Lending growth slows in March

Bank lending expanded at its slowest pace in four months in March as loan growth for both production activities and consumers eased, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the central bank, rose by 11.8% year on year to PHP 13.19 trillion from PHP 11.795 trillion.

This eased from the 12.2% expansion in February and was the slowest since the 11.1% growth seen in November 2024. Still, this was faster than the 9.44% annual increase logged in March 2024.

On a seasonally adjusted basis, big banks’ outstanding loans inched up by 0.9% month on month.

Outstanding loans to residents increased by 12.3% year on year to PHP 12.87 trillion in March, slower than the 12.6% growth in February. Meanwhile, loans to nonresidents decreased by 5.6% to PHP 324.82 billion in March from the 3.2% decline seen in the previous month.

Loans for production activities expanded by 10.9% to PHP 11.23 trillion in March, slower than the 11.2% growth in February.

“Loan growth eased due to the slower expansion in lending to key industries such as real estate activities (9.6 %); wholesale and retail trade, repair of motor vehicles and motorcycles (11.6%); information and communication (8.9%); construction (1.8%); arts, entertainment and recreation (12.6%); water supply, sewerage, waste management and remediation activities (12.9%); and accommodation and food service activities (19.3%),” the central bank said.

Consumer loans to residents rose by 23.6% in March to PHP 1.64 trillion, also slower than the 24.1% increase seen in the previous month.

Credit card loans rose by 28.8% year on year to PHP 959.43 billion, BSP data showed, while loans for motor vehicles grew by 18.8% to PHP 477.79 billion in March. Salary-based general purpose consumption loans also increased by 8.9% to P158.71 billion.

“Lending remains robust but could benefit from additional rounds of easing. First-quarter GDP (gross domestic product) showed capital formation up a modest 4%,” Metropolitan Bank & Trust Co. Chief Economist Nicholas Antonio T. Mapa said in a Viber message.

“Further BSP cuts could support lending activity and overall GDP amidst the Trump tariffs,” Mr. Mapa added.

The Philippine economy expanded by 5.4% year on year in the first quarter, faster than the 5.3% growth seen in the fourth quarter but below the government’s 6-8% target for the year.

This was also well below the 5.8% median forecast of 15 economists in a BusinessWorld poll and the revised 5.9% GDP growth recorded in the same quarter last year.

On Wednesday, BSP Governor Eli M. Remolona, Jr. told Bloomberg that the central bank is open to cutting key rates by 75 basis points (bps) more this year following as inflation continues to ease.

The Monetary Board last month resumed its easing cycle after an unexpected pause in February, cutting benchmark rates by 25 bps to bring the policy rate to 5.5%. Its next meeting is on June 19.

Money supply

Meanwhile, domestic liquidity grew by 6.1% year on year in March, slightly slower than the 6.3% expansion in February, the BSP reported separately.

M3 — which is considered as the broadest measure of liquidity in an economy — increased to P18.24 trillion in March from P17.199 trillion a year earlier. Month on month on a seasonally adjusted basis, M3 inched up by 0.7%.

“Liquidity growth remained positive as economic growth stayed robust. The slowdown may be traced to the moderating in bank lending activity, but we expect a rebound in the coming months as BSP is likely to provide monetary support,” Mr. Mapa said.

Domestic claims increased by 10.4% in March, slightly faster than the 10.1% increase in February, the central bank said.

“Claims on the private sector grew by 11.5% in March from 12.3% in the previous month with the sustained expansion in bank lending to nonfinancial private corporations and households,” the BSP said.

Net claims on the central government grew by a faster 8% in March from 5.9% in the previous month amid higher National Government borrowings.

Meanwhile, the growth in net foreign assets (NFA) in peso terms slowed to 2.5% in March from 5.8% in February.

“The BSP’s NFA expanded by 4.5%, reflecting the increase in gross international reserves relative to a year ago. Meanwhile, the NFA of banks declined largely on account of higher foreign currency-denominated bills payable,” the central bank said.

“The BSP will continue to ensure that domestic liquidity conditions remain consistent with the prevailing stance of monetary policy, in line with its price and financial stability objectives.” — A.M.C. Sy

Shares drop on weaker-than-expected GDP data

Stocks dropped on Thursday due to weaker-than-expected Philippine gross domestic product (GDP) growth last quarter and after the Federal Reserve warned of potential risks to the US economic outlook amid the Trump administration’s shifting policies.

