semiconductors, and so on,” Mr. Sekinada also said.

With this, Kearney noted that external headwinds like the global oil crisis and geopolitical developments provide opportunities for the Philippines to capture investment in sectors like high-value manufacturing.

“In this context, I think that there is an opportunity for the Philippines to have more investment,” Mr. Sekinada said.

“But it’s very important to have predictability consistent in the policy at the national level, but another important factor is reliability with specific partner companies here,” he added.

Opportunities to develop the Philippines as a key player in semiconductor manufacturing would also help build an ecosystem of jobs and real estate developments, Mr. de la Rosa said.

“Once you start having these communities build and income increases in a particular sector, it then attracts more foreign direct investment, while other new sectors and industries can start to come and grow around it,” he said.

However, the Philippines continues to lag from its Southeast Asian neighbors in attracting foreign direct investments (FDIs).

The country slipped two spots to 18^th out of 25 emerging markets in Kearney’s 2026 FDI Confidence Index, trailing behind peers like Thailand (6^th), Malaysia (7^th), Indonesia (13^th) and Vietnam (16^th).

Mr. de la Rosa noted that the country’s score in the index was based on key factors like infrastructure, talent pool, and legal frameworks.

“Our neighboring countries won’t stand still. We’re all sort of competing for the same investment dollars. So, the trick is to ensure that the Philippines gets its fair share of investments relative to the capabilities and potential that we have,” he said.

HYDROPOWER DEVELOPERS are already feeling the effects of El Niño as prolonged dry spells lower reservoir levels, disrupting operations and critical maintenance activities.

Eric Y. Roxas, president of Repower Energy Development Corp. (REDC), said El Niño reduces the company’s hydropower plant efficiency to about 35% to 40%.

“During this period, the company takes advantage of the lower water volume to do our maintenance and repairs of our weirs, waterways infrastructure, dredging activities, and preventive maintenance activities,” Mr. Roxas told BusinessWorld.

In June, the Philippine Atmospheric, Geophysical and Astronomical Services Administration announced the onset of El Niño, which is widely expected to bring droughts to parts of the country. It is expected to escalate into a “Super El Niño” by late 2026 and persist until 2027.

Since hydropower facilities depend on reservoir and river levels, drier-than-normal conditions could prompt plants to run at partial capacity and reduce power generation output.

As of December 2025, hydropower accounted for about 12% of the country’s total installed power generation capacity, based on data from the Department of Energy.

This share remains vulnerable to weather-driven disruptions, particularly during El Niño, which is already affecting the operations of hydropower plants.

Mr. Roxas said REDC undertakes maintenance activities to ensure the company will take full advantage of increased water volume during the rainy season.

“The El Niño or dry season on the one hand becomes advantageous to us on the construction of our projects in development, with minimal delays due to weather,” he said.

REDC operates nine run-of-river hydropower plants across Luzon and Mindanao, totaling around 35 megawatts (MW), with six projects currently in development.

Dennis Michael P. Gonzales, senior vice-president of power producer First Gen Corp., said the impact of El Niño on the hydropower sector is “quite substantial,” as observed in one of their facilities.

He said the impact has reached a critical point for its Pantabangan hydropower facility in Nueva Ecija, with power generation output dropping from its original 120 MW to just 20 MW as of the end of July.

“Very close to completely shutting down the plant entirely,” Mr. Gonzales told BusinessWorld.

For context, he explained that every one-meter drop in the reservoir results in about a 3-MW decrease in power output.

“The low elevation reached this year is of huge concern as the reservoir is expected to recharge during the third quarter of the year,” Mr. Gonzales said.

“Failure to recharge sufficiently will lead to a low reservoir elevation for the next cropping season thus affecting the area that can be supported by irrigation as well as low power output due to low elevation as lower water volume releases.”

The Pantabangan hydroelectric plant is a multi-purpose hydro complex that also supplies irrigation water for the vast rice fields of Central Luzon.

While the plant saw higher-than-usual generation during the first half of the year, this was largely due to the previous year’s “generous inflows” being used to provide increased irrigation support for local farmlands. However, this heavy reliance on stored water has led to a “substantial drawdown” of the reservoir.

Unlike run-of-river plants where the impact of drought is instantaneous, large multi-purpose reservoirs like Pantabangan experience “a lag in impact,” Mr. Gonzales said.

“Even if the El Niño is encountered this year, the effect will be more felt next year,” he said.

The company official said the Luzon and Mindanao grids have significant hydropower capacity, accounting for 2,500 MW and 1,200 MW, respectively.

“Given its size, an El Niño phenomenon may trigger yellow alerts. In a way, we already felt this in June and July of this year when the hydropower plants experienced derating due to low water inflows,” Mr. Gonzales said.

A yellow alert is issued when the operating margin is insufficient to meet the transmission grid’s contingency requirement.

In Mindanao, state-run National Power Corp. (NPC) is working to complete the maintenance program for the Agus and Pulangi hydroelectric power plants to return to full operations by Aug. 20.

The Agus-Pulangi hydropower complex, which straddles the provinces of Lanao del Norte, Lanao del Sur and Bukidnon, is designed to generate 982 MW of electricity through seven run-of-river hydropower plants.

However, only about 700 MW of the facility’s capacity is currently operational due to aging infrastructure.

“Water has many competing uses, and with the possibility of a Super El Niño, energy requirements must always be balanced against water security and the needs of the communities,” NPC President and Chief Executive Officer Jericho Jonas B. Nograles said at a briefing last week.

THE BANGKO SENTRAL ng Pilipinas’ (BSP) tightening cycle may be over as the country’s sluggish growth will likely soften demand-driven inflation, with rate cuts on the table for mid-2027, Standard Chartered Bank said.   

Jonathan Koh, Standard Chartered’s senior economist and foreign exchange (FX) analyst for Association of Southeast Asian Nations (ASEAN), said the BSP may adopt a “wait-and-see” approach while assessing the movements of oil prices and the peso-dollar exchange rate.

“(B)ecause growth is soft, I think that the demand inflation is probably going to be softer. And from that perspective, I think that the BSP can potentially actually wait and see,” Mr. Koh told a press briefing on Friday.

“So, I took my August hike call off the table last week. I do recognize it’s going to be a close call. I think that the BSP is probably going to be watching oil prices as well as peso performance in the lead-up to the meeting,” he added.

Mr. Koh said this month’s policy meeting could be a close call between a hold and a rate hike, particularly if renewed price pressures worsen the inflation outlook.

“However, one month of softer inflation does not yet establish a sustained disinflationary trend, particularly as both measures remain above BSP’s target range. We therefore expect a close decision between a hike and a pause,” Mr. Koh and Standard Chartered Chief Economist and Head of FX for ASEAN and South Asia Edward Lee said in a report.

Standard Chartered’s latest policy call came after the dismal second-quarter gross domestic product (GDP) growth prompted the bank to slash its full-year forecast to 3.5% from 4% for 2026.

In the second quarter, GDP growth slowed to a post-pandemic low of 2.3%. Excluding the pandemic, it was the slowest growth in over 16 years.

The slowdown was largely driven by the lingering effects of last year’s flood control graft scandal on public construction and investments as well as subdued consumer spending as the Middle East war spiked prices.

Still, Standard Chartered is projecting a second-half recovery for the Philippines, although Mr. Koh said risks remain from volatile oil prices, potentially high food prices due to El Niño, and the government’s budget plan.

“As long as we don’t see that, I do think that the Philippine economy is probably going to recover in the second half of the year. Of course, as I noted, I think some part of it is going to be dependent on whether or not the government will be able to disperse the budget,” Mr. Koh said.

Standard Chartered likewise sees inflation averaging 5.9%, slower than its initial forecast of 6.5% amid moderating price pressures. Mr. Koh said the headline print likely peaked in the second quarter when it averaged 6.8%, well above the BSP’s 3% target.

However, inflation eased for a third consecutive month to 6.2% in July, bringing the year-to-date clip to 5%.

For Mr. Koh, the BSP could start easing next year, with a 25-basis-point (bp) cut each in the second and third quarters.

“So, in terms of the BSP itself, at the moment, my call, which I think is probably non-consensus, is I don’t expect the BSP to hike in August or for the rest of the year, and I’m actually looking for rate cuts in 2027,” he said.

Since it began tightening in April, the central bank has delivered 50 bps in rate hikes, raising the benchmark policy rate to about a one-year-high of 4.75%.

Last week, BSP Governor Eli M. Remolona, Jr. said their inflation fight is still on as they have yet to see a sustained disinflation trend, with unpredictable price shocks requiring their vigilance.

However, he added that the weak economic growth in the second quarter means they can be less aggressive in curbing inflation, especially as expectations prove relatively well-anchored.

The central bank has repeatedly signaled its commitment to steering inflation back to its target using all necessary monetary policy actions.

Its latest projections show inflation could breach its target for three straight years at 6.4% this year, 4.5% in 2027, and 3.1% in 2028.

PESO
Meanwhile, Mr. Koh expects the peso to range between P61 and P62 per dollar until yearend, with a hold by the US Federal Reserve likely to support the peso.

“Now, our view is no Fed hike,” he said. “And if, let’s say, our view really pans out, that means that your dollar should actually go lower. So, that could potentially help in terms of dollar peso moving slightly lower towards the end of the year as well.”

At its latest policy review in July, the Fed left its benchmark rates unchanged for a fifth straight meeting at the 3.5%-3.75% range.

Meanwhile, the peso averaged over P60 versus the greenback as of July from the P58- to P59-a-dollar level prewar.

It sank by 9.7 centavos to close at a new all-time low of P61.847 against the greenback on July 24, breaking its previous record of P61.75 on July 23, Bankers Association of the Philippines data showed.

As of end-July, the local unit stood at P61.432 versus the greenback, about 7.2% or P4.126 weaker than P57.306 in the same period last year, according to central bank data.

Inspired by Singapore’s rich hawker culture, Tiong Bahru offers a selection that brings some of the country’s most beloved culinary traditions closer to home. Diners often cite the restaurant’s faithful take on iconic classics as one of the reasons they keep coming back, making it a go-to spot for those looking to enjoy authentic Singaporean flavors without leaving the Philippines.

“It took us back to when we had our chicken rice in Singapore,” wrote reviewer Chryssa Eunice, highlighting the authenticity that many guests continue to appreciate.

Customer favorites include the restaurant’s signature Hainanese Chicken Rice, aromatic Laksa, and comforting Bak Kut Teh, alongside a selection of Singaporean-style noodle dishes and other hawker specialties. These menu staples have earned praise from regulars for their rich and well-balanced flavors, quality ingredients, and familiar sense of comfort, reflecting the essence of Singaporean comfort food that has resonated with Filipinos.

“I tried my favorite Hainanese Chicken Rice, and it tastes just like the ones in Singapore,” wrote Bernardo Andico in an online review, echoing the authenticity that many guests continue to appreciate.

“Our goal has always been to bring authentic Singaporean flavors closer to Filipino diners. Seeing customers appreciate our dishes and return for their favorites inspires us to continue delivering a genuine and memorable dining experience,” said Kathryna Yu-Pimentel, Co-Owner and Director of Tiong Bahru Singapore Flavours.

For many guests, the appeal of Tiong Bahru goes beyond the food itself. Online reviews on Google Maps and feedback shared across social media frequently highlight the overall dining experience, from friendly and attentive service to clean and inviting spaces that make meals enjoyable for families, friends, and colleagues alike. Service is another aspect often praised by guests, with reviewer Reiner Venida noting that the “wait staff are very accommodating and food was surprisingly quick.” Diners likewise appreciate the value offered by the restaurant, allowing them to experience a taste of Singapore close to home without compromising on quality.

The positive reception has translated into strong customer loyalty, with many patrons returning for well-loved plates and recommending the restaurant to others through social media and review platforms. Guests also cite the consistency of food quality and dining experience as reasons they continue to revisit the restaurant. “I can’t wait to return for another memorable meal,” wrote Von Villalon in a review, underscoring the strong customer satisfaction that continues to drive repeat visits. This growing community of repeat visitors has helped introduce more Filipinos to Singaporean cuisine and the culture behind it.

“We are grateful for the support and feedback from our customers. Their positive experiences motivate us to uphold the quality, authenticity, and hospitality that Tiong Bahru is known for,” added Ms. Yu-Pimentel.

By staying true to the flavors and traditions that inspired the brand, Tiong Bahru continues to introduce more Filipinos to Singapore’s vibrant food culture. Whether people are discovering the cuisine for the first time or returning for a familiar favorite, the restaurant offers an opportunity to taste its hawker heritage through recipes prepared with care and consistency.

Through its signature dishes and dedication to authenticity, Tiong Bahru Singapore Flavours continues to share the traditions behind Singapore’s vibrant food culture with communities across the Philippines.

Those looking to enjoy a taste of Singapore can visit any of Tiong Bahru Singapore Flavours’ 16 branches nationwide. For updates and more information, follow Tiong Bahru Singapore Flavours on Facebook (Tiong Bahru Singapore Flavours), Instagram (@tiongbahruph), and TikTok (@tiongbahruph).

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The Department of Budget and Management plans to further reduce unprogrammed appropriations in future national budgets as it seeks to tighten spending discipline, although eliminating the allocation will depend on the government’s fiscal space and project pipeline.

Acting Budget Secretary Kim Robert C. de Leon said the government could eventually bring unprogrammed appropriations to 1% of total spending or eliminate them altogether if sufficient fiscal room allows priority projects to be funded through programmed budgets.

“We’re working towards a more disciplined budget,” told reporters at the Economic Journalists Association of the Philippines Forum on Friday. “The lower, the better, but it depends on the actual purpose or nature of the project to be funded.”

The proposed 2027 unprogrammed appropriations were cut 25.8% to P111.98 billion from P150.9 billion this year. The allocation, the lowest in since 2019, is equivalent to about 1.6% of the proposed P7.2-trillion national budget.

Mr. de Leon said the DBM could reduce the allocation further if the government has enough fiscal space to include more priority expenditures in the programmed budget.

The agency also tightened the criteria for projects that can be placed under unprogrammed appropriations, he said. Projects with definite funding sources were included in the programmed budget, while those dependent on contingencies were placed under the unprogrammed allocation.

“If we can really accommodate it, if that’s the priority, we put it in the programmed appropriations,” he said.

Only four items remain under unprogrammed appropriations in the proposed 2027 budget: support for foreign-assisted projects, conversion of National Government advances to the National Housing Authority into subsidies, the Risk Management Program, and a standby provision for the partial restoration of funds previously remitted by the Philippine Deposit Insurance Corp.

FLOOD-CONTROL PROJECTS

The DBM also said it subjected the Department of Public Works and Highways’ proposed flood-control projects to stricter screening after locally funded projects were removed from the 2026 national expenditure program.

The proposed 2027 budget includes P107.4 billion for DPWH flood-control projects.

Mr. de Leon said the DBM required the agency to submit full documentation for the projects, including budget forms, locations, geotagging and programs of work.

The requirements apply to all DPWH infrastructure projects, not just flood control, he said.

The government will prioritize completing ongoing infrastructure projects and operating and maintaining completed facilities, he said.

The restoration of funding for flood-control projects comes as economic managers seek to increase infrastructure investment after weak public construction weighed on economic growth in recent quarters.

“That is really the direction of the economic managers: to ramp up our infrastructure investment since it is one of the drivers of growth,” he said.

Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan said large infrastructure projects reviewed by the Investment Coordination Committee (ICC) undergo feasibility studies, technical evaluation and Cabinet scrutiny.

Many of the flood-control projects previously questioned, however, were smaller projects that did not meet the threshold for ICC review, he told reporters at the forum. Most projects reviewed by the ICC are official development assistance-funded projects, he added.

ODA-funded projects are subject to feasibility studies and other requirements imposed by institutions such as the World Bank, Asian Development Bank and Japan International Cooperation Agency, Mr. Balisacan said.

For smaller projects outside ICC review, the government has established a monitoring dashboard that allows implementing agencies and other stakeholders to track infrastructure projects, Mr. Balisacan said.

The DBM and DEPDev are developing a common project identification system that will assign each government project a unique code and allow the public to access project information digitally.

“We are coming up with a nomenclature system so that each of the projects that the government will implement can be accessible to the public by way of a coding or numbering system,” Mr. Balisacan said.

The Philippines’ weak economic growth gives the Bangko Sentral ng Pilipinas (BSP) room to take a less aggressive approach to monetary tightening, but Governor Eli M. Remolona, Jr. said the central bank still needs clearer evidence that inflation is moving sustainably lower before it could relax.

“Weaker growth that we’re seeing means we can be less aggressive in trying to tame inflation,” he said at the Economic Journalists Association of the Philippines’ Economic Forum on Friday.

His remarks suggest the BSP may have greater scope to weigh growth risks in its policy decisions after the economy expanded at the slowest outside the COVID-19 pandemic in more than 16 years.

The economy grew 2.3% in the second quarter from a year earlier, slowing from 2.8% in the first quarter and 5.4% a year earlier. It was the fourth straight quarter of slower growth.

Mr. Remolona described the result as “disappointing and surprising,” although he said the economy would have grown 3.2% based on the BSP’s estimate based on second-quarter 2025 gross domestic product.

The weak performance came as declining public construction weighed on investment and elevated prices constrained household spending.

The slowdown also reflected lingering effects of last year’s flood-control corruption scandal and the more than five-month-old Iran war, Mr. Remolona said.

The weak growth could reduce the need for further aggressive rate increases, particularly if inflation expectations remain contained.

However, Mr. Remolona said the central bank is not yet ready to ease its inflation fight.

“With the growth numbers, and with the inflation numbers, I think we need a more convincing downward trend for inflation before we can relax,” he said.

Inflation eased to 6.2% in July from 6.4% in June, marking its third straight month of easing. But it remained well above the BSP’s 3% target, with the year-to-date average hitting 5%.

Mr. Remolona said the latest inflation data also showed the need for vigilance against unpredictable price shocks.

Still, inflation expectations remain relatively well-anchored, giving the central bank some reassurance as it weighs growth and price stability risks.

The median forecast of 24 external forecasters surveyed by the BSP as of July 23 showed inflation easing to 5.4% over the next 12 months, from 6% in the June survey.

Inflation is expected to average 4% over the next two years, slightly lower than the previous 4.1% forecast, and 3.3% over the next 36 months, compared with the previous 3.4% projection.

“That’s the reassuring part — that those expectations are pretty anchored,” Mr. Remolona said.

The combination of weak growth and easing inflation expectations could give the BSP more flexibility in calibrating its next policy moves, although the governor’s comments indicate that a sustained decline in inflation is needed for a significant shift.

The Monetary Board has raised its benchmark policy rate by 50 basis points since it began tightening in April, bringing the key rate to 4.75%.

The BSP has three remaining policy reviews this year, scheduled for Aug. 27, Oct. 22 and Dec. 17.

Guided by its mission to bring fun to people, Casino Plus is bringing a special festival showcase to Davao featuring fan interactions, interactive activities, contests, and exciting prize giveaways for local attendees and online followers.

The celebration will take place from Aug. 14-16, 2026 at Davao Whisky Park in Davao City. The three-day Casino Plus activation will feature a lineup of entertainment and community activities, with Zeinab making a special appearance during the festivities.

Fans, affectionately known as Zebbies, will have the chance to meet Zeinab in person. Her return to Davao comes as the city celebrates Kadayawan, a festival that holds a special place in Davao’s cultural identity. Held every August, Kadayawan is a celebration of thanksgiving, abundance, and the city’s rich cultural heritage, bringing communities together through traditions, performances, colorful displays, and festivities.

In a dedicated social media announcement, the “Reyna ng Good Vibes” shared her excitement about returning to Davao City and invited her followers to join the Kadayawancelebration:

“Kadayawan na! Marami kaming hinandang prizes at gagawin nating sobrang saya ito. Bonggang-bonggang kakulitan ang dadalhin k o. Excited ak o makita at makasama kayo especially this is my second time in Davao kaya ano pang hinihintay n’yo? Arat na sa Kadayawan!” she said.

Known for her candid personality, humor, and strong connection with her online community, Zeinab is set to bring her signature energy and “kakulitan” to the Kadayawan celebration.

Joining her at Davao Whisky Park are some of the country’s most popular content creators and performers, including “Daddy Blue” and Maritoni Fowler, along with actors Baby Giant, Joanna Lara, Lhevin Andal, and Miro Macs.

The Casino Plus activation complements the festive atmosphere of Kadayawan by creating an opportunity for fans and festivalgoers to share an experience with Zeinab while celebrating the spirit of one of Davao City’s most anticipated annual events.

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From Vision to Transformation

Through a collaborative ecosystem of stakeholders working toward a common goal, the shared commitment of a waste-free future reflects the SM way of creating meaningful and lasting impact. The launch of SM Waste Free Future in 2024 at the SM Mall of Asia marked the start of the group-wide initiative on waste circularity and standardized waste segregation across SM properties.

At the core of the initiative is the belief that lasting waste reduction begins with everyday behavior. Applying the theory of change, the program started with observations of daily waste generation and an assessment of existing segregation systems. This was followed by the deployment of the three-bin waste system: Recyclable, Disposable, and Compostable (RDC) bins, which make segregation easier and more accessible, helping reinforce positive daily habits over time.

Closing the loop, however, requires more than improving waste management practices. In 2025, a year after its launch, SM Prime achieved an 80% diversion rate for non-hazardous waste away from landfills. Achieving this level of diversion means sustained commitment and strategic investment in the program.

A key enabler is SM GUUN Environmental Company, Inc. (SGECI), a waste-to-fuel facility in Consolacion, Cebu, that transforms disposable waste into alternative fuel for major cement manufacturers such as Holcim and APO Cement, advancing both waste diversion and circularity goals by keeping materials in productive use.

SGECI’s expanded ecosystem includes Asia Brewery, PetValue, Nature Springs, and Concreat to recover, process, and repurpose waste materials generated across SM properties and smaller businesses in the area. It has processed more than 6,000 metric tons of waste in 2025, helping divert valuable resources away from landfills.

Turning circularity into movement

Behind every framework, however, lies the collective action critical to any program. SM Cares, the corporate social responsibility arm of SM Supermalls, leverages its social media presence to engage communities, especially the youth, in active participation toward a waste-free future. Last year’s International Coastal Cleanup had 48,000 volunteers – the largest gathering of coastal warriors to date.

“Creating a waste-free future requires everyone to play a role—from employees and partner-tenants to local governments, communities, and customers,” says Engr. Liza B. Silerio, SM Supermalls VP for Compliance and Sustainability.

“It is always a challenge at the start, but I’m proud of how far we have come. By working together, we can turn waste challenges into opportunities for positive environmental impact,” said Ms. Silerio.

Championed by the SM Green Movement, the SM Waste Free Future continues to advance SM Prime’s circular economy practices by bringing together employees, tenants, partners, and communities behind a shared vision of responsible waste circularity.

“This recognition reflects the power of collaboration in attempting to do what is impossible. The award belongs to everyone who has contributed to the journey. It demonstrates that when we unite behind a common purpose, we can achieve transformation at scale,” says Louernie de Sales, SM Prime VP for Sustainability and President of SGECI.

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During one of Japan’s busiest holiday weeks, more than 360 mm (14 inches) of rain fell in 24 hours in parts of the Chiba area adjoining Tokyo, inundating roads and railways, with soldiers sent to help with rescue efforts.

“This case was an extremely unusual situation,” Chiba Governor Toshihito Kumagai told reporters. “I have responded to many disasters in the past, but I have never experienced a case like this.”

The eight dead included one person trapped in a submerged vehicle, public broadcaster NHK said, citing Chiba authorities and police.

At Narita, airport staff distributed sleeping bags, water and snacks to hundreds of passengers, many of whom had bedded down on Thursday after transport disruptions stranded about 7,000 people, causing widespread chaos.

“I queued for a taxi, but the wait was four hours,” said Minoru Yamasaki, a 48-year-old Chiba resident returning from holiday, who had booked a hotel only to be told it could not put him up. With nowhere else to go, he returned to the airport.

An airport spokesperson said most flights were expected to operate normally on Friday.

More than 20,000 homes were without power in the early hours of Friday, after rain flooded a power substation, utility Tokyo Electric Power said, while gas supply to nearly 13,000 was temporarily cut.

In Chiba city, one of the worst-hit spots, hundreds of people spent the night under foil blankets at makeshift evacuation centers in government buildings.

Some major highways in Chiba were shut, forcing drivers to take alternative routes that clogged traffic, said highway operator NEXCO East.

Several rail services were also suspended on Friday, though some services from Narita to Tokyo resumed, easing congestion at the international transport hub.

Weather authorities said the 367 mm (14.5 inches) of rain over a 24-hour period in Chiba exceeded the previous record of 309 mm (12.17 inches) set in October 2013. — Reuters

GLOBAL investment firm Kohlberg Kravis Roberts & Co. (KKR) has proposed increasing its stake in Lopez-led First Gen Corp. and launching a tender offer for its remaining public shares, a transaction that could lead to the power producer’s voluntary delisting from the Philippine Stock Exchange (PSE).

In a clarification to the stock exchange on Thursday, First Gen said KKR had made a preliminary, non-binding offer to First Philippine Holdings Corp. (FPH) and First Gen that does not create legally binding obligations.

First Gen said the proposal was e-mailed on July 10 and that KKR offered to acquire an additional 8.43% stake in First Gen from FPH and enter into a shareholders’ agreement with FPH.

Under KKR’s proposal, the investment firm would then launch a voluntary tender offer for the entire 11.67% public float of First Gen’s outstanding common shares, which would support a petition for the company’s voluntary delisting from the PSE, according to First Gen.

First Gen is the power generation arm of the Lopez group through FPH, which holds a 67.84% stake in the company, according to its latest public ownership report. KKR, meanwhile, holds a 19.9% economic interest.

First Gen also said KKR had indicated that any transaction, whether above the level of First Gen or at First Gen itself, that would result in a direct or indirect change of control would trigger a mandatory tender offer.

KKR said such a transaction should command a full control premium of at least 30% above its offer price, or about P46 per share, according to First Gen.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said FPH should “seriously look into KKR’s offer and ensure the best deal for all shareholders, including public investors.”

“It’s also important that they are transparent about the process. An offer to take [First Gen] private, even if phrased as non-binding, is material information that should be timely disclosed to the investing public,” he said in a Viber message.

“I’ve always said that [First Gen] is ripe for delisting, but any such exercise should be on terms beneficial to minority shareholders,” he added.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., likewise said FPH should consider the proposal as it could provide greater capital flexibility while preserving control of First Gen.

“That capital could strengthen FPH’s balance sheet, support investments elsewhere in the group, or provide additional flexibility as the Lopez companies reassess their portfolios,” he said in a Viber message.

Mr. Arce said, however, that minority shareholders would need to decide whether the proposed tender price “adequately captures the company’s long-term value.”

At the local bourse on Thursday, First Gen shares rose by 2.38% to close at P28 apiece.

Energy Undersecretary Giovanni Carlo J. Bacordo said the government is studying seven areas as possible locations for future nuclear power plants.

“There are two sites in Bataan, two sites in Palawan, one in Masbate, Pangasinan, and Camarines Norte,” Mr. Bacordo told reporters on Tuesday.

These sites have undergone initial assessment, with technical assistance from the International Atomic Energy Agency (IAEA) to determine whether the areas can safely host nuclear facilities.

“Nuclear energy is not simply about deciding to build a power plant. We must build the institutions, the regulatory system, the technical capability, the financing framework, and the public confidence to support it,” Mr. Bacordo said.

These sites will set the foundation as the Philippines works toward its goal of developing 1,200 megawatts (MW) of nuclear power generation by 2032.

Beyond this target, the country is also considering the entry of 1,400 MW of nuclear capacity by 2038.

The DoE said the country’s progress on nuclear development heeds to the call of President Ferdinand R. Marcos, Jr. in his 2026 State of the Nation Address to revisit nuclear energy as part of efforts to strengthen energy security and bring down electricity costs.

The Philippines is positioning nuclear energy as part of efforts to diversify its energy mix, reduce emissions, and enhance energy security.

“Nuclear can add firm capacity and diversify the energy mix, but it does not replace the need for other technologies,” Energy Secretary Sharon S. Garin said.

Amid concerns over the safety of nuclear power, the DoE said public acceptance has increased, citing a Social Weather Stations survey that showed public approval of nuclear energy rose to 82% in 2024 from 79% in 2019. 

While laying down the groundwork for nuclear energy sites, the DoE said it also focuses on addressing the remaining work across the IAEA’s 19 nuclear infrastructure issues, with priority areas covering electrical grid readiness; safety, security and safeguards; legal and regulatory requirements; emergency preparedness; nuclear fuel cycle and waste management; stakeholder involvement; and nuclear workforce development.

According to the DoE, progress is underway in developing the legal and regulatory framework, including the enactment of Republic Act No. 12305, which establishes the Philippine Atomic Energy Regulatory Authority.

At the same time, the government is pursuing measures to streamline nuclear power plant licensing and establish the policy framework for a pioneer nuclear power project.

The DoE is also moving forward with the finalization of its roadmap that will feature the infrastructure necessary for the country to be ready to commission and operate its first nuclear power plant.

Nuclear advocacy group Alpas Pinas said the rising electricity demand and energy security concerns highlight the need to push for faster transition to nuclear energy.

“It is the clearest signal yet that nuclear energy is no longer a distant possibility but an important policy option in addressing our country’s long-term energy needs,” Alpas Pinas Lead Convenor Gayle Certeza said in a statement.

“As this national conversation moves forward, it is equally important that the government starts making concrete steps to make this happen,” she added. — Sheldeen Joy Talavera

A BEVERAGE INDUSTRY group urged the Philippine government to review its proposed taxes on sugary drinks, warning that new levies could raise prices of everyday goods and offset the benefits of planned income tax relief.

“We support the intent of the ProGRESS (Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability) package to ease the tax burden on workers and small businesses and to achieve better health outcomes,” Beverage Industry Association of the Philippines President Juan Lorenzo Tañada said in an e-mail to BusinessWorld.

“But what government gives with one hand through income tax relief, it may very well take back with the other through higher prices on everyday products,” he said.

The Department of Finance (DoF) recently unveiled its proposed ProGRESS bill, which seeks to raise the annual personal income tax-exempt threshold to P350,000 and remove the minimum corporate income tax for micro and small enterprises.

To offset the revenue losses from the tax relief, the DoF is seeking to generate revenues from a proposed tax hike on sweetened beverages and impose new taxes on edible ices such as ice cream, sorbets, ice lollies, and frozen yogurt.

Under the proposed measure, the excise tax on beverages using caloric or noncaloric sweeteners will be raised to P20 per liter from the current P6, while the tax on beverages using high-fructose corn syrup will be hiked to P40 per liter from P12. The proposed sweetened beverage tax rates would be indexed by 5% annually.

Mr. Tañada noted that raising taxes on sugary beverages is “untimely” as consumers grapple with high inflation.

“Consumer spending, which is a key pillar of GDP (gross domestic product) is already under strain. When consumers cut back, VAT (value-added tax) collections shrink along with them, risking the very tax base government depends on,” he said.

Since the Middle East war erupted, headline inflation remained above the central bank’s 3% target for five consecutive months, bringing the average to 5% as of July.

Philippine economic growth slowed to a post-pandemic low of 2.3% in the second quarter, as oil shock stoked inflation and dampened household consumption.

Household consumption, which makes up around 70% of the Philppines’ gross domestic product, grew by 2.8% in the second quarter, the weakest pace since the 4.8% decline in the first quarter of 2021.

Nestlé Philippines Head of Corporate Affairs Jose Uy III said there is a need to ensure that the DoF’s proposed taxes are evidence-based.

“We are not against a policy that helps encourage Filipino healthy living. That is part of us and our purpose,” he said at a briefing on Thursday.  “However, I personally believe that any major policy that is being created by the legislators or the government has to undergo scientific or evidence-based [review,]” Mr. Uy said.

Mr. Tañada also noted the tax hike on sugary drinks is not based on evidence, adding that it “carries unintended consequences particularly when other measures remain available, including tightening of existing tax collection.”

“We urge policymakers to listen to the affected sectors: manufacturers, sari-sari store owners, farmers, sugar millers, and all other stakeholders across the value chain. As important, the low- and middle-class consumers who will ultimately bear the cost of tax increases. Government must build reforms grounded in evidence, fairness, and genuine dialogue,”  Mr. Tañada said.

Ivy Sicat, Nestlé Philippines’ nutrition advocacy lead, noted that the high prevalence of diabetes among Filipinos stem from a lack of protein and fiber in their diets rather than excessive sugar intake.

“We have to look into the diet of Filipinos. Do these particular food categories really significantly contribute to the sugar intake of Filipinos?” she told the same briefing.

Mr. Tañada also noted Filipinos have already been drinking less sugary drinks and paying more since the tax took effect in 2018.

“By the government’s records, beverage consumption dropped 9% in 2025 alone, and its own projections show a further decline of at least one-third the current sales volume of beverages if the proposed increase pushes through. But what has not gone down are obesity and overweight rates at 43.1% also in 2025… If taxing beverages was supposed to make Filipinos healthier, the numbers say otherwise,” he said.

In a report dated Aug. 11, the United Kingdom-based think tank said the Bangko Sentral ng Pilipinas (BSP) could still deliver an additional 50 basis points (bps) in rate hikes to 5.25% this year. 

This comes even as they see most central banks in emerging markets pausing amid persistent uncertainty arising from the Middle East war. 

“We expect most central banks will keep rates on hold as uncertainty regarding the Middle East conflict lingers,” Oxford Economics Lead Economist Maya Senussi said. “We only forecast additional hikes in the Czech Republic, India, Indonesia, the Philippines, and South Africa.”

According to Ms. Senussi, the country’s vulnerability to price shocks warrants a higher-for-longer policy even as its growth outlook looks bleak.

“The Philippines remains the most exposed to inflation risks and we expect another cumulative 50 bps worth of tightening despite soft growth prospects,” she said. 

Meanwhile, Citi Philippines also maintained its forecast of up to a fourth straight hike, although weighing a potential pause in October amid a widening output gap and easing inflation.

“No change in our BSP rate call; still expecting 25-bp hikes in August and October, while monitoring the risk scenario of an October pause,” it said in an e-mailed note on Wednesday. “The continued slowing of GDP (gross domestic product) growth in the second quarter was accompanied by elevated unemployment, thus likely a wider output gap.”

BSP Governor Eli M. Remolona, Jr. has said that the economy continues to suffer from a negative output gap especially after domestic growth slowed for a fourth straight quarter.

An economy posts a negative output gap when its actual output is less than its full potential.

In the second quarter, Philippine GDP grew by 2.3% — its lowest since the pandemic. This came as investments took a major hit from the decline in public construction, while household spending suffered from the sharp rise in consumer prices.   

The country’s unemployment rate climbed to a three-month high of 4.9% in June from 3.7% a year earlier, translating to 2.59 million jobless Filipinos. The unemployment rate averaged 5% in the first half.

On the other hand, Citi noted that stronger growth in goods and services exports provided some relief for the Philippine economy in the second quarter.

“Exports of goods and services (+1pps in contribution to growth) were also a bright spot,” it said. “Worth noting that half of the growth in exports was contributed by services, perhaps allaying concern over structural headwinds caused by AI (artificial intelligence).”

However, Oxford Economics said this uptick in exports was still insufficient to boost the economy’s overall growth during the period.

“The Philippines has also benefited through stronger exports, although its concentration in testing, assembly, and packaging likely will generate more limited domestic spillovers. Its recent Q2 GDP print shows domestic demand is weak even as exports grow,” Ms. Senussi said.

As of June, the country’s total exports grew by 13.09% year on year to $46.72 billion from $41.31 billion. This is projected to rise by 3% for the full year, based on the Development Budget Coordination Committee’s latest outlook.

For Citi economists, the economy could rebound in the third quarter as inflation continues to cool down, investment growth turns around, and exports growth remains at a double-digit pace.

However, it ruled out a sharp recovery, noting that risks could emerge if remittance inflows from the Middle East stay subdued, and the upcoming El Niño event triggers another price shock.   

The central bank has also remained optimistic about the economy’s second-half outlook, counting on the government’s catch-up measures to lift growth in the latter part of the year.

Citi kept its full-year GDP growth forecast for the Philippines at 3.2%, below the government’s 3.5%-4.5% target.

MEASURED APPROACH
In a separate report, De La Salle University’s Angelo King Institute for Economics and Business Studies (DLSU-AKI) said economic managers must continue taking a measured approach to oil price shocks to avoid worsening the economy’s vulnerability in the future.

“Oil price shocks will continue to test the Philippines,” DLSU-AKI researchers Jan Marie Claire Edra, Junette A. Perez, and Edwin Valeroso said.

“This calls for a more careful response: not panic tightening or open-ended subsidies, but a calibrated mix of credible monetary policy, targeted relief, transparent fuel markets, supply buffers, and faster energy diversification,” they added.

Since the Middle East war erupted in late February, the BSP has maintained a measured monetary policy stance as it warned against potential market disruption should it turn aggressive. 

“For the Bangko Sentral ng Pilipinas, the danger is misreading a supply shock as a demand shock,” the DLSU researchers said. “Raising rates too much in response to a temporary oil spike can slow output and credit growth without producing more oil. Doing too little, however, can also be risky if transport fares, wages, food prices, and expectations begin to adjust together.”

According to the authors, the BSP can look past immediate oil price shocks and act only when such pressures begin to feed into expectations and costs of other commodities.

“Keep monetary policy credible but avoid overreacting to temporary oil movements. The BSP should continue distinguishing first-round oil price effects from second-round pressures. A rate response is more justified when oil shocks start changing inflation expectations, wages, transport fares, and core prices,” they said.

The Monetary Board has so far delivered two 25-bp hikes since April, bringing its benchmark interest rate to 4.75% by June.

Headline inflation remained above the BSP’s target as well as its 4% ceiling since the first full month of the Middle East war in March. It stood at a year-to-date average of 5%, still below the BSP’s 6.4% full-year estimate, after easing for a third straight month to 6.2% in July.

Earlier this week, the central bank chief said they could still tighten “as much as necessary” to drive inflation near its 3% target, but added that the sluggish growth last quarter has eased some pressure off their rate hike prospects.

The Monetary Board will hold its fourth rate-setting meeting this year on Aug. 27, with the last two scheduled for Oct. 22 and Dec. 17. — Katherine K. Chan

FOREIGN INVESTMENT pledges in the Philippines in the second quarter rose to the highest level in nearly two years, despite muted economic growth and geopolitical uncertainties.   

Preliminary data from the Philippine Statistics Authority (PSA) showed foreign commitments approved by the country’s investment promotion agencies (IPAs) jumped by 68.22% to P115.2 billion in the April-to-June period from P68.48 billion recorded last year.

This was the highest approved quarterly foreign investments since P148.94 billion in the third quarter of 2024.

Quarter on quarter, approved investment pledges more than doubled from the P54.78 billion in the first quarter.

The Netherlands accounted for the bulk or 44% of the total foreign investment pledges with P50.74 billion, followed by Germany with P18.05 billion (15.7%) and Singapore with P9.95 billion (8.6%).

“The surge in investment approvals shows that investors are still willing to bet on the Philippines’ long-term growth story,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said in a Viber message.

The Philippine economy posted a weaker-than-expected growth in the second quarter, reflecting the impact of the Middle East conflict and last year’s corruption scandal.

Gross domestic product (GDP) grew by 2.3% in the April-to-June period, the slowest since the pandemic. In the first half, GDP expanded by 2.6%, below the government’s 3.5%-4.5% target for 2026.

In the second quarter, investment commitments were approved by eight out of the 16 IPAs: Philippine Economic Zone Authority (PEZA), the Bases Conversion and Development Authority (BCDA), Board of Investments (BoI), Clark Development Corp. (CDC), Clark International Airport Corp. (CIAC), Subic Bay Metropolitan Authority (SBMA), Authority of the Freeport of Bataan and the BOI-Bangsamoro Autonomous Region in Muslim Mindanao (BoI-BARMM).

PEZA approved P79.16 billion worth of investment pledges in the second quarter, accounting for 68.71% of the total.

This was followed by the BCDA with P22.28 billion worth of investment pledges (19.34%) share, BoI with P9.28 billion (8.1% share), and CDC with P2.78 billion (2.42% share).

CIAC also approved investment pledges worth P781.07 million (0.68% share), followed by SBMA with P537.19 million (0.47%), Bataan freeport with P264.06 million (0.23%), and BoI-BARMM with P118.32 million (0.1%).

The Aurora Pacific Economic Zone and Freeport Authority, Bangsamoro Economic Zone Authority, Cagayan Economic Zone Authority, John Hay Management Corp., Phividec Industrial Authority, Philippine Pharmaceutical Manufacturers Association, Tourism Infrastructure and Enterprise Zone Authority, and the Zamboanga City Special Economic Zone Authority did not report any investment pledges in the second quarter.

In the April-to-June period, about 68.4% or P78.71 billion of the total approved foreign investments will go to the manufacturing sector.

Investment pledges for the electricity, gas, steam, and air-conditioning supply reached P8.81 billion or 7.7% of the total, followed by mining and quarrying with P5.8 billion or 5% of the total.

During the period, the Cordillera Administrative Region accounted for 48.4% or P55.74 billion of investment pledges, followed by Central Luzon at 32% or P36.81 billion, and Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) at 12.8% or P14.75 billion.

In the second quarter, the total approved investments from both foreign and Filipino nationals reached P541.51 billion, a 73.1% increase from the P312.87 billion reported in the second quarter of last year.

“Approved investments for the second quarter of 2026 are expected to generate a total of 32,167 employment, reflecting a 21.9% decline from the 41,203 employment expected in the same period of 2025,” the PSA said.

Of this, 27,266 jobs are expected to be generated from approved projects with foreign interest.

In the six months of the year, foreign investment approvals jumped by 76.18% to P169.98 billion from P96.48 billion in the same period a year ago.

The top three recipients of foreign investments in the six-month period include PEZA (P99.12 billion), BCDA (P28.48 billion), and BoI (P14.52 billion).

Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said it may take a while for these foreign investment pledges to translate to actual jobs.

“Foreign investment pledges will likely keep growing on paper, but that growth is being driven by a handful of large, capital-intensive projects rather than a broad recovery in investor confidence,” he said in a Facebook Messenger chat.

THE IT and Business Process Association of the Philippines (IBPAP) is banking on global capability centers (GCCs) to defend the country’s market share in the global information technology-business process management (IT-BPM) sector and drive growth in higher-value services.

“I think we are a world leader in IT-BPM, along with India. We just need to protect our existing market share and hopefully grow it towards the higher-value spectrum of jobs,” IBPAP President and Chief Executive Officer Jonathan “Jack” R. Madrid said in an interview aired on Money Talks with Cathy Yang on One News on Wednesday.

GCCs are wholly owned offshore operations established by multinational companies in markets such as the Philippines, where they transfer certain business functions previously handled at their headquarters. These perform business functions for their parent companies, including IT, finance and human resources.

Mr. Madrid said the Philippines is the second-largest market for GCCs after India.

“I think the growth in GCCs is continuous,” he said. “The Philippines is a solid No. 2 and is the natural alternative to these multinationals because of our strength in IT-BPM.”

The Philippines is well-positioned to attract GCCs across sectors like banking, financial services, insurance, and healthcare, Mr. Madrid said. The country hosts about 200 GCCs.

While the country remains a premier IT-BPM destination, he noted competition is intensifying due to emerging hubs like Egypt, South Africa, Poland, and Colombia.

The IBPAP recently lowered its revenue and employment targets for 2028 amid intensifying global competition and the growing adoption of artificial intelligence (AI), which is displacing some manual roles.

Under the IBPAP roadmap’s downside scenario, the IT-BPM industry could reach $43.3 billion in revenues and 1.85 million in AI-enabled workers by 2028.

Meanwhile, the industry is expected to generate $50.5 billion in revenues and boost its headcount to 2.14 million by 2028 under a best-case scenario.

These new figures were a downgrade from IBPAP’s earlier forecast, which projected $59 billion in revenues and a workforce of 2.5 million full-time employees (FTE) by 2028.

Mr. Madrid said the recalibrated targets do not mean there is a decline in competitiveness of the Philippine IT-BPM industry.

“The more tempered forecast is a result of macroeconomic factors. Locators have not stopped, but maybe they are taking longer to decide on offshoring services to India and the Philippines,” he said.

“It has nothing to do with the competitiveness of the Philippines or any other constraints,” Mr. Madrid added.

Meanwhile, he said the bright outlook for the Philippines’ exports of semiconductors and electronic goods could convince foreign companies to locate their higher-value services in the country.

“While there is maybe no direct connection, I think we can take advantage of the stronger electronics growth rate and maybe convince those multinationals to consider some services — whether it’s in analytics, logistics, cybersecurity, or finance — to be delivered in the Philippines on top of the assembly and design of chips,” Mr. Madrid said.

The country’s semiconductor and electronic exports are projected to reach $54 billion this year from $49.64 billion in 2025, driven by the growing demand for tech components needed to power data centers and AI models, according to the Semiconductor and Electronics Industries in the Philippines Foundation, Inc.

The Philippines is looking to move up the electronics value chain beyond basic assembly to lessen its reliance on traditional service exports like IT-BPM amid global uncertainties.

Despite external headwinds and intensified competition, the Philippines remains a preferred destination for outsourcing activity, Mr. Madrid said.

“I think global customers still want a Filipino digital worker or agent to solve their issues,” he noted.

For 2026, IT-BPM revenues are projected to reach $42.3 billion from $40 billion in 2025. The industry’s total headcount is expected to rise to 1.96 million FTEs from 1.9 million last year.

IBPAP also expects industry revenues to grow to $45.3 billion in revenues in 2027, with FTEs projected to reach 1.99 million.

THE PHILIPPINES could remain below its growth potential for longer even with the government’s catch-up measures if it does not address the structural issues that are eroding its economic foundation, GlobalSource Partners said.

In a commentary, GlobalSource country analysts Diwa C. Guinigundo and Wilhelmina C. Mañalac said the government should focus on rebuilding its capacity to create sustainable conditions that support investment and boost productivity, not on merely reaching its growth targets.

“A stronger second half would certainly be welcome. But the real test of economic management is not whether GDP (gross domestic product) can be pushed back toward 4% for a few quarters,” Mr. Guinigundo and Ms. Mañalac said on Tuesday.

“It is whether the government can restore the conditions for sustained, investment-led, and productivity-driven growth. Otherwise, the Philippines should prepare not merely for another disappointing GDP number, but for a more persistent period of disappointing, but entirely expected, economic growth,” they added.

The economy saw its worst performance since the pandemic after expanding by only 2.3% in the second quarter from 2.8% in the first quarter and 5.4% a year earlier.

Public construction contracted in the second quarter amid the lingering fallout from the flood control graft scandal, worsening the decline in investment, while elevated inflation kept household spending subdued and further weighed on economic activity.

In the first half, GDP expanded 2.6%, below the government’s 3.5%-4.5% full-year goal.

Department of Economy, Planning, and Development Secretary Arsenio M. Baliscan earlier said the economy would have to expand by at least 4.4% in the second semester to achieve the lower end of the target.

The GlobalSource analysts noted that hitting even the lower end of this year’s growth target is a tough task, with compounding governance issues and global energy shocks keeping economic momentum weak.

Mr. Guinigundo and Ms. Mañalac said 4.4% growth in the second half may be achievable “in numbers” but requires a faster and broad-based rebound across the economy.

“That is possible in numbers. But economics is not merely arithmetic,” they said. “It would require a substantial turnaround in investment, stronger household demand, a revival of business confidence, continued export growth and much faster execution of government programs.”

The National Government has vowed to ramp up its spending and project implementation, particularly on infrastructure, to compensate for the slowdown caused by last year’s flood control mess.

This came on the back of still muted infrastructure spending, with the latest data showing a 42.9% decline to P269.4 billion as of May from P471.5 billion a year ago. Infrastructure spending has fallen for an 11^th consecutive month on an annual basis.

According to the government, infrastructure and other capital outlays could decline by 15.1% year on year to P931.54 billion this year from P1.1 trillion in 2025. It could rise slightly in 2027 but remain under a trillion, it added.

However, Mr. Guinigundo and Ms. Mañalac said the so-called catch-up measures are insufficient to resolve deep-seated structural gaps such as policy uncertainty, educational divide, food and energy insecurity, and unstable governance.

“This is where the government’s economic narrative needs to become more ambitious,” they said. “The Philippine economy does not merely need more spending in the second half of the year. It needs a stronger foundation for private investment and productivity.”

The GlobalSource analysts said the government must prioritize tackling the country’s investment environment, flagging longer term risks from declining gross capital formation.

“Investment is what expands productive capacity. It creates jobs, improves productivity, introduces new technology and raises future potential output,” they said. “When investment contracts sharply, the consequences extend well beyond the quarter in which the decline is recorded.”

Gross capital formation, the economy’s investment component, dropped by 9.2% in the second quarter. This was steeper than the 3.1% contraction in the previous quarter and marked a reversal of the 0.91% growth a year ago.

“The Philippine government’s proposed response, such as faster infrastructure spending and catch-up programs, may help produce a second-half rebound, but it will not by itself address the deeper structural weaknesses,” Mr. Guinigundo and Ms. Mañalac said.

“Restoring sustained growth requires rebuilding investor confidence, accelerating legitimate public investment without compromising anti-corruption efforts, improving the regulatory and permitting environment, strengthening education and human capital, addressing food and energy vulnerabilities, and pursuing a clearer industrial policy focused on productivity and higher-value investment,” they added.

PRICE PRESSURES
Meanwhile, Nomura Global Markets Research kept its headline inflation forecast at 5.1% for 2026 but sees room for more policy rate hikes amid the spillovers of high energy prices.

Nomura research analysts Euben Paracuelles and Nabila Amani said they continue to see lingering pressures from the oil shock feeding into other commodities, though they held their full-year core inflation estimate at 3.9%.

“In our view, headline inflation has already peaked, partly underpinned by our crude oil price assumption, but core inflation has not, as we expect persistent second-round effects from energy prices,” they said in an Aug. 11 report.

Headline inflation eased for a third straight month to 6.2% in July, while core inflation cooled for the first time in eight months to 4.2%. Both remain well above the central bank’s 3% target.

Mr. Paracuelles and Ms. Amani said the Monetary Board may still raise its benchmark rate by 25 basis points (bps) each during its Aug. 27 and Oct. 22 meetings.

If realized, this would bring the BSP’s key policy rate to 5.25%.

“The latest CPI (consumer price index) inflation reading is unlikely to reduce BSP’s concerns but justifies its preference for a measured approach to its hiking cycle,” the Nomura analysts said.

This also came even after Nomura slashed its GDP growth forecast last week for the Philippines to 3.8% from 4.6% for this year following the weaker-than-expected print in the April-to-June period.

Mr. Paracuelles and Ms. Amani said they are banking on a second-half recovery driven by low base effects and potentially increased government spending but cautioned against risks from political uncertainty and the looming “Super El Niño.”

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. has left the door open for further hikes to bring inflation back to their target but noted that the tepid second-quarter growth print eased some pressure off their tightening prospects.

Mr. Remolona said inflation remains their top consideration but noted that they do not ignore growth concerns in adjusting their monetary policy to maintain price stability.

The Monetary Board has so far delivered two 25-bp hikes since it began tightening in April, with the benchmark interest rate now at 4.75%

THE NATIONAL GOVERNMENT (NG) expects value-added tax (VAT) and related sales tax collections to rise by 12.8% in 2027, outpacing overall tax revenue growth despite the current weakness in household consumption.

The 2027 Budget of Expenditures and Sources of Financing (BESF) showed that the VAT and related sales tax collections are expected to increase to P860.03 billion next year from the P762.42-billion program for 2026.

The tally covers VAT and related sales taxes collected by the Bureau of Internal Revenue (BIR), net of VAT refunds, but excludes VAT on imports collected by the Bureau of Customs (BoC).

Overall tax revenues are projected to grow by 9.2% to P4.85 trillion in 2027 from the P4.44-trillion program for 2026.

Taxes on domestic goods and services, which include VAT, excise taxes, and taxes on selected services, are projected to jump by 11.3% to P1.75 trillion in 2027 from the P1.57-trillion program for 2026. The P177.18-billion increase would account for 43.3% of the projected P409.23-billion rise in overall tax revenues.

The projected P97.61-billion rise in VAT and related sales tax collections next year would account for 23.9% of the overall increase in tax revenues and 55.1% of the increase in taxes on domestic goods and services.

VAT would also post the fastest growth among the components of taxes on domestic goods and services.

Excise tax collections are projected to jump by 8.9% to P380.86 billion next year, while taxes on selected services are seen increasing by 9.1% to P164.39 billion.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said the projected increase in tax revenues assumes faster household consumption and economic activity in 2027.

“It is achievable if domestic demand and imports recover next year. It likely assumes stronger household consumption, firmer business activity, and better tax administration and compliance,” he told BusinessWorld via Viber.

Mr. Rivera said the Development Budget Coordination Committee earlier attributed the higher revenue targets for 2027 to tax reforms, digitalization, and enforcement.

For 2027, the government projects revenues to go up by 8.3% to P5.21 trillion, equivalent to 15.7% of gross domestic product (GDP).

“So, yes, the target does imply an expectation that domestic demand improves in 2027, but not necessarily a consumption boom. Part of the increase can also come from better collection efficiency and a broader tax base,” he added.

However, Mr. Rivera said the revenue outlook faces risks from weaker-than-expected consumption, slower investment, softer imports, and another external shock that keeps growth subdued.

The BESF projections already incorporate proceeds from legislated tax reform measures. These measures are projected to have a net revenue impact of P31.96 billion in 2027, up from the P29.47-billion program this year.

VAT on digital services is projected to generate P24.67 billion, the largest amount among these measures, while the Rationalization of the Mining Fiscal Regime and the excise tax on pickup trucks are expected to yield P6.1 billion and P7.44 billion, respectively.

These gains would be partly offset by estimated revenue losses of P4.61 billion from the Capital Markets Efficiency Promotion Act and P1.65 billion from the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act.

However, the Department of Budget and Management said they do not yet account for the proposed tax-relief and revenue-generating measures under the Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability tax package.

Estimates by the Department of Finance showed that the proposed measures would generate an average of P47.94 billion in net additional revenues annually from 2027 to 2030.

BIR COLLECTIONS
Meanwhile, the Bureau of Internal Revenue collected P2.003 trillion from January to July, exceeding its P1.99-trillion target for the period by P13.53 billion or 0.68%. The seven-month tally was 5.4% higher than a year earlier.

BIR Commissioner Charlito Martin R. Mendoza said the agency had already collected around 60% of its full-year target for 2026, reflecting improving taxpayer compliance and sustained collection efforts.

For July alone, gross collections reached P358.44 billion, exceeding the P336.07-billion target by P22.37 billion or 6.66% and 5.73% higher than a year earlier.

“These results show that better taxpayer service, clearer rules, and effective enforcement can support stronger compliance and collection,” Mr. Mendoza said.

The BIR said its reform agenda includes simplifying tax rules and processes, expanding digital services, improving taxpayer assistance, strengthening audit safeguards, and enforcing tax laws against deliberate noncompliance.

Under the BESF, the BIR is projected to collect P3.736 trillion in 2027, up 10.1% from the P3.393-trillion program for 2026.

PESO DEPRECIATION
Meanwhile, the BESF showed that a P1 depreciation against the US dollar could narrow the NG’s 2027 budget deficit by P5.7 billion, as higher revenues are expected to more than offset increased disbursements.

The government expects the budget deficit to widen in nominal terms to P1.695 trillion in 2027 from the P1.659-trillion program this year. However, the deficit-to-GDP ratio is projected to fall to 5.1% from 5.4%.

The sensitivity analysis showed that a P1 depreciation would increase revenues by P10.6 billion while raising disbursements by P4.9 billion.

The sensitivity estimate measures the effect of a P1 change from the government’s baseline exchange rate assumption. The government assumes a peso-dollar exchange rate of P60 to P62 from 2026 to 2029.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said a weaker peso would increase the peso value of interest payments on US dollar- and other foreign currency-denominated debt.

On the revenue side, he said the increase would be “largely linked to import tax-related revenues, especially at the BoC.”

According to the BESF, import VAT collections are projected to rise by 5.6% to P692.31 billion in 2027 from the P655.89-billion program this year.

Mr. Ricafort said the larger impact on revenues than on disbursements could partly reflect the government’s domestic-heavy debt portfolio.

“A bigger share of domestic borrowings in the total borrowing mix in recent years may have helped,” he added.

The NG’s outstanding debt rose by 2.8% to P19.07 trillion at end-June from P18.55 trillion at end-May. Domestic obligations accounted for 67.33% of the debt stock, while the remaining 32.67% came from external sources.

The government plans to raise P3.304 trillion in gross borrowings in 2027, a 20.9% increase from the P2.734-trillion program this year.

Of the proposed gross borrowings, 72.3% would be from domestic sources. Gross domestic borrowings are projected to increase by 24.5% to P2.389 trillion from this year’s P1.918-trillion program.

The remaining P914.982 billion would be raised from external sources, up 12.2% from the P815.505-billion program for 2026.

Performance cannot be the only defining characteristic of a flagship business laptop. Executives also expect mobility, enterprise-grade security, dependable battery life, artificial intelligence (AI) capabilities, and a design that looks as polished at the boardroom table.

ASUS has built the ASUS ExpertBook Ultra around those expectations.

Positioned as the company’s flagship business laptop, the ASUS ExpertBook Ultra runs on up to Windows 11 Pro, up to Intel Core Ultra X9 Series 3 processor, Intel Arc graphics, up to 64 gigabytes of Low Power Double Data Rate 5X memory, a 2-terabyte Peripheral Component Interconnect Express 5.0 solid-state drive, and a dedicated 50 trillion operations per second (50 TOPS) neural processing unit (NPU) for on-device AI workloads.

The business laptop also features a 14-inch 3K Tandem Organic Light-Emitting Diode (OLED) display protected by a Corning Gorilla Matte; a comprehensive set of ports, including dual Thunderbolt 4 and Wi-Fi 7 connectivity, so you can easily work from anywhere.

But these specifications tell only part of the story. Here are 10 ways the ASUS ExpertBook Ultra distinguishes itself as a business laptop for decision-makers.

1. Work almost anywhere with ultraportability

Mobility remains one of the defining requirements for modern executives.

The ASUS ExpertBook Ultra weighs as little as 0.99 kilogram for selected configurations and measures only 10.9 millimeters thick, making it one of the company’s lightest commercial laptops. The magnesium-aluminum chassis further maintains structural rigidity and contributes to the laptop’s reduced weight.

For executives searching for a 14-inch business laptop, portability increasingly matters as much as processing capability. Carrying a lighter device may likewise reduce their fatigue during important tasks.

2. Military-grade durability

Executive schedules often expose laptops to frequent changes of environment and heavy daily use. Durability matters even more because damaged equipment creates unnecessary interruptions.

The ASUS ExpertBook Ultra passed 24 MIL-STD-810H military-standard test procedures along with more than 150 internal ASUS durability tests. The laptop also features reinforced input-output ports, a spill-resistant keyboard, strengthened hinges, scratch-resistant materials, and Nano Ceramic technology to resist daily wear.

The exterior is designed to maintain its finish through repeated use, helping the laptop remain presentable during client meetings and executive presentations. Rather than focusing solely on appearance, ASUS places durability as part of long-term reliability.

3. All-day battery life for greater productivity

The ASUS ExpertBook Ultra incorporates a 70-watt-hour battery capable of delivering between 18 and 24 hours of use depending on workload. Under specific conditions, it may even extend up to 26 hours.

The laptop also supports USB Type-C charging, which allows compatible power banks and USB-C chargers to supplement power while traveling.

The flexibility of the ASUS ExpertBook Ultra may be just as valuable as its battery capacity for professionals looking for a long-battery-life laptop.

4. Display designed for demanding work environments

The ASUS ExpertBook Ultra features a 14-inch 3K Tandem OLED touchscreen with a 2880-by-1800 resolution, variable refresh rates from 30 to 120 hertz, VESA DisplayHDR True Black 1000 certification, and up to 1,400-nit HDR brightness.

Meanwhile, the anti-glare surface is intended to reduce reflections in brightly lit conference rooms while preserving image clarity.

Executives, therefore, may benefit from sharper visuals and improved readability across different environments.

5. Listen with premium audio systems

The ASUS ExpertBook Ultra features a six-speaker Dolby Atmos sound system with Smart Amplifier technology. Combined with AI Noise-Canceling Technology and dual multi-array microphones that support speech recognition, the audio system is designed to improve communication during hybrid meetings.

Through its integrated audio capabilities, the system delivers fuller sound with greater clarity than conventional business laptops, making long meetings and quick calls easier to hear across boardrooms without relying on external speakers.

6. Reflection of professionalism

The ASUS ExpertBook Ultra combines an all-metal magnesium-aluminum chassis with Nano Ceramic technology that resists scratches, fingerprints, and stains while maintaining a refined appearance.

The company also incorporates Expert Lumi, an ambient lighting feature that provides visual indicators during use and complements the laptop’s premium design language.

Available in Morn Grey and Jet Fog, the ASUS ExpertBook Ultra is designed to project confidence in executive settings without sacrificing portability or durability.

7. Access to direct AI-powered workloads

On top of its reliable features, the ASUS ExpertBook Ultra is a certified Copilot+ PC, designed to perform a higher level of AI workloads and gives users access to productivity features such as:

• AI live video captions during meetings
• AI-enhanced video and audio quality with automatic framing, background blur, portrait lighting, and voice focus
• Click to Do to automatically search the web with Copilot
• Recall past content with screen snapshots

The ExpertBook Ultra also features ASUS MyExpert, an on-device AI packed with a multitude of AI features for businesses: AI meeting minutes, file search, and live video translation.

With ASUS MyExpert, professionals can easily access AI assistance to boost productivity and enhance workflow efficiency in everyday work. Moreover, on-device AI provides enhanced data security, as information is processed and stored locally, without heavy reliance on the cloud.

For executives and businesses, this means AI that works alongside them on the ExpertBook Ultra — summarizing meetings, finding files instantly, and breaking down language barriers in real time with enhanced security so executives can dedicate more time to strategic decision making.

8. Conduct meetings with AI assistance

Meetings often generate action items and decisions that require accurate documentation. Missing even one detail may delay execution.

The ASUS ExpertBook Ultra addresses this through ASUS MyExpert, which includes AI ExpertMeet. The feature can generate meeting and video transcripts, summarize discussions, and organize key points through on-device AI processing.

This aspect reduces time spent reconstructing conversations after they end. Instead of relying entirely on handwritten notes, executives can now record, review, and share summarized discussions immediately after the meeting concludes.

9. Communicate across languages

Business expansion requires conversations across multiple markets and languages. AI ExpertMeet supports live AI translated subtitles when watching videos and in online meetings, so participants can better follow multilingual discussions without depending on external translation services.

Integrated language assistance may simplify communication during virtual meetings and help executives remain focused on the discussion itself rather than language differences.

10. Protect confidential information

Executive devices frequently contain plans, reports, road maps, legal documents, and customer information. That is why many business leaders still remain cautious about sending confidential information online.

With AI ExpertMeet, a confidential watermark function marks sensitive documents during meetings.

The ASUS ExpertBook Ultra also incorporates enterprise-focused protections through ASUS ExpertGuardian, including Trusted Platform Module 2.0, dual self-healing Basic Input/Output System, Microsoft Secured-core PC support, an ASUS Security Processor, a webcam privacy shutter, and a security architecture aligned with the National Institute of Standards and Technology Special Publication 800-193 process.

These capabilities target organizations and executives that prioritize cybersecurity, data privacy, and network security.

From the first meeting of the day up to the final decision, executives need a device that can keep pace with their demands. ASUS ExpertBook Ultra is designed to support that workflow with its AI-powered productivity tools, enterprise security, premium portability, and commercial-grade sturdiness.

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South Asialink Finance Corp. (SAFC), one of the Philippines’ leading financing companies, is strengthening its collections operations by adopting AI Rudder’s conversational AI technology. As its customer base continues to grow, SAFC is investing in intelligent automation to enhance collection efficiency, improve customer outreach, and enable its collections teams to focus on higher-value interactions.

To support these efforts, SAFC has partnered with AI Rudder, a Singapore-headquartered enterprise conversational AI company, to deploy its AI Voice Agent solution. Designed specifically for high-volume customer engagement, AI Voice Agent conducts natural, two-way voice conversations with customers, enabling timely payment reminders, account follow-ups, and collections outreach at scale. Powered by advanced conversational AI, the solution delivers real-time, human-like interactions while ensuring consistent communication across every customer touchpoint.

By integrating AI Voice Agent into its collections workflow, SAFC is enhancing the efficiency of routine collections activities while allowing its collections specialists to focus on more complex cases that require empathy, negotiation, and human judgment. The solution also helps improve operational productivity, increase customer reach, and provide a more consistent and convenient experience throughout the collections journey.

The collaboration reflects SAFC’s ongoing commitment to modernizing its collections strategy through innovation. By leveraging conversational AI, the company is building a more agile and scalable collections operation that supports sustainable business growth while maintaining a customer-first approach.

“Our customers expect timely, convenient, and respectful communication throughout their financial journey. As our business continues to expand, we are committed to adopting technologies that help us strengthen our collections operations while delivering a better customer experience. This partnership with AI Rudder reflects our commitment to investing in the right tools that allow us to better serve our customers and operate more efficiently,” said Maricel D. Dejongoy, SAFC President and Chief Executive Officer.

“We’re excited to partner with SAFC as they transform their collections operations with conversational AI. Collections today are no longer just about improving operational efficiency, they’re also about creating better customer experiences through timely, personalized, and empathetic engagement. Our AI Voice Agent helps financial institutions scale their outreach while empowering human agents to focus on conversations where they can create the greatest value,” said Bianca Cheng, Chief Marketing and Revenue Officer of AI Rudder.

The collaboration between SAFC and AI Rudder reflects the growing adoption of conversational AI across the financial services industry. By combining SAFC’s expertise in consumer financing with AI Rudder’s advanced AI Voice Agent technology, both organizations are working to build smarter, more efficient, and customer-centric collections that support stronger business outcomes and long-term customer relationships.

About SAFC

SAFC (South Asialink Finance Corporation) is one of the leading non-bank financial institutions in the Philippines. For over two decades, it has empowered Filipinos by providing accessible and reliable financing solutions. With a nationwide network of around 100 branches and growing, SAFC plays a vital role in driving growth across communities, making financing more accessible to Filipinos who need it most. It serves as a trusted partner to micro, small, and medium enterprises (MSMEs), supporting business expansion and helping create meaningful economic opportunities. For more information, visit www.safc.com.ph.

About AI Rudder

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The property developer cut its capex budget to P50 billion in May after first-quarter profit declined. In February, it announced a spending plan of P70 billion to P80 billion.

At a media briefing on Monday, ALI President and Chief Executive Officer Anna Ma. Margarita Bautista-Dy said the company had decided to increase the budget.

“We’re confident to bring it back up to about P60 billion,” she said.

Ms. Bautista-Dy said the revision was tied to projects ALI plans to complete this year.

“We want to finish all the projects that we have laid out for this year. We felt that because these are such high-conviction projects for us and that they were all very strategic, we decided to increase the capex in order for us to deliver on this. Both on the leasing side and on the residential side,” she said.

ALI is targeting the delivery of 13,000 residential units and 200,000 square meters (sq.m.) of mall space this year.

Ms. Bautista-Dy said the company had delivered 6,000 residential units in the first half.

“We’ve delivered 6,000 in the first half — so these are buyer commitments. We’re on track,” she said.

The company also plans to deliver 100,000 sq.m. of mall space in 2027.

ALI plans to launch about P5 billion worth of residential projects in the second half, primarily horizontal developments.

“We do have a launch pipeline for the second half. We’re looking at launching around P5 billion, primarily horizontal,” ALI Chief Commercial Officer Mike Jugo said.

The company said residential sales for the first half stood at about P53 billion despite limited launches.

Ms. Bautista-Dy said unsold residential inventory had declined to about 15 months, equivalent to roughly P110 billion worth of units, from 18 months earlier in the year.

“We’re now 15 months, which is practically our pre-pandemic levels,” she noted.

ALI said its long-term strategy includes building its recurring-income portfolio to balance the cyclical nature of property development.

Mariana Beatriz E. Zobel de Ayala, ALI group head for leasing and hospitality, said the company considers transport and accessibility in planning each mall development.

She cited Trinoma’s connections to Light Rail Transit Line 1 (LRT-1), Light Rail Transit Line 2 (LRT-2), Metro Rail Transit Line 3 (MRT-3), and the future Metro Rail Transit Line 7 (MRT-7), as well as Ayala Malls Manila Bay’s direct links to the Parañaque Integrated Terminal Exchange (PITX), as examples of transit-oriented development.

The company’s pipeline includes Ayala Gatewalk in Cebu, with an office component scheduled to open in December 2026.

Still, Ms. Bautista-Dy said the economic environment remains uncertain.

“I mean, the war hasn’t ended. GDP (gross domestic product) [growth], actually, for the second quarter is even slower than the first quarter. So, we realized that this is going to continue to be a challenging second quarter,” she said. 

She also said the company expects its second-half performance to be broadly in line with the first half.

ALI’s net income fell 19% to P11.5 billion in the first half from P14.2 billion a year earlier, while revenue declined 9.75% to P75 billion from P83.1 billion.

For the second quarter, net income stood at P6.1 billion, while revenue reached P37.5 billion.

ALI’s capex totaled P39.5 billion in the first half, down 2% from a year earlier.

AYALALAND LOGISTICS
Meanwhile, AyalaLand Logistics Holdings Corp. (ALLHC) said in a statement on Tuesday that consolidated revenue reached P1.6 billion in the first half of 2026, while net income stood at P11 million, as higher leasing revenue partly offset lower industrial lot sales.

Revenue from industrial lot sales fell 44% to P489 million during the six-month period.

Sales reservations at ALLHC’s Technopark developments, however, rose 11% to P791 million. The company said the reservations will be recognized as revenue as customers meet payment milestones.

Leasing revenue increased 13% to P1.1 billion, driven by higher revenue from warehouse and cold storage facilities.

Warehouse leasing revenue rose 9% to P391 million, while cold storage revenue nearly doubled to P243 million, up 99% from a year earlier. ALLHC attributed the increase in cold storage revenue to higher utilization across most of its facilities.

Commercial leasing revenue, meanwhile, fell 6% to P438 million amid softer occupancy during the period.

At the local bourse on Tuesday, ALI shares rose 0.63% to P16.10 each, while ALLHC shares closed unchanged at P1.21 each. — Alexandria Grace C. Magno and Juliana Chloe A. Gonzales

THE PHILIPPINE government’s outstanding debt is projected to hit a record P21.48 trillion by end-2027, with higher borrowing largely driven by increased principal repayments and continued fiscal deficits, according to a copy of the 2027 Budget of Expenditures and Sources of Financing.

The debt stock is expected to rise 8.7% from the P19.77 trillion projected for end-2026, which is 11.6% higher than the P17.71 trillion posted at end-2025.

The government plans to raise P3.3 trillion in gross borrowings next year, 21% more than this year’s P2.73-trillion program. The planned borrowing is equivalent to 46% of the proposed P7.2-trillion national budget.

Domestic sources will account for 72% of total gross borrowings, with domestic debt issuance projected at P2.39 trillion, up 24.5% from this year. External borrowings are expected to reach P914.98 billion, 12.2% higher than the 2026 program.

The increase in gross borrowing, however, is largely due to the government’s rising debt repayments rather than a sharp increase in fresh financing needs.

Principal amortization is projected to jump 51.5% to P1.59 trillion next year from P1.05 trillion in 2026. The P540.6-billion increase in repayments accounts for about 95% of the P570.1-billion rise in gross borrowings.

As a result, net financing, which excludes principal repayments, is projected to increase by just 1.8% to P1.71 trillion.

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the increase in debt would likely reflect continued fiscal deficits and the financing requirements of a bigger national budget.

“Borrowing is needed not only to finance new expenditures but also to refinance maturing obligations,” he told BusinessWorld via Viber.

Mr. Asuncion said the debt level remains manageable for now, but its sustainability depends on economic growth, revenue performance, and the government’s ability to narrow its fiscal deficit.

“While the debt stock is projected to reach a record level in nominal terms, debt sustainability is better assessed relative to the size of the economy,” he said.

“The key challenge is ensuring that debt grows more slowly than the economy over the medium term and that rising interest costs do not crowd out productive spending,” he added.

The government projects revenues to rise 8.3% to P5.21 trillion in 2027, while disbursements are expected to increase 6.7% to P6.9 trillion.

The budget deficit is projected at P1.695 trillion, 2.2% higher than the revised P1.659-trillion ceiling for 2026. Despite the wider deficit in nominal terms, its share of gross domestic product (GDP) is expected to narrow to 5.1% from 5.4%.

The outlook comes as economic growth has weakened. Philippine GDP expanded by 2.3% in the second quarter, bringing first-half growth to 2.6%, amid weaker public construction and subdued household spending.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said the key issue is not the size of the debt alone, but whether borrowings generate stronger economic growth, create jobs and raise tax revenues.

“If economic growth outpaces debt accumulation, the fiscal position remains manageable,” he said in a Viber message. “Otherwise, fiscal pressures could build over time.”

The National Government’s (NG) outstanding debt rose 2.8% to P19.07 trillion at end-June from P18.55 trillion a month earlier. Year on year, the debt stock increased 10.41%.

The end-June debt level pushed the debt-to-GDP ratio to 66% in the second quarter, its highest since 2004, from 65.2% in the first quarter and 63.2% at end-2025.

DEUTSCHE BANK Research cut its Philippine growth forecast for 2026, saying the economy might only reach the lower end of the government’s target even as activity is expected to recover in the second half.

In a report dated Aug. 7, Deutsche Bank Economist Junjie Huang lowered the bank’s gross domestic product (GDP) growth forecast to 3.5% from 3.7%, following weaker-than-expected second-quarter growth.

The economy expanded by just 2.3% in the second quarter, slowing from 2.8% in the first quarter and 5.4% a year earlier. It was the weakest quarterly growth since the COVID-19 pandemic.

The result was also below the 2.8% median forecast from a BusinessWorld poll of 21 economists and analysts. Deutsche Bank had expected second-quarter growth of 2.5%.

Economy Secretary Arsenio M. Balisacan attributed the slowdown largely to a contraction in public construction, which weighed on investments, and weaker household spending amid elevated inflation.

He said the economy was showing early signs of recovery but would need to grow by at least 4.4% in the second half to reach the lower end of the government’s 3.5%-4.5% full-year target.

The economy grew by an average of 2.6% in the first half.

Mr. Huang said the expected second-half recovery would depend largely on faster infrastructure spending and government subsidies to help households cope with higher prices.

“[Second-half] growth of 4.4% will be primarily supported by the expected acceleration in infrastructure spending, while government subsidies would help to ease the burden of higher prices on consumers,” he said.

The recovery faces a significant hurdle in weak government infrastructure spending. Infrastructure outlays fell for an 11^th straight month in May, declining 35.3% year on year to P80.1 billion, based on the latest Department of Budget and Management data.

Infrastructure spending in the first five months also plunged 42.9% to P269.4 billion from a year earlier.

Bank of America (BofA) Securities was more cautious, keeping its 2026 growth forecast at 2.5% and its 2027 forecast at 3.5%.

“The rate of GDP growth in [the first half] is in line with our full-year 2026 forecast of 2.5%, which implies growth in [the second half] would be broadly similar,” said Jojo Gonzales, a research analyst at BofA’s research partner Philippine Equity Partners.

He said lower fuel prices and higher minimum wages could eventually support industrial activity and consumption, although their impact might only become visible toward the end of the year.

Meanwhile, Deutsche Bank expects inflation to ease but remain above the Bangko Sentral ng Pilipinas’ (BSP) target. It now sees inflation at 5.4% by yearend, down from its previous 6% forecast, and expects 2027 inflation at 4%, slightly below its earlier 4.1% projection.

Inflation eased for a third straight month to 6.2% in July as transport prices declined and food inflation stabilized. Year-to-date inflation stood at 5%, above the central bank’s 3% target and 4% ceiling.

Deutsche Bank expects inflation to continue easing through September on favorable base effects, particularly for food excluding rice. It also expects Brent crude to remain at $75-$80 per barrel through yearend.

Still, Mr. Huang warned that the Middle East war-driven oil shock continues to feed into domestic prices, with the Philippines’ price diffusion index remaining elevated at 82 in July, only slightly below June’s 83.

“This implies that 80% of the items in the Philippines’ CPI (consumer price index) basket by weight are seeing above-trend inflation,” he said, indicating that price pressures remain broad-based.

Deutsche Bank continues to expect two more 25-basis-point (bp) rate hikes, which would bring the policy rate to 5.25%, although it said the final increase could be delayed if inflation continues to ease.

BofA, meanwhile, expects one final 25-bp hike this month, which would mark the end of the BSP’s tightening cycle.

The Monetary Board has raised its benchmark rate twice this year by 25 bps, bringing it to 4.75% in June.

The BSP has three remaining policy reviews this year, scheduled for Aug. 27, Oct. 22 and Dec. 17.

RETAILERS are betting on a stronger second half of the year as the Philippine market absorbs the exit and closure of some brands, with the Christmas season expected to test whether consumer spending can recover after a difficult first half.

The retail environment has been marked by weaker foot traffic, higher operating costs and more cautious consumers, prompting companies to tighten inventory management, adjust their product offerings and seek growth in fresh brands, categories and locations.

Golden ABC Vice-President for Strategy and Operations Bryan Liu said brand entries and exits are a normal part of retail, but the pace of change underscores the need for retailers to remain flexible.

“Brands entering, brands leaving, stores opening and stores closing will always be a part of retail,” he told BusinessWorld on the sidelines of a national retail expo in Pasay City near the Philippine capital last week.

No Brand, the South Korean discount concept operated by Robinsons Retail Holdings, Inc., has left the Philippines, with all 11 standalone stores wound down by the end of June.

Mr. Liu said Golden ABC, which owns and operates the brands Penshoppe, OXGN, Forme, MEMO, Regatta and BOCU, had weaker conditions early in the second quarter as higher fuel prices weighed on consumers and spending became more concentrated. The company, however, began seeing more encouraging growth toward the end of the quarter.

The retailer remains optimistic about the third quarter and is preparing for the fourth quarter, traditionally a critical period for Philippine retailers because of Christmas spending.

“We have a saying every year in the company that Filipinos will never cancel Christmas,” Mr. Liu said.

Golden ABC plans collaborations across some of its brands in the third and fourth quarters, as well as holiday collections tailored to the local market.

PUMA Sports Philippines Country Manager Paolo Misa also expects a better second half despite a difficult first six months. He said foot traffic declined by double digits, although this has not translated into a similar decline in the company’s business.

‘TIGHT SHIP’
“I’m a bit more optimistic about the second half,” he told BusinessWorld at the same event, citing the company’s stronger merchandise and product offering.

PUMA plans to place greater emphasis on the fourth quarter, while keeping tighter control over inventory as consumer demand becomes harder to predict.

“You really have to run a tight ship,” Mr. Misa told BusinessWorld, adding that retailers with sufficient capacity and discipline could emerge stronger when market conditions improve.

At Primer Group of Companies, the outlook remains cautious but growth-oriented amid the war in Iraq and higher costs of necessities.

Regional Brand Manager Justine Thai said the company needs to remain agile and manage risks while pursuing expansion, including outside Metro Manila.

The group recently added Owala, a US reusable drinkware brand best known for insulated water bottles and tumblers, to its portfolio and continues to explore brands from international and regional markets.

It also sees potential in wellness as consumers spend more on sports, hobbies, and lifestyle activities.

RAFFCO International Trading Corp., which operates Plains & Prints, R.A.F., and Piccola by Plains and Prints, meanwhile, expects consumer spending to improve alongside greater political stability.

Co-founder and Vice-President Roxanne Farillas said she was concerned about the recent exits of brands from the Philippine market, saying a broader retail ecosystem could help boost the sector as local retailers compete with online marketplaces and other channels.

“It would be nice if we would be more in that particular field,” she said on the sidelines of the retail event. “It would be an opportunity for us to show that the retail scene in the Philippines is stronger.”

Virendra Prakash Sharma, founder and chief executive officer at PT Mitra Adiperkasa Tbk (MAP), likewise expects a stronger second half, pointing to the importance of the Christmas season.

“We believe the war should be over,” he told BusinessWorld. “And the second half is always more important for the Philippine market because of the Christmas season.”

Marks & Spencer (M&S) will resume operations in the Philippines under a franchise agreement with the Indonesian retail group, marking a return to the market after its earlier exit under a previous operator.

“We are optimistic about the Philippines,” Mr. Sharma said.

For retailers, the second half will therefore be less about whether the market can grow, and more about which companies can adapt quickly enough to capture a recovery in consumer spending while managing costs, inventory and changing consumer preferences.