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The Bangko Sentral ng Pilipinas (BSP) is widely expected to ease for a fifth straight meeting on Thursday as economic growth slows and inflation remains below target, analysts said.

A BusinessWorld poll conducted last week showed that 17 out of 18 analysts surveyed expect the Monetary Board to cut the target reverse repurchase rate by 25 basis points (bps) on Dec. 11. This is the board’s last policy review meeting of the year.

If realized, the benchmark rate will fall to 4.5% from the current 4.75%. At 4.5%, this would be the lowest policy rate in over three years or since the 4.25% in September 2022.

In the BusinessWorld poll, only one analyst, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco, sees the BSP delivering a 50-bp cut.

The central bank has so far reduced borrowing costs by a cumulative 175 bps since it began its easing cycle in August last year. It delivered a 25-bp cut at each of its meetings in April, June, August and October.

Moody’s Analytics Assistant Director and Economist Sarah Tan said the dismal third-quarter growth and easing inflation print may prompt a 25-bp rate cut on Thursday.

“Weaker-than-expected third-quarter GDP (gross domestic product) growth and a low-inflation environment together strengthen the case for further easing, even as risks of stronger price pressures linger,” she said in an e-mail. “These forces should outweigh concerns about the peso’s recent depreciation.”

In the July-to-September period, the Philippine GDP expanded by 4%, its slowest pace since the first quarter of 2021, as consumer and investor sentiment waned amid the ongoing public infrastructure corruption mess.

The country’s economic growth averaged 5% in the nine-month period, below the government’s 5.5-6.5% target for 2025.

Cid L. Terosa, a senior economist at the University of Asia and the Pacific, said the BSP will likely deliver a 25-bp cut in light of slowing economic growth both here and abroad, as well as a weaker pace of household spending.

“(The Philippine economy) does not seem to show signs of recovering from the effect of corruption scandals all throughout the country,” Mr. Terosa said.

For Mr. Chanco, the weaker-than-expected GDP growth in the third quarter, coupled with benign inflation, could support a jumbo cut by the central bank.

“A rate cut (on Dec. 11) is almost a given, the question is by how much, and we suspect that the very weak Q3 GDP print is reason enough for the Monetary Board to go with a larger 50-bp cut, especially with inflation still well under control,” Mr. Chanco said in an e-mail.

In November, headline inflation eased to 1.5% from 1.7% in October and 2.5% a year earlier amid slower price increases in food and non-alcoholic beverages, with food inflation posting a 0.3% decline during the month.

This brought the 11-month inflation average to 1.6%, below the BSP’s 1.7% full-year projection. November marked the ninth month in a row that inflation undershot the BSP’s 2-4% target.

Chinabank Research, which also anticipates a rate cut, said below-target inflation and well-anchored inflation expectations give the BSP room to continue easing.

“A more accommodative policy could also offer support for the Philippine economy, which grew weaker than expected in the third quarter and continues to face challenges from both the domestic and external fronts,” Chinabank Research said.

Deutsche Bank economist for the Philippines Junjie Huang said the central bank may ease further as they see slow growth through yearend.

“Q4 GDP growth may still be fairly weak amid lingering effects of constrained public spending… To reflect such a challenge, we revised down our GDP growth forecast to 4.1% year on year in Q4 from 5.4%, which in turn points to a wider negative output gap and thereby eliciting a policy action by BSP,” he said in a note.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said lower borrowing costs may spur spending, capital expenditures and overall economic activity.

BSP Governor Eli M. Remolona, Jr. earlier said that the Philippine GDP might grow by only 4-5% by yearend, well-below the government’s 5.5-6.5% target.

Meanwhile, Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said that the anticipated rate cut by the US Federal Reserve at its last policy meeting this year also allows the BSP to have a more accommodative monetary policy stance.

“Global easing trends, particularly the Fed’s expected cut, also provide room for BSP to act without putting undue pressure on the peso,” he said in an e-mail.

The Fed has so far lowered its key policy rate by 150 bps since September 2024, bringing it to the 3.75-4% range. It is scheduled to have its last meeting this year on Dec. 9 and 10.

“A rate cut from both the Fed and the BSP (this) week would keep the interest rate differential at 75 bps, which could then help stave off any additional depreciation pressure on the peso,” Chinabank Research said.

The peso hit the PHP 59-per-dollar level several times in November, even reaching a fresh low of PHP 59.17 versus the greenback on Nov. 12.

Further easing in 2026

Meanwhile, analysts see further monetary policy easing next year amid a dim growth outlook.

“(I’m) expecting one more 25-basis-point rate cut next year that can take place in the first quarter as GDP is likely to show sluggishness in the fourth quarter of this year with inflation to end this year at sub-two percent,” Security Bank Chief Economist Angelo B. Taningco said in an e-mail.

The BSP chief has said that the economy would only fully recover by 2027 but noted that a slight rebound might come by the middle of next year.

Maybank Investment Bank economist Azril Rosli projects two more 25-bp cuts next year, with the first one likely to come in the first half, as he expects inflation to settle at 2.2% in 2026.

“Price pressures continue to ease, with rice prices softening due to stronger domestic harvests and lower global prices, though the BSP will continue monitoring the impact of rice import restrictions on supply and retail markets,” he said in an e-mail. “Upside risk is the combined effects of rice policy adjustments, base effects, and higher electricity rates.”

The suspension of regular and well-milled rice imports will be temporarily lifted in January but will be reimposed from February to April.

The flexible tariff scheme on rice will likewise take effect on Jan. 1, wherein the levy on the staple grain will be adjusted by 5 percentage points every 5% change in global prices up to a maximum of 35%. The National Government currently imposes a 15% tariff on rice.

Meanwhile, Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. also expects the central bank’s easing cycle to end once the benchmark interest rate settles at 4% but flagged risks of excessive easing.

“A gradual easing path could bring the policy rate down to 4% in 2026, providing support to an economy that will likely depend more on monetary policy in the near term given the constraints on fiscal spending,” he said in a note.

“Nevertheless, excessive rate cuts may carry risks as inflation could rise again in 2026. An overly aggressive easing cycle could force the BSP into an abrupt reversal should inflation pick up unexpectedly, potentially leading to sharper-than-ideal rate hikes later on,” he added.

The BSP projects inflation to return to the target range by 2026 at 3.1%, before slowing anew to 2.8% in 2027. — Katherine K. Chan

The Board of Investments (BoI) has approved PHP 816.81 billion worth of investment pledges as of November, dropping by 48.3% from the PHP 1.58 trillion in pledges approved in the same period a year ago.

At the same time, the value of green lane-certified projects breached the PHP 6-trillion mark, it added.

In a statement, the BoI said it greenlit 261 projects, which are expected to create 32,864 jobs, in the first 11 months.

These investment pledges are mainly in the sectors of energy and electricity (PHP 479.78 billion), airports and seaports (PHP 195.69 billion), manufacturing (PHP 58.99 billion), mass housing (PHP 37.55 billion), and information and communication (PHP 21.27 billion).

“These figures reflect the strong inflow of high-value investments that strengthen our economy. But we will not slow down,” said Trade Secretary and BoI Chair Ma. Cristina A. Roque in a statement on Monday.

“The PHP 816.81 billion in approved investments to date sends a clear signal to local and foreign investors: the Philippines is an ideal, competitive, and future-ready business destination,” she added.

The top country sources of investments were Singapore (PHP 74.78 billion), Thailand (PHP 7.75 billion), and the US (PHP 5.38 billion).

However, the approvals for the first 11 months are far below the PHP 1.75-trillion target set by the BoI this year.

At PHP 816.81 billion, the agency is only hitting 46.67%, or less than half of what it projected for 2025.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the decline in investment approvals could be partly attributed to weather-related disruptions, which have reduced the number of working days for government offices.

“Another factor would be the recent political noise on the anomalous flood control projects that led to some wait-and-see attitude by some investors,” he said in a Viber message.

Allegations that lawmakers, officials and contractors have siphoned off billions of pesos from anomalous flood control projects have triggered protests and dampened investor and consumer sentiment.

“Furthermore, another external risk factor since early 2025 has been Trump’s higher tariffs, trade wars, and other protectionist measures that reduced the global economic growth… thereby leading to some wait-and-see attitude by some international investors,” Mr. Ricafort said.

However, Ms. Roque said that although the political environment is an important consideration for any investor, the BoI’s strategic projects typically have medium- to long-term gestation period.

“And as such, investors attach greater importance to long-term factors such as economic fundamentals and structure, market demographics, and direction of policy reform,” she said.

Despite the decline in approvals, Ms. Roque said that they are currently reviewing a strong pipeline of investment pledges.

“BoI is still assessing 10 more big-ticket, strategic projects worth over PHP 1 trillion,” she said. “It’s premature to make any definitive conclusions until those are finalized… These projects are registered with our green lane facility. Let’s wait and see what happens.”

These include three hydroelectric projects with 2.4-gigawatt (GW) combined capacity, four offshore wind projects with 3.7-GW capacity, two air transport service projects, and one transport infrastructure project.

“As we are a prudent administrator of incentives, we carefully evaluate these projects according to the requirements of the Strategic Investment Priorities Plan and its guidelines,” Ms. Roque said.

“While we are working double-time, we are unsure if all of these can be approved for registration this year. But what this signifies is that the pipeline of strategic investments remains to be strong,” she added.

The BoI will hold two more regular board meetings before yearend, which means there could still be an increase in investment approvals.

“But we cannot predict yet whether the increase will be enough to reach the PHP 1.75 trillion we targeted for 2025,” the Trade chief said.

Green lane approvals

Meanwhile, the BoI said that it has endorsed 78 projects worth PHP 1.92 trillion in the January-to-November period for green lane treatment to the Once-Stop Action Center for Strategic Investments.

These projects are in sectors such as renewable energy, infrastructure, manufacturing, food security, pharmaceuticals, and digital infrastructure. These are expected to generate 161,325 direct jobs.

The renewable energy sector accounted for 60 projects worth PHP 1.42 trillion, followed by public-private partnership, infrastructure and water projects valued at PHP 416.08 billion.

Other projects are in digital infrastructure (PHP 49.56 billion), manufacturing (PHP 30.13 billion), food security (PHP 4.33 billion), and pharmaceuticals (PHP 45 million).

“Since its launch in Feb. 2023, the green lane has certified 229 projects worth PHP 6.06 trillion, projected to create 398,822 jobs, underscoring its key role in attracting strategic, future-ready investments,” the BoI said. — Justine Irish D. Tabile, Reporter

The Philippines’ gross international reserves (GIR) soared to its highest level in over a year as the central bank’s gold holdings reached a record high at the end of November.

The country’s dollar reserves amounted to USD 111.077 billion as of November, up 0.75% from the USD 110.249 billion seen a month ago, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

This was the highest GIR level in 13 months or since the USD 111.084 billion logged in October 2024.

Year on year, the dollar reserves climbed 2.39% from USD 108.488 billion.

GIR refers to 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).

In a statement released late on Friday, the BSP said that the level of dollar reserves as of November is enough to cover about 3.8 times the country’s short-term external debt based on residual maturity.

According to the central bank, a GIR level is deemed adequate if it can cover at least 100% of the country’s payments of public and private foreign debt due within the immediate year.

The country’s foreign reserves at end-November are also equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income, more than double the three-month standard.

“The latest GIR level provides a robust external liquidity buffer,” the central bank said.

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

Preliminary BSP data showed that its gold holdings jumped to their highest ever at USD 18.026 billion in the 11-month period, rising by 6.73% from USD 16.89 billion a month ago. It also surged by 63.49% from USD 11.026 billion a year ago.

However, BSP’s foreign investments slipped by 0.32% month on month to USD 87.808 billion from USD 88.09 billion in October and by 3.83% from USD 91.304 billion in the same period last year.

Foreign exchange holdings likewise dropped by 4.94% to USD 603.8 million at end-November from USD 635.2 million at end-October. Year on year, it slumped by 65.07% from USD 1.729 billion.

Meanwhile, the country’s reserve position in the IMF inched up by 0.01% to USD 728.3 million from USD 728.2 million a month ago. It grew by 8.99% from the USD 668.2 million recorded at end-November 2024.

SDRs — or the amount which the Philippines can tap from the IMF’s reserve currency basket — increased by 0.14% to USD 3.911 billion as of November from USD 3.889 billion the previous month. It likewise climbed by 4% from USD 3.761 billion a year earlier.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that higher gold prices in the global market drove up the value of the central bank’s gold holdings to a record high, which in turn increased its dollar reserves.

“The increase in the GIR (was) again largely due to the latest month-on-month increase in gold holdings by USD 1.135 billion or 6.7% to a new record high of USD 18.026 billion as world gold prices gained by 5.9% month-on-month in November 2025; still near the new record highs to USD 4,381.52 per ounce on Oct. 20, 2025,” he said in an e-mailed note.

Mr. Ricafort added that the high GIR level allows the BSP to intervene in the foreign exchange market amid the recent peso volatility.

BSP Governor Eli M. Remolona, Jr. has said that they have been intervening a bit in the foreign exchange market just to ensure that it wouldn’t become “too messy.”

He later said that the central bank does not have a target level for the peso, but noted that they would more likely intervene when the market goes “crazy.”

On Friday, the peso closed at PHP 58.935 per dollar, climbing by 8.7 centavos from its PHP 59.022 finish on Thursday, Bankers Association of the Philippines data showed. However, the local unit hit the PHP 59-per-dollar level several times in November, even reaching a fresh low of PHP 59.17 against the greenback on Nov. 12.

“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from OFW (overseas Filipino workers) remittances, BPO (business process outsourcing) revenues, exports (though offset by imports), (and) relatively fast recovery in foreign tourism revenues,” Mr. Ricafort said.

The BSP expects dollar reserves to reach USD 105 billion this year and USD 106 billion in 2026. — Katherine K. Chan

 

The Philippines has sharply lowered its export targets for this year until 2028 amid geopolitical tensions, renewed trade barriers, and persistent disruptions in major shipping routes that continue to squeeze global supply chains and dampen demand.

Under the revised Philippine Export Development Plan (PEDP), exports are now expected to reach USD 110.8 billion to USD 113.4 billion this year, USD 116.1 billion to USD 120.2 billion in 2026, USD 123.3 billion to USD 127.4 billion in 2027, and USD 132.8 billion to USD 135.1 billion in 2028, the Export Development Council (EDC) said on Thursday.

These are all substantially below the earlier projections of USD 163.6 billion, USD 186.7 billion, USD 212.1 billion, and USD 240.5 billion for those respective years. For 2025, the EDC now forecasts export growth of about 3.55% from the original 14.1%.

“The rate of growth has decelerated in the last two years, so we have to adjust,” EDC Executive Director Bianca Pearl R. Sykimte said at the National Export Congress. She cited mounting global headwinds — rising political tensions, uncertainty surrounding US tariff policies and bottlenecks along key shipping routes — as the main reasons for the reset.

Merchandise and services exports reached USD 107 billion in 2024 and USD 103.7 billion in 2023, both falling short of the plan’s earlier path. Data from the Philippine Statistics Authority show merchandise exports in the first 10 months at USD 70.43 billion, higher than USD 61.9 billion a year ago.

Gains were driven largely by electronics and semiconductors, though the EDC noted that the improvement remained uneven across sectors.

Ms. Sykimte said the revised figures also reflect weaker global demand, which has weighed on key Philippine export categories even as electronics, automotive components and several agro-based shipments posted modest recovery.

“Our frontliners have been navigating a global economy that is volatile in its pace of change, uncertain in its directions, complex in its interdependencies and ambiguous in outcomes,” she added.

Even with the adjustments, sectoral performance suggests the country will continue to trail regional peers.

The Philippines ranked 49^th globally in merchandise exports in 2024 and sixth in the Association of Southeast Asian Nations, behind Thailand, Vietnam, Malaysia, Indonesia and Singapore.

“Even if we triple our exports, it is not enough to catch up with our nearest competitor, Indonesia,” Ms. Sykimte said, noting that larger economies have benefited from stronger inflows of export-driven investments.

The EDC flagged the country’s heavy reliance on a small set of markets. Ten destinations — the US, Japan, Hong Kong, China, South Korea, Thailand, Singapore, the Netherlands, Taiwan and Germany — account for about 80% of total exports.

While Philippine goods reach about 200 markets, only 32 absorb more than USD 100 million annually, and only 14 exceed USD 1 billion. Just two markets take in more than USD 10 billion worth of Philippine shipments.

Ms. Sykimte said this concentration exposes the country to external shocks and foreign policy changes in a few major economies.

Diversification, she said, would be central to the PEDP’s revised approach. The government aims to secure more preferential trade arrangements through bilateral and regional agreements while easing market access barriers in existing destinations.

The revised PEDP retains a three-pillar strategy: expanding market access through trade policy, building sectoral capabilities and strengthening trade promotion to link exporters with buyers overseas.

The plan also seeks to attract more export-oriented foreign investment, which Ms. Sykimte said has helped scale up export ecosystems in other countries.

Still, Ms. Sykimte said the country will post positive export growth this year, supported in part by the stronger performance seen in recent months. Average monthly goods exports reached USD 7.2 billion in the past five months, up from the typical USD 5 billion to USD 6 billion range in previous years.

Electronics and semiconductors are expected to remain the main drivers, though she noted that October’s gains were broad-based across about 28 sectors.

Even so, she stressed that the Philippines needs sustained reforms to regain competitiveness.

“Given the size of our competitors in the region and globally, it is harder for the Philippines to be seen as a supplier in the global market,” she said. The country needs to broaden its capabilities and strengthen its position if it wants to keep pace, she added. — JIDT

About eight of 10 European companies operating in the Philippines expect trade and investment activity to increase over the next four years, the European Chamber of Commerce of the Philippines (ECCP) said, even as a corruption scandal involving flood control projects continues to weigh on investor sentiment.

The findings were part of the ECCP’s 2025 Business Sentiment Survey Report released on Thursday that gathered 172 responses from member companies from October to early November.

The chamber said 78.5% of respondents anticipate higher trade and investment activity in the next two to four years, while 20.3% expect conditions to remain steady — reflecting what it described as a “sustained commitment to the market even in the absence of expansion.”

Only 1.2% foresee weaker trade and investment in the medium term.

In the near term, sentiment is similarly upbeat. Over the next 12 months, 70.3% expect business activity to rise, while 26.7% foresee no change. Just 2.9% anticipate a decline.

The relatively positive outlook comes amid what economic managers have described as a temporary drag caused by revelations of widespread graft in public works, particularly flood control infrastructure.

The scandal has slowed government spending, disrupted project pipelines and contributed to weaker investor and consumer confidence.

Asian Development Bank Country Director for the Philippines Andrew Jeffries said several tailwinds could support a rebound next year, including monetary easing and strength in services, which account for 60% of employment.

“Macroeconomic fundamentals remain broadly sound. Nonperforming loans have actually decreased,” he said. But he added that the sharp fall in public infrastructure spending is the biggest drag on growth this year. “The number one driver for next year is getting infrastructure spending back on track.”

Recovery expectations

ECCP members cited expectations of economic recovery as a major factor behind their expansion. About 51.7% of the respondents pointed to Philippine growth prospects as a key driver of future business activity, while 42.4% expect these opportunities to become significant in the next two to three years.

The outlook comes after a weaker-than-expected 4% economic growth in the third quarter, bringing year-to-date growth to 5%, as household consumption and government spending slowed due to the corruption controversy.

Only 5.8% said economic recovery would not factor into their expansion considerations.

Political and policy conditions were also central to investor sentiment. About 45.4% of companies said stability in government and politics underpins their expansion plans, while 48.8% expect it to become an increasingly significant factor. A small group — 5.8% — said it is not a key consideration.

“Political and policy stability is a critical driver for foreign investment, as it reduces risks and provides predictability for long-term planning,” the chamber said.

European companies reported a more nuanced view of the Philippines’ overall investment environment. The report found that 59% said the country had become more attractive in the past two years compared with other markets in the region, while 40.1% cited improvements specifically tied to their investment decisions. More than a quarter said conditions were unchanged, and 29.1% reported diminished appeal.

As a supplier market, the country fared weaker: 36% noted gains, 40.7% saw no change, and 18.6% reported deterioration. The Philippines performed relatively better as a sales market, with 46.5% citing improved attractiveness, 35.5% noting stability and 13.4% signaling a decline.

“The data suggest that while the Philippines is increasingly recognized as a promising market — particularly for sales and overall business opportunities — perceptions of its investment and supplier potential remain more mixed,” ECCP said.

Companies may be prioritizing market access and revenue growth while exercising caution on long-term commitments and supply-chain integration.

Despite generally optimistic sentiment, 90.1% of companies said significant barriers continue to hinder trade, investment or business operations in the Philippines. Only 9.9% reported no major obstacles.

The top challenges cited include lack of harmonized standards, complex taxation processes — such as value-added tax refunds, audits and other Bureau of Internal Revenue procedures — and cumbersome Customs rules. These issues highlight “regulatory and procedural inefficiencies,” ECCP said.

Other obstacles include unfair competition, geopolitical risks, rising protectionist measures, limited liberalization in services and gaps in green supply chains.

Among companies engaged in trade, only 18% described Customs procedures as speedy and efficient; 48% said they were acceptable but need improvement, while 34% found them burdensome.

ECCP, a multilateral chamber promoting European-Philippine business ties, represents more than 900 member companies. — Aubrey Rose A. Inosante, Reporter