The Philippine Stock Exchange index (PSEi) fell by 1.17% or 75.96 points to 6,389.49, while the broader all shares index went down by 0.74% or 28.03 points to 3,740.35.

“The local market went down as investors digested the Fed’s decision to keep policy rates unchanged and its gloomy outlook for the US economy amid President Donald J. Trump’s tariff policies,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Investors also dealt with the Philippines’ first quarter 2025 GDP data, which posted a growth of 5.4%, below the government’s full-year target of 6% to 8%.”

“Philippine investors sold on profit as the first quarter GDP came out at 5.4%, while other investors digested the implications of the latest Federal Open Market Committee meeting,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The Federal Reserve held interest rates steady on Wednesday but said the risks of higher inflation and unemployment had risen, further clouding the US economic outlook as its policymakers grapple with the impact of Mr. Trump’s tariffs, Reuters reported.

At this point, Fed Chair Jerome H. Powell said it isn’t clear if the economy will continue its steady pace of growth, or wilt under mounting uncertainty and a possible coming spike in inflation.

The Fed’s policy statement, which held the benchmark overnight rate steady in the 4.25%-4.5% range, noted that since the central bank’s last meeting in March “uncertainty about the economic outlook has increased further,” and that risks were increasing that both inflation and unemployment could increase.

Meanwhile, the Philippine economy expanded by 5.4% year on year in the first quarter, faster than the 5.3% GDP growth seen in the fourth quarter. This was slower than the 5.8% median forecast of 15 economists in a BusinessWorld poll and the 5.9% growth posted in the same quarter last year.

All sectoral indices closed in the red on Thursday. Holding firms declined by 2.01% or 108.86 points to 5,282.78; mining and oil sank by 1.98% or 192.52 points to 9,528.96; property went down by 1.64% or 37.64 points to 2,255.17; financials retreated by 0.82% or 20.44 points to 2,465.78; industrials decreased by 0.64% or 58.93 points to 9,053.09; and services shed 0.07% or 1.58 points to end at 2,070.80.

Value turnover dropped to PHP 6.01 billion on Thursday with 733.54 million shares traded from the PHP 8.27 billion with 958.47 million issues that changed hands on Wednesday.

Decliners outnumbered advancers, 113 versus 75, while 54 names were unchanged.

Net foreign selling was at PHP 18.84 million on Thursday versus the PHP 671.55 million in net buying seen on Wednesday. — Revin Mikhael D. Ochave with Reuters

Farm output rises 1.9% in Q1

Agricultural output grew by an annual 1.9% in the first quarter, as good weather helped boost crops, fisheries and poultry production, the Philippine Statistics Authority (PSA) said.

Data from the PSA showed the value of agriculture and fisheries production rose by 1.9% in the January-to-March period to PHP 437.74 billion, faster than 0.2% in the first quarter of 2024.

This was a turnaround from the revised 2% contraction in the fourth quarter and ended three quarters of decline.

“The value of crops, poultry, and fisheries production recorded improvements, while livestock continued to decline during the quarter,” the PSA said in a report, citing constant 2018 prices.

At current prices, the value of production in agriculture and fisheries rose by 2.3% in the first quarter to PHP 623.66 billion.

“We are optimistic that the recovery in the first quarter signals momentum for the latter half of the year — especially as we bring new infrastructure online such as cold storage facilities and rice processing systems,” Agriculture Secretary Francisco Tiu Laurel, Jr. said in a statement.

However, former Agriculture Undersecretary Fermin D. Adriano said the first-quarter agricultural output results were “expected.”

“(This follows the) normal pattern of agri performance for first quarter of the year given the absence of typhoons and extreme weather occurrences… The harvest season extends in the first quarter of the year. Wait till the second quarter, which is planting (lean supply) season for rice and intense heat affects water supply for irrigation,” he said in a Viber message.

Crop production, which accounted for 57% of the total, increased by 1% to PHP 249.61 billion in the January-to-March period. This was a turnaround from the 0.3% decline in the same period last year.

Palay or unmilled rice production inched up by 0.3%, an improvement from the 2% contraction a year ago.

The volume of palay production went up to 4.7 million metric tons (MMT) in the period ending March from 4.69 million MMT in the same period last year.

The Department of Agriculture (DA) said that yield reached a record high of 4.09 MT per hectare, offsetting the decline in rice-planted areas. It targets a record palay output of 20.46 MMT this year.

PSA data showed corn production declined by 5.1% in the first quarter, a reversal of the 0.5% growth last year.

Coconut output slipped by 0.3%, slower than the 3.3% decline in the same quarter in 2024.

Crops that saw a double-digit increase in the value of output include tobacco (80.4%), cacao (23.6%), sugarcane (19%), rubber (13.6%), coffee (10.7%) and mongo (10.1%).

On the other hand, the value of production contracted for abaca (15.4%), sweet potato (9.4%), mango (7.5%), cabbage (6.4%) and calamansi (0.8%).

PSA data showed the poultry sector grew by 9.4% to PHP 75.22 billion, contributing 17.2% to total farm production.

The value of chicken egg production rose by 12.1%, while chicken output increased by 8.7% and duck by 1.5%.

On the other hand, duck egg production declined by 2.2% in the first quarter.

“We can see a little shift in the consumption pattern of consumers to the poultry sector as a source of food protein due to higher prices of meat, especially of hogs,” Philippine Chamber of Agriculture and Food, Inc. President Danilo V. Fausto said in a Viber message.

“This can be seen in the good performance of chicken and egg production and decrease in growth of the hog sector,” he added.

However, Mr. Fausto warned the local poultry industry may face challenges if there are increased imports from the US.

“The poultry sector will experience headwinds, however, if the US will require the entry of more chicken to the country as a bargaining chip to reconsider the tariff imposed by Trump for Philippine exports to the US,” he said.

Slump in livestock

Meanwhile, the value of livestock production continued to decline in the first quarter.

PSA data showed livestock output slipped by 2.8% to PHP 57.82 billion in the period ending March, although the pace of decline was slower than 3.5% in the same quarter last year. This accounted for 13.2% of the total farm output.

Hog production slumped by 3.7% in the first quarter, while carabao output dipped by 0.2%.

However, an increase in production was seen in dairy (10.5%), cattle (1.3%), and goat (1.2%).

“Livestock contraction is expected as the much-vaunted ASF (African Swine Fever) vaccine of the DA is ineffective with little adoption by hog raisers,” Mr. Adriano said.

The DA in March said it was expecting the approval of the Food and Drug Administration by April for the commercial rollout of ASF vaccines from Vietnam.

“Hopefully, we could also begin later this year the commercial roll out of the long-awaited vaccine for ASF, which will help kickstart the DA’s a large-scale hog repopulation effort,” Mr. Laurel said.

Bureau of Animal Industry data as of April 11 showed ASF had been detected in 54 villages, up from 39 as of March 14.

Meanwhile, fishery production rose by 1.5% to PHP 55.1 billion in the first quarter, accounting for 12.6% of the total output. This was an improvement from the 0.2% drop in the same period in 2024.

Milkfish (bangus) production rose by 7.8%, while tilapia inched up by 2.2%.

Double-digit growth was seen for slipmouth or sapsap (21%), mudcrab or alimango (20%), Indian mackerel or alumahan (14.5%) and blue crab or alimasag (12.1%).

However, declines were seen for fimbriated sardines or tunsoy (34.5%), roundscad or galunggong (14.7%), cavalla or talakitok (12.7%) and bigeye tuna or tambakol (11.2%).

Raul Q. Montemayor of the Federation of Free Farmers said the agriculture sector still has a lot of catching up to do, especially since output declined last year.

In 2024, farm output shrank by 2.2%, due in large part to the El Niño weather pattern, which is estimated to have caused about P15-billion in damage to local agriculture. — K.A.T.Atienza

Govt debt hits record PHP 16.7T at end-March

The national government’s (NG) outstanding debt edged up to a fresh high of PHP 16.68 trillion as of end-March, the Bureau of the Treasury (BTr) said on Wednesday, adding that this debt “remains manageable.”

Latest data from the Treasury showed that the debt rose by 0.31% from PHP 16.63 trillion at the end of February.

Year on year, outstanding debt went up by 11.78% from PHP 14.93 trillion at end-March 2024.

“The NG’s robust revenue performance in the first quarter of 2025 has enabled the government to finance key priority programs without imposing new taxes, keeping debt growth well within sustainable levels,” the BTr said in a statement.

NG debt is 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 bulk or 68.2% of the total debt stock came from domestic sources, while the rest were external borrowings.

“This financing mix reflects a prudent approach to debt management to help mitigate exposure to external risks while taking advantage of the country’s liquid domestic market,” BTr said.

Domestic debt, which was composed of government securities, rose up by 1.39% to PHP 11.38 trillion at end-March from PHP 11.22 trillion at end-February.

Year on year, it jumped by 10.72% from PHP 10.28 trillion in the same period.

“This was mainly due to the net issuance of domestic securities worth PHP 157.86 billion, demonstrating strong investor confidence in government instruments,” the BTr said.

However, the increase in domestic debt was partially offset by the peso appreciation against the US dollar, which reduced the overall valuation by PHP 2.03 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the higher debt in March partly reflected the widening budget deficit, which required additional borrowings by the government.

Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said the rise in domestic debt reflected the high demand for government bonds, which continues to be oversubscribed.

“This is an indication of confidence in this asset and the risk-averse sentiment while waiting for major market catalysts,” he added.

Meanwhile, external debt dropped by 1.92% to PHP 5.3 trillion as of end-March from PHP 5.41 trillion at end-February.

However, it jumped by 14.12% from PHP 4.65 trillion in March 2024.

“The (year-on-year) reduction was primarily due to the P66.22-billion decrease in the peso equivalent of US dollar-denominated debt behind local currency appreciation, as well as the net repayment of external loans, which further trimmed the external debt total by P60.84 billion,” the Treasury said.

“These more than offset the PHP 23.19-billion upward revaluation effect of third-currency movements against the US dollar,” it added.

The peso closed at PHP 57.21 against the dollar at end-March, appreciating by 78.5 centavos from its PHP 57.995-per-dollar finish at end-February.

External debt was composed of PHP 2.77 trillion in global bonds and P2.53 trillion in loans.

The NG’s guaranteed obligations slipped by 0.37% to PHP 339.86 billion as of end-March from PHP 341.11 billion in the previous month.

The Treasury attributed the monthly decline to the net repayment of external guarantees amounting to PHP 1.29 billion and the PHP 1.13-billion downward revaluation amid the continued appreciation of the peso versus the greenback.

“These more than offset the PHP 0.77 billion in additional domestic guarantees and the PHP 0.4- billion impact of third-currency exchange rate movements on external guarantees, reflecting the government’s continued efforts to prudently manage contingent liabilities while supporting key development initiatives,” it added.

Year on year, guaranteed obligations declined by 1.79% from PHP 346.04 billion.

The BTr said that 91.5% of the debt stock had fixed interest rates, shielding the Philippines from abrupt shifts in global interest rates and currency movements.

It also noted that 81.3% of the obligations are long term, “giving the government ample fiscal space and time to support growth-enhancing investments.”

Mr. Ricafort said in the following months, the debt stock could hit a new fresh high due to the need to hedge both local and foreign borrowings because of the “Trump factor.”

This year’s financing program is set at PHP 2.545 trillion, with 80% coming from local lenders and 20% from foreign sources.

The NG’s outstanding debt is projected to reach PHP 17.35 trillion by end-2025.

“With the economy continuing to grow faster than its obligations, the country remains firmly on track to achieve fiscal consolidation and reduce the debt-to-GDP (gross domestic product) ratio to below 60% by 2028,” the BTr said.

Under the Medium-Term Fiscal Framework, the government seeks to bring the ratio down to 60.4% by the end of 2025, and to 56.9% by 2028.

“The Marcos administration has inherited a large debt due to the pandemic, amounting to approximately PHP 12.79 trillion, but it has already made improvements to the country’s debt statistics by reducing the NG debt-to-GDP ratio to 60.7% in 2024, below the 70% international threshold,” the BTr said.

First-quarter GDP and debt-to-GDP ratio data will be released on May 8.

“Moreover, the country’s recent credit rating upgrades and reaffirmations underscore strong investor confidence in the country’s economic fundamentals, translating to greater demand for Philippine bonds, thereby preserving government access to reasonable borrowing costs, crucial for sustaining the country’s inclusive growth momentum,” the BTr said.

In late April, Fitch Ratings affirmed its “BBB” investment grade rating and “stable” outlook amid the country’s strong growth prospects and minimal exposure to trade tensions. – Aubrey