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Money sent home by migrant Filipinos rose by 2.9% year on year in January, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Cash remittances from overseas Filipino workers (OFWs) coursed through banks increased by 2.9% to USD 2.92 billion in January from USD 2.84 billion in the same month in 2024.

The 2.9% annual growth in January was a tad slower than the 3% expansion seen in December 2024.

Month on month, remittances declined by 13.7% from USD 3.38 billion in December.

Cash remittances in January were also the lowest level in two months or since USD 2.81 billion in November.

BSP data showed remittances from land-based workers jumped by 3.4% to USD 2.33 billion in January from USD 2.25 billion a year ago. 

Sea-based OFWs sent home USD 587 million during the month, inching up by 0.9% from USD 582 million in the previous year.

“The growth in cash remittances from Saudi Arabia, the United States, Singapore, and the United Arab Emirates (UAE) mainly contributed to the increase in remittances in January 2025,” the central bank said.

In January, the US remained the top source of remittances, accounting for 41.2% of the total.

This was followed by Singapore (7.5%), Saudi Arabia (6.6%), Japan (5.7%), and the United Kingdom (4.7%).

The UAE (3.5%), Canada (3.1%), Taiwan (2.8%), Qatar (2.8%), and Malaysia (2.4%) were also main sources of cash remittances.

Remittances from the top 10 countries accounted for over 80% of overall remittances during the month.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said the 13.7% month-on-month drop in cash remittances is “not alarming” as this was a seasonal effect as the bulk of remittance flows is usually seen in the fourth quarter.

“The month-on-month slowdown of remittances is expected as the effects of the holiday season came to a close,” Reinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc., said.

“Typically, remittances grow faster during the latter months of the year as families celebrate the holidays,” he added.

Meanwhile, central bank data showed personal remittances, which contain inflows in kind, increased by 2.9% to USD 3.24 billion in January from USD 3.15 billion in the same month in 2024.

“The increase was observed in remittances from both land-based and sea-based workers,” it added.

Remittances from workers with contracts of one year or more rose by 3% to USD 2.52 billion, while those with contracts less than one year went up by 2.5% to USD 650 million.

In the coming months, Mr. Erece said risks arising from global economic uncertainty could dampen remittance flows.

“This year, we should monitor the persistent global economic uncertainty caused by trade wars and geopolitical tensions, which may cause a bit of a slowdown in remittances as OFWs cushion the risks of higher living costs abroad,” he said.

Markets are pricing in the potential impact of US President Donald J. Trump’s barrage of tariffs on the rest of the world. Among these proposals is a reciprocal tariff that Mr. Trump has pledged to impose on all of the US’ trading partners. 

“We should also monitor the exchange rate, influenced by the Fed and BSP’s respective monetary policies. A cautious Fed can cause a peso depreciation, enticing OFW remittances to take advantage of an elevated peso value of the dollar,” he added.

While the US central bank is expected to keep interest rates unchanged on Wednesday, its commentary on the impact of tariff policies on US inflation and growth will also be closely watched, Reuters reported.

Cash remittances rose by an annual 3% to USD 34.49 billion in 2024. The BSP expects remittances to grow by 3% this year. – Luisa Maria Jacinta C. Jocson, Reporter

The Bangko Sentral ng Pilipinas (BSP) said inflation could overshoot the 2-4% target range in the second half of this year amid base effects.

In its latest Monetary Policy report, the central bank said annual inflation is likely to settle within the 2-4% target band from this year to 2026 amid declining rice prices.

“However, inflation could exceed the target range in the latter part of 2025, primarily due to base effects from easing commodity price pressures in the corresponding period of 2024,” it said.

“Inflation is then projected to move closer to the midpoint of the target range in 2026, supported by an expected moderation in global commodity prices,” it added.

The BSP’s baseline forecasts for inflation are at 3.5% for 2025 to 2026. Accounting for risks, inflation could reach 3.7% in 2026.

In February, the consumer price index (CPI) sharply slowed to 2.1%, bringing headline inflation to 2.5% in the first two months.

For this year, inflationary pressures could come from “higher global oil and non-oil prices, peso depreciation, and recent above-expectation inflation readings,” the BSP said.

However, inflation could breach the 2-4% target range if crude oil prices rise, it said.

BSP estimates show that if crude oil prices average above $100 per barrel, inflation could hit 4.1% this year and 4.8% next year.

Based on the latest Development Budget Coordination Committee macroeconomic assumptions, Dubai crude oil is seen to range from $60 to $80 per barrel this year.

However, the BSP reiterated that risks to the inflation outlook have remained “broadly balanced.”

“Upside risks include potential increases in electricity rates, transport charges, and pork prices,” it said.

According to the BSP’s risk matrix, there is a high probability for a rise in pork prices and a low probability for elevated transport and electricity costs.

“Conversely, the main downside risk stems from the spillover effects of lower tariffs on imported rice to domestic rice prices.”

Rice inflation further decreased to 4.9% in February from the 2.3% drop in January. This was the lowest rice inflation print since the 5.7% contraction in April 2020.

Rice prices are seen to decline further after the Agriculture department declared a food security emergency on rice, as well as lowered the maximum suggested retail price of 5% broken imported rice.

According to the BSP’s calculations, the likelihood of inflation settling within target this year remains above 50%.

“For 2026, the probability of inflation remaining within the target range has increased to nearly 50%, with a corresponding decrease in the likelihood of inflation exceeding the upper limit of the target range.”

Inflation expectations

Meanwhile, inflation is expected to remain within the Philippine central bank’s 2-4% target from this year until 2027, according to economists surveyed by the BSP.

Analysts’ average inflation estimates were unchanged at 3.2% for this year and 3.3% for 2026, according to the BSP’s Survey of External Forecasters.

Economists also expect inflation to settle at 3.4% in 2027, still within the target band.

“Forecasters identify several potential upside risks to the inflation outlook. These include the effects of geopolitical tensions and adverse weather conditions on commodity prices, particularly oil.”

“Other factors cited are base effects, uncertainties in international trade, potential upward adjustments to utility rates and transport charges, and proposed minimum wage increases.”

The analysts surveyed assigned a “high probability” of inflation remaining within target over the forecast horizon.

This year, economists expect an 83.2% probability that inflation will settle within 2-4% versus the 15.4% chance that it will exceed the target band.

“The likelihood of inflation falling within the target range is estimated at 84.4% for 2026 and 76.5% for 2027.”

Meanwhile, the respondents expect further policy easing by the central bank this year.

“Regarding monetary policy expectations, most analysts anticipate a loosening of the BSP’s stance in 2025, with projections ranging from 50 to 100 basis points (bps) of easing.”

After keeping rates steady in February, BSP Governor Eli M. Remolona, Jr. said a rate cut is still “on the table” at the Monetary Board’s meeting in April, signaling “a few more” rate cuts for the rest of the year.

The central bank unexpectedly kept rates steady at its February policy review, opting to keep the target reverse repurchase rate (RRP) at 5.75%. The BSP had delivered three straight 25-bp cuts at each of its meetings in August, October and December in 2024.

“Views on the 2026 target RRP rate are more diverse, spanning from a 75-bp reduction to no change. For 2027, a majority of respondents foresee the BSP continuing on an easing path.” — Luisa Maria Jacinta C. Jocson

Philippine economic growth is likely to fall short of the government’s target in the first two quarters, GlobalSource Partners said.

“Our assessments show that GDP (gross domestic product) may be expected to increase within a narrow band over the next two quarters — rising from just above 5.7% in first quarter to approximately 5.9% in second quarter,” GlobalSource country analysts Diwa C. Guinigundo and Wilhelmina C. Mañalac said in a report on March 14.

This would be below the Development Budget Coordination Committee’s (DBCC) 6-8% target band until 2028.

GlobalSource’s first-quarter growth forecast of 5.7% would be slower than the 5.8% print in the same period in 2024.

For the second quarter, GlobalSource’s 5.9% GDP growth projection would be slower than the 6.4% print in the same period in 2024.

“This modest upward trend is driven by resilient historical GDP performance, growth in the services sector, and short-term USD/PHP exchange rate effects,” GlobalSource said.

However, local and geopolitical risks may affect the growth outlook in the first half.

“If both domestic and geopolitical shocks occur in a big, adverse way, they could unsurprisingly alter the outcome of this initial analysis,” GlobalSource said.

National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan earlier this month said government growth targets may need to be revisited amid rising global economic uncertainty.

“It’s too early to change at this point but we need to be watchful and be flexible because of this uncertainty,” he said.

A DBCC meeting is scheduled to be held at the end of March.

Budget Secretary and DBCC Chair Amenah F. Pangandaman has said that the committee historically keeps its target unchanged during the first and second quarters of the year.

Earlier, Finance Secretary Ralph G. Recto said that “6-6.5% [growth] is doable for 2025.”

However, GlobalSource said the Philippine economy should grow faster than the DBCC’s 6-8% target.

“The economic scarring of the pandemic actually requires the Philippines to grow by much more than the targeted growth rates of 6-8% through the end of the Marcos administration. Persistent poverty and income inequality are additional imperatives to grow by much more,” it said.

During the MAP Economic Briefing and General Membership Meeting on March 12, Mr. Guinigundo said that Philippine GDP growth of 6-8% annually would bring the economy to around PHP 60 trillion by 2036

“To overcome this setback, growth will have to be between 9% and 9.5% through 2028 to be able to return to the original growth path,” he said.

In 2024, the economy expanded by 5.6%, from the 5.5% print in 2023 amid subdued consumption and lower farm output. It fell short of the government’s revised 6-6.5% target.

“It’s easy to blame the onslaught of typhoons during the latter part of the year, which constrained economic expansion. Such weather disturbances could indeed explain part of the failure, but not the entire dynamics,” GlobalSource said.

The economy grew by 5.2% in the fourth quarter, slower than the 5.5% print in the same period in 2023 after a series of typhoons hurt agricultural output.

“Sufficient stock buffering, mangrove propagation, zonal building along the coasts could have also mitigated the effects of these supply shocks. Yes, food inflation likewise deterred economic growth because private consumption spending was generally restrained,” GlobalSource said.

NEDA Undersecretary for Policy and Planning Group Rosemarie G. Edillon attributed the weaker-than-expected GDP growth in 2024 to “extreme weather events, geopolitical tensions, and subdued global demand.” — Aubrey Rose A. Inosante

The Philippines’ outstanding external debt rose by nearly 10% year on year as of end-2024, the Bangko Sentral ng Pilipinas (BSP) said.

Preliminary data showed the country’s external debt increased by 9.8% to USD 137.63 billion as of end-December 2024 from USD 125.39 billion in the same period in 2023.

However, the debt stock edged lower by 1.4% quarter on quarter from the record-high USD 139.64 billion as of end-September.

External debt refers to all types of borrowings by residents from nonresidents.

“The increase was driven primarily by net availments of USD 9.61 billion to address liquidity requirements of the public and private sector,” the central bank said.

BSP data showed public sector net availments amounted to USD 5.59 billion last year, while the private sector’s net availments reached USD 4.03 billion.

“The net acquisition of Philippine debt securities by nonresidents of USD 3.37 billion resulting from investor preference towards emerging market debt securities for most of 2024 as well as prior years’ adjustments of USD 634.76 million further contributed to the increase in debt stock.”

“Meanwhile, the negative FX (foreign exchange) revaluation of borrowings denominated in other currencies of USD 1.39 billion tempered the increase in debt,” it added.

This brought the external debt as a percentage of gross domestic product (GDP) to 29.8% from 30.6% in the third quarter. However, this was higher than the 28.7% posted in 2023.

The central bank said the external debt-to-GDP ratio remains at a “prudent” level.

“This improvement in the ratio was driven by the decline in external debt levels in conjunction with the Philippine economy’s 5.2% real GDP growth for the fourth quarter and 5.6% growth for the full year,” it added.

Meanwhile, the BSP attributed the 1.4% quarter-on-quarter decline in the debt stock due to the negative FX revaluation of borrowings denominated in other currencies.

It also cited the “net acquisition by residents of Philippine debt securities from nonresidents aggregating USD 835.33 million; and recorded net repayments amounting to USD 133.51 million.”

“During the reference quarter, the appreciation of the US dollar decreased the value of the country’s debt stock by USD 1.29 billion,” it said.

At the end of 2024, the peso closed at P57.845 versus the dollar, declining by P2.475 or 4.28% from its end-2023 finish of P55.37 against the greenback.

“The US dollar strengthened due to improved US economic performance, market perception towards Federal Reserve’s future policy path as well as expectations on the shift in US trade and investment policies under the then incoming administration.”

“The same underlying factors may have also triggered nonresidents to offload Philippine debt securities, further lowering outstanding external debt by USD 835.33 million,” it added.

Broken down, the private sector’s external debt slipped by 0.9% to USD 52.29 billion at the end of the fourth quarter from USD 52.76 billion at the end of the third quarter.

“The modest decline in private sector borrowings were driven by the net acquisition by residents of debt securities issued offshore aggregating USD 870.03 million,” the BSP said.

It also cited the negative FX revaluation of borrowings denominated in other currencies of USD 154.11 million and net repayments of USD 70 million, which offset prior periods’ adjustments of USD 313.98 million.

Public sector debt dropped by 1.8% to USD 85.34 billion as of end-fourth quarter from USD 86.88 billion as of end-third quarter.

This was due to the USD 1.44-billion negative FX revaluation of borrowings denominated in other currencies.

“Prior periods’ adjustments of USD 71.23 million as well as net repayments of USD 63.51 million further reduced the outstanding levels.”

The bulk or 92.9% of public sector obligations were from the National Government, while the rest came from borrowings of government-owned and -controlled corporations, government financial institutions, and the BSP.

The Philippines’ top creditor countries were Japan (USD 15.18 billion), Singapore (USD 5.06 billion) and the Netherlands (USD 4.55 billion).

The borrowing mix was composed mainly of US dollar-denominated debt (74%) followed by debt in Philippine peso (9.2%) and debt in Japanese yen (7.5%).

The central bank said other key external debt indicators were also still at “sustainable levels.”

The country’s gross international reserves (GIR) stood at USD 106.26 billion as of end-2024. This represented 3.81 times cover for short-term (ST) debt based on the remaining maturity concept.

“The debt service ratio (DSR) rose to 11.5% from 10.3% for the same period last year due to the higher recorded debt service payments.”

The DSR and the GIR cover for short-term debt is a gauge of the adequacy of foreign exchange earnings to meet maturing debt obligations.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the persistent NG budget deficit contributed to the rise in external debt.

“The budget deficit fundamentally led to more local and foreign borrowings and outstanding debt, despite increasing the share of local borrowings in the total borrowing mix to better manage foreign exchange risks entailed in external debt,” he said.

The NG’s budget deficit narrowed by 0.38% to P1.506 trillion in 2024 from P1.512 trillion in 2023. However, it exceeded the P1.48-trillion deficit ceiling set by the Development Budget Coordination Committee.

Moving forward, the share of external debt to the overall borrowing mix is expected to be reduced, Mr. Ricafort said.

“Some of the foreign borrowings in recent years were meant to diversify borrowing sources for the NG and to provide liquidity of global bonds in the international market,” he said.

In January, the NG raised USD 3.3 billion from the sale of 10-year and 25-year fixed-rate global bonds and seven-year euro sustainability bonds. It was NG’s first global bond offering for the year.

The government plans to borrow PHP 2.55 trillion this year, of which PHP 507.41 billion will come from external sources. – Luisa Maria Jacinta C. Jocson, Reporter

The national government’s (NG) debt service payments surged to PHP 2.02 trillion in 2024 as both interest and amortization payments increased, the Bureau of the Treasury (BTr) said.

Data from the Treasury showed that the NG’s debt repayments rose by 26% to PHP 2.02 trillion last year from the PHP 1.604 trillion recorded in 2023.

However, it fell short of the PHP 2.027-trillion program for debt payments by 0.3% last year.

Debt service refers to payments made by the NG on its domestic and foreign debt.

The bulk or 62.22% of total debt payments came from amortization payments.

Principal payments jumped by 28.92% to PHP 1.26 trillion in 2024 from PHP 975.28 billion in the previous year. This was 0.47% lower than the BTr’s PHP 1.263-trillion program for the year.

Amortization on domestic debt went up by 19.18% annually to PHP 1.018 trillion, while principal payments on foreign debt surged by 97.58% to PHP 239.293 billion last year.

On the other hand, interest payments went up by 21.48% to PHP 763.31 billion in 2024 from PHP 628.33 billion in 2023. It was 0.02% below the PHP 763.437-billion program for the full year.

Interest paid on domestic debt went up by 23.89% to PHP 539.83 billion in 2024 from PHP 435.74 billion in 2023.

Broken down, PHP 340.5 billion was for interest payments for fixed-rate Treasury bonds, PHP 153.92 billion for retail Treasury bonds, and PHP 32.69 billion for Treasury bills.

For external debt, interest payments went up by 16.04% to PHP 223.48 billion from PHP 192.59 billion in the previous year.

December debt service

In December alone, debt repayments slipped by 3.73% to PHP 66.3 billion from PHP 68.87 billion in the same month in 2023.

Month on month, interest payments fell by 29.25% from PHP 93.7 billion in November.

Amortization payments rose by 1.61% to PHP 8.32 billion in December last year from PHP 8.19 billion in December 2023.  It was entirely composed of principal payments on external debt, since there were no payments made on domestic debt in December.

Meanwhile, interest paid on domestic debt fell by 4.45% to PHP 57.98 billion in December from PHP 60.68 billion in the same month in 2023.

Broken down, interest payments on retail Treasury bonds at PHP 19.18 billion, fixed-rate Treasury bonds stood at PHP 14.51 billion, and Treasury bills at PHP 2.27 billion.

Interest payments on external debt jumped by 19.93% year on year to PHP 20.54 billion in December from PHP 17.13 billion in 2023.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the higher debt servicing reflects the rising repayments on the significant amount of debt incurred by the government during the coronavirus disease 2019 (COVID-19) pandemic.

As of end-2024, NG’s total outstanding debt reached PHP 16.05 trillion, 9.8% higher than the end-2023 level.

“(The) still relatively higher interest rates and weaker peso exchange rate since the Russia-Ukraine war started in February 2022 also increased debt servicing, particularly interest payments. Also (the) higher peso equivalent for foreign/external debts amid weaker peso since then (from PHP 51 levels in early 2022, or at least 12% weaker since then),” he said.

Mr. Ricafort said the expected rate cuts by the US Federal Reserve would “somewhat help reduce external debt servicing costs, going forward.”

“But would be offset by [Donald] Trump’s higher US import tariffs and other protectionist policies that could reduce Fed rate cuts,” Mr. Ricafort said.

Reinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc., said he expects higher debt service bill this year mainly due to external debt repayments.

“However, in 2025, I expect foreign loan repayments to be the major driver rather than domestic borrowing repayments as the Philippine peso is expected to depreciate relative to the dollar, causing higher repayments needed to meet the country’s obligations,” he said. — A.R.A. Inosante

The Philippines’ services trade slumped in 2024 as exports grew at a much slower pace than imports, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Preliminary central bank data showed the country’s trade in services fell by 19.8% to USD 14.58 billion in 2024 from USD 18.18 billion in 2023.

This as service exports rose by just 7.5% year on year to USD 51.98 billion from USD 48.33 billion compared with imports, which jumped by 24% to USD 37.4 billion from USD 30.15 billion.

Broken down, other business services accounted for the bulk of overall services, posting a USD 15.57-billion balance.

These include services related to research and development; professional and management consulting; and technical, trade-related and other business services.

This was followed by telecommunications, computer and information services (USD 5.93 billion), and manufacturing services on physical inputs owned by others (USD 4.91 billion)

On the other hand, shortfalls were recorded in transport services (-USD 3.87 billion), travel (-USD 3.04 billion), financial services (-USD 2 billion), and insurance and pension (-USD 1.91 billion). 

The services industry is a key growth driver of the Philippine economy.

“This may reflect the higher base in services exports, especially BPO (business process outsourcing) revenues, given the sharp increase over the past 2 years or so, so mathematically growth already nearing GDP (gross domestic product) growth as a result,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Latest data from the Philippine Statistics Authority (PSA) showed that the services sector grew by 6.7% in the fourth quarter, slowing from 7.4% in the same period in 2023. It accounted for 62% of total GDP.

The IT and Business Process Association of the Philippines (IBPAP) said it booked USD 38 billion in revenue last year, 7% higher than USD 35.5 billion in 2023.

“The Philippines’ free trade agreements over the past 15 years and the more globalized services due to increased digitization including more online businesses as well as increased outsourcing may have increased services imports,” Mr. Ricafort said.

“This also may reflect increased competition for services, similar to merchandise, especially in terms of getting the lowest price possible in other countries.”

Service imports also saw an increase amid the “specialization of other developed countries where there is strict observance of intellectual property rights especially on technology solutions and other higher end of the supply chain for services.”

IBPAP also earlier said the Philippines should raise the value-added content of its offerings to minimize the impact of US protectionism.

“There is a need for the Philippines to develop higher end of the services supply chains such as having high-tech ecozones that would be similar to Silicon Valley to encourage local development of new startups that have the potential to become local industry giants,” Mr. Ricafort said. 

The government must also find ways to “attract and retain local talent rather than being lost to overseas competition where there are opportunities for high-end service professionals especially for the tech sector.”

He also cited the need to harness and integrate artificial intelligence (AI) and machine learning in the sector.

Under the Philippine Development Plan, the government expects to book USD 48.15 billion in services exports this year.

Current account

Meanwhile, latest data from the BSP showed the current account deficit (CAD) widened by 41.4% to USD 17.5 billion last year from the USD 12.39 billion in 2023.

This breached the USD 10.4-billion forecast set by the BSP for the year.

It also marked the second-largest current account deficit on record, after the USD 18.3-billion gap recorded in 2022.

This brought the CAD as a share of gross domestic product (GDP) to 3.8% in 2024, larger than the 2.8% ratio posted a year prior.

“The higher current account deficit emanated from lower net receipts in trade in services and a higher deficit in trade in goods,” the BSP said.

“However, this was offset partly by higher net receipts in the primary and secondary income accounts.”

In the fourth quarter alone, the current account deficit skyrocketed to USD 4.6 billion from USD 1.04 billion in the same quarter in 2023.

“The sharp widening of the CAD can be explained by the surge of imports of capital goods and energy, partly due to elevated oil prices and infrastructure-driven demand, while export growth remained weak, particularly in electronics,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said.

“Sluggish global trade conditions and weak demand from key markets like China and the European Union also played a role,” he added.

Mr. Ricafort said the wider current account deficit reflects the trade deficit in 2024.

The country’s full-year trade balance grew by 3.1% year on year to a USD 54.21-billion deficit in 2024 from USD 52.59 billion a year ago, its widest trade gap in over two years.

“While BPO revenues and tourism receipts improved, the growth was not enough to offset the trade imbalance,” Mr. Rivera said.

“Transport and logistics costs remained elevated, impacting net services. Multinational firms repatriating profits and increased interest payments on external debt contributed to the larger deficit.”

For the coming months, the current account could be impacted by tariff policies by the United States, Mr. Ricafort said, which could “slow down global trade, investments, employment and overall global GDP growth.”

Markets are pricing in US President Donald J. Trump’s shifting tariff policies on its biggest trading partners, namely, China, Mexico and Canada. Proposals of a reciprocal tariff on all countries that tax US imports continue to loom over the markets.

“Exports could see moderate recovery, especially if global electronics demand picks up, but downside risks remain,” Mr. Rivera said.

“Remittances and BPO revenues are expected to continue supporting external accounts, but a strong peso could temper growth. The pace of import growth will be key if infrastructure spending remains aggressive and oil prices stay high, the deficit could remain elevated.”

This year, the central bank expects the current account deficit to reach USD 12.1 billion or 2.4% of economic output. — Luisa Maria Jacinta C. Jocson