Archives: Business World Article

The Philippine economy is on track to bounce back this year as business confidence has begun to improve, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. said.

“It looks like it’s (confidence) beginning to come back,” the central bank chief said during a Management Association of the Philippines (MAP) event on Wednesday held in Taguig City. “Not as fast as we would like, but it’s coming back.”

“In our projections, we think that we’ll be back to normal by the second half of 2026,” he added.

Mr. Remolona noted that the loss of confidence amid the graft scandal stalled the country’s economic growth in the second half of 2025.

In the fourth quarter of 2025, the Philippine gross domestic product (GDP) grew by 3%, its slowest in 14 years (excluding the pandemic), as investments and spending slowed amid the flood control controversy.

This brought full-year economic growth to a post-pandemic low of 4.4%, undershooting the BSP’s 4.6% forecast and the government’s 5.5%-6.5% target.

However, recent indicators, such as the S&P Global Manufacturing Purchasing Managers’ Index (PMI) and the Philippine Stock Exchange index (PSEi), have signaled that business confidence is slowly returning and the economy may be on the way to recovery.

Latest data showed that the Philippines’ manufacturing PMI rose to a nine-month high of 52.9 in January from 50.2 in December.

The PSEi rose to a near seven-month high on Wednesday, even soaring above the 6,500 line during the session. The PSEi went up by 0.37% or 24.22 points to close at 6,498.82, its best finish in almost seven months or since it closed at 6,525.04 on July 14, 2025.

For 2026, the central bank projects GDP to expand by 5.4%.

However, Mr. Remolona said they are reviewing a potential revision to their growth forecast.

Speaking to reporters on the sidelines of the MAP event, Mr. Remolona said the revival of confidence, alongside inflation falling back to target, may have narrowed the central bank’s easing space.

Asked if the BSP can still afford to cut rates anew to support the economy, Mr. Remolona said: “It’s conceivable. Again, it’s based on the data. We have to review the data.”

The benchmark interest rate currently stands at 4.5%, the lowest in over three years.

The Monetary Board has so far delivered 200 basis points (bps) in cuts since it began its easing cycle in August 2024, including five straight 25-bp reductions last year.

Mr. Remolona noted that stabilizing inflation remains their priority in deciding on the monetary policy path.

“If we can maintain price stability, that will help with confidence,” he said.

In January, headline inflation came in at 2%, marking its comeback to the BSP’s 2%-4% target for the first time in nearly a year.

Inflation

Meanwhile, BSP Deputy Governor Zeno Ronald R. Abenoja said headline inflation may approach the 3% mark in the coming months before potentially breaching it by the second half of the year.

“If you look at the inflation path in our MPR (monetary policy report), it will move gradually close to 3% and then possibly a little above 3% by (the) second half,” he told reporters on the sidelines of the same event. “But after that, it will move closer to 3% again and then stabilize around that area.”

Mr. Remolona noted that he doesn’t mind inflation undershooting their target but said that an above-3% print worries him more.

The BSP expects headline inflation to average 3.2% by yearend, before easing to 3% in 2027. — Katherine K. Chan, Reporter

The Department of Trade and Industry (DTI) is looking to attract investments in aerospace manufacturing and services as well as sustainable aviation fuel, an official said.

“The Philippines has strong capabilities in areas of parts manufacturing and MROs (maintenance, repair, overhaul),” Trade Undersecretary and Board of Investments (BoI) Managing Head Ceferino S. Rodolfo told BusinessWorld. “These include machining, plastic injection, assembly, packaging, and delivery,” he added.

Mr. Rodolfo said the Philippines can take advantage of opportunities as the industry pursues decarbonization.

“With more than 140 nations pledging for the target of Net Zero by 2050, the Philippines also recognizes the significance of sustainable aviation fuel in the global aviation industry’s decarbonization,” he added.

Mr. Rodolfo noted the Philippines has more than 15 million metric tons of biomass, which can be used for sustainable fuel. These are from rice, corn, coconut, and cassava, among others.

The country also has abundant feedstock concentrated in Central Luzon, Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon), Western Visayas, Northern Mindanao, and Davao.

Mr. Rodolfo’s statement follows the participation of the country at the Singapore Airshow 2026 earlier this month, where the department facilitated business matching and target introductions with foreign investors, buyers, and attendees.

“DTI’s engagement at the airshow focuses on positioning the Philippines as a competitive location for aerospace manufacturing and services, including parts production, sub-assemblies, and MRO,” the Philippine Trade and Investment Center (PTIC)-Singapore said in a statement.

The DTI also advanced direct commercial discussions between Philippine firms and international aerospace companies.

“Singapore plays a central role in regional investment decision-making, with many Asia-Pacific manufacturing, MRO, and supply chain decisions taken by regional headquarters of global aerospace and aviation firms based here,” said PTIC-Singapore Commercial Counsellor Carla Regina P. Grepo.

During the event, she said that the PTIC-Singapore briefed aerospace and aviation companies on opportunities in aircraft parts manufacturing, sub-assemblies, and MRO in the Philippines.

“While some firms also referenced defense-related programs as part of their long-term outlook, the core discussions centered on commercial aerospace supply chains, procurement diversification, and expansion of MRO capabilities in Asia,” she added.

Citing data from the BoI, PTIC Singapore said that Philippine aerospace exports stood at USD 590.2 million in 2024, rising to USD 603.1 million in the first nine months of 2025. Major export markets included the US, Singapore, France, and China.

Although the country currently hosts Tier 1 and Tier 2 aerospace parts suppliers to Boeing and Airbus across industrial zones and airport-linked developments, the Philippines still face a lack of skilled workers.

To address this, Mr. Rodolfo said that the department has been working with human resource (HR) firms and relevant universities to explore potential areas of collaboration.

“The BoI is continuously engaging HR firms and workforce providers and has supported similar key players in the aerospace parts manufacturing sector, including Tier-1 companies like Collins Aerospace,” he said.

The BoI is also spearheading the Academe-Industry Matching (AIM!) Program, which aims to bridge the gap between education and industry needs.

“Through the AIM! campus roadshows, industry partners are able to increase awareness of the industries’ skills requirements and competencies, enabling high school students to have career options related to the featured industries,” Mr. Rodolfo said.

Apart from aerospace, the program also featured industries like information technology and business process management and electronics, among others.

Mr. Rodolfo also cited the role of Administrative Order No. 31 in advancing the aviation sector.

Issued in March last year, the order created the Philippine Semiconductor and Electronics Industry Roadmap as well as the Semiconductor and Electronics Advisory Council.

“Growing semiconductors and electronics through continued skills development will have a positive impact on the aviation sector,” he added.

Bases Conversion and Development Authority (BCDA), which was among the sponsors of the Philippine Pavilion at the Singapore Airshow, recently announced investment pledges from Lufthansa Technik Philippines.

BCDA President and Chief Executive Officer Joshua M. Bingcang earlier said that it received a proposal from the company for a USD 400-million MRO facility at the Clark Aviation Capital in Pampanga.

The company already operates an MRO facility at Ninoy Aquino International Airport. — Justine Irish D. Tabile, Senior Reporter

Net inflows of foreign direct investments (FDIs) into the Philippines hit a four-month high in November, even as inflows slipped year on year, the Bangko Sentral ng Pilipinas (BSP) said.    

Preliminary BSP data released on Tuesday showed that FDI net inflows dipped by 0.3% to USD 897 million in November from USD 900 million in the same month in 2024.

Month on month, inflows jumped by 39.7% from USD 642 million in October.

November saw the highest FDI inflows in four months or since USD 1.271 billion in July.

“Foreign direct investments into the Philippines posted net inflows of USD 897 million in November 2025,” the central bank said in a statement. “South Korea was the leading source of FDIs, with most inflows directed to the manufacturing industry during the month.”

Based on BSP data, investments in equity and investment fund shares soared by 71.6% to USD 187 million in November from USD 109 million a year ago.

Net investments in equity capital other than reinvestment of earnings more than tripled to USD 122 million in November, from the USD 35 million logged in November 2024.

This, as equity capital placements doubled year on year to USD 142 million from USD 71 million, while withdrawals dropped by 44.4% to USD 20 million from USD 36 million previously.

Meanwhile, reinvestment of earnings stood at USD 64 million, down by 12.7% from USD 74 million a year earlier.

Net investments in debt instruments fell by 10.2% annually to USD 711 million in November from USD 791 million a year ago.

According to the BSP, net investments in debt instruments include mainly intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines. The rest are investments made by nonresident subsidiaries or associates in their resident direct investors, or known as reverse investment.

SM Investments Corp. Group Economist Robert Dan J. Roces said the nearly flat year-on-year change in FDI net inflows reflects steady but still selective investor sentiment.

“(It) shows stabilization after a softer stretch,” he said in a Viber message. “Some delayed equity placements and reinvested earnings likely came through, which tells you investors are pacing commitments, not exiting.”

11-month slump

Meanwhile, FDIs went down by 22.1% to USD 7.077 billion at end-November from USD 9.084 billion in the same period last year.

“For the first eleven months of 2025, equity capital placements were sourced primarily from Japan, the United States, Singapore, and South Korea, and were channeled largely into the manufacturing, wholesale and retail trade, and real estate industries,” the central bank said. 

BSP data showed that investments in equity and investment fund shares reached USD 2.297 billion in the 11-month period, declining by 10.8% from USD 2.576 billion the year prior.

This, as net foreign investments in equity capital, excluding reinvestment of earnings, fell by 23.3% year on year to USD 1.144 billion during the period from USD 1.491 billion.

Of the total, placements dropped by 12.2% annually to USD 1.741 billion, while withdrawals rose by 21.1% to USD 596 million.

On the other hand, reinvestment of earnings edged up by 6.2% to USD 1.152 billion in the period ending November from USD 1.085 billion in the previous year.

However, nonresidents’ net investments in debt instruments of local affiliates amounted to USD 4.78 billion, down 26.6% from the USD 6.508 billion logged as of November 2024.

FDIs account for foreign investors’ investments in local businesses where they hold at least a 10% equity capital, as well as investments by a nonresident subsidiary or associate in its resident direct investor. It can be in the form of equity capital, reinvestment of earnings or borrowings.

The BSP’s FDI data cover actual investment flows, compared to the Philippine Statistics Authority’s foreign investments data which include investment commitments that may not be fully realized in a given period.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the decline in FDI net inflows during the 11-month period shows that investors were more cautious last year.

“That mix suggests the Philippines hasn’t lost investor interest — sentiment just became more selective,” he said in a Viber message.

“The decline likely reflects global uncertainty, domestic policy noise, and tougher competition from our ASEAN (Association of Southeast Asian Nations) neighbors,” Mr. Ravelas added. “But the November bump signals that when investors see clearer direction and more stability, they begin to re‑engage.”

Mr. Roces said there could be annual growth in FDI inflows at the end of 2025 if companies log year-end reinvestments or intercompany loans, “but that will depend more on timing of flows than a sudden shift in confidence.”

Meanwhile, Mr. Ravelas said credible reforms, reduced uncertainty and faster execution could enhance the country’s investment climate.

“If the government sustains that clarity, we could turn that November momentum into a broader recovery,” he said. — Katherine K. Chan, Reporter

Freny C. Dongoya sells pares — Filipino comfort food made of braised beef in a sweet-savory soy sauce served with garlic fried rice — for PHP 120 (USD 2) a plate in Pasay City near the Philippine capital.

On most days, her customers are call center agents and motorcycle riders grabbing quick meals between shifts. She hasn’t raised prices despite higher food costs.

“If I increase prices, they stop coming,” she told BusinessWorld in Filipino. “Then I earn nothing.”

Ms. Dongoya works long hours, but she’s not counted in official job statistics. Like millions of Filipinos, she operates in the informal economy — without permits, tax registration or social protection.

Her situation captures the tension in the Philippine economy as it enters 2026.

Growth slowed sharply last year. Full-year expansion in 2025 eased to 4.4%, the weakest in 14 years excluding the pandemic. Infrastructure spending stalled and global trade softened. Yet officials continue to project confidence about reaching upper middle-income status.

On the ground, the picture looks uneven.

Outside business districts such as Bonifacio Global City and Ortigas, much of the workforce depends on low-paid, unstable jobs. Informal workers sell food, run small stores or take on casual labor. They cushion daily life for formal workers — but see little benefit from economic growth.

About 42% of the workforce or 20.6 million Filipinos remain in informal employment, according to estimates by IBON Foundation.

Christopher James R. Cabuay, an associate professor of economics at De La Salle University in Manila, said this helps explain why growth feels disconnected from household income.

“The current growth model is not structured to favor those in the informal sector,” he told BusinessWorld via teleconference.

“Most of the jobs we produce are in sectors like wholesale and retail trade or accommodation and food services. These employ many workers, but value-added per worker is small, so wages grow slowly,” he added.

Productivity gains are limited, and many workers stay near subsistence levels even during expansion years.

High-value sectors tell a different story. Business process outsourcing, finance and information technology earn in foreign currency and benefit from global demand. These industries helped stabilize growth during external shocks.

But their gains don’t spread evenly.

Analysts describe this as a two-track economy. One track is globally linked and relatively stable. The other is local, informal, and exposed to inflation and weak demand.

Warfredo Alejandro II works in the first track. The 27-year-old is a credit card specialist in the business process outsourcing sector. He has a steady paycheck and benefits. But he depends on the informal economy to manage daily costs.

He notes that affordable meals from vendors like Ms. Dongoya are the only way many employees can stretch their take-home pay.

“Street vendors make life affordable,” he said. “Without them, many employees would struggle to stretch their salaries.”

‘Hidden safety net’

Mom-and-pop stores and food stalls cluster around office towers for a reason. They sell cheap meals and essentials. For workers on entry-level wages, that matters.

Alellie B. Sobreviñas, an associate professor of economics at La Salle, said informal vendors act as an economic buffer for urban workers.

“They are a hidden safety net” especially for workers with long or irregular hours, she said in an e-mailed reply to questions.

When authorities clear sidewalks or relocate vendors without alternatives, costs rise quickly. Workers pay more for food. Commute times increase. Disposable income shrinks.

“That is an effective pay cut,” Ms. Sobreviñas said.

This does not mean informality is desirable, she said. Informal workers lack protection, access to credit and legal security. But removing them without replacing the services they provide creates pressures.

Formalization is often presented as the solution. In practice, it is costly.

For a small food vendor, registering a business requires multiple permits, fees and tax compliance. Costs can reach tens of thousands of pesos. For operators earning thin margins, that’s out of reach.

Ms. Dongoya pays her helpers PHP 400 to PHP 500 a day — below Metro Manila’s PHP 695 minimum wage, which only applies to formal jobs.

Mr. Cabuay said this creates another gap. Wage policies help those already inside the system. They do little for those outside it.

“The difference between what an informal worker earns and what they could earn in the formal jobs available to them is often not that large,” he said.

Many formal openings are also low skill: cleaners, service crew and laborers. They offer stability but limited wage gains. For some workers, informality still pays more.

This weak incentive slows formalization and keeps productivity low.

Economists warn that this structure limits long-term growth. Without stronger manufacturing and higher-value domestic industries, job quality will remain constrained.

Mr. Cabuay and his colleagues have raised concerns about government targets of 6% to 8% growth. Without upgrading jobs, growth will not translate into higher incomes for most workers.

Other barriers remain. Small firms struggle to access credit. Regulations are complex and public investment has been uneven.

The result is an economy that grows without lifting the base.

In business districts, consumption looks strong. Malls are busy and offices are full. But many households remain one shock away from hardship.

For informal workers, inflation hits first and hardest. Food and fuel costs rise, earnings don’t adjust quickly and savings are limited, yet their role remains essential.

Without informal vendors, entry-level formal workers would face higher living costs. Without informal transport, commutes would be longer. Without small retailers, neighborhoods would lose access to cheap goods.

The challenge is not choosing between formal and informal work. It is closing the gap between them.

That means lowering the cost of formalization, improving access to credit, and creating jobs that pay more because they produce more.

Until then, growth will continue to feel abstract for millions.

Ms. Dongoya doesn’t talk about gross domestic product targets. She watches foot traffic and rice prices.

“If customers disappear, I disappear,” she said.

For now, they keep coming. That says as much about the Philippine economy as any official forecast. — Erika Mae P. Sinaking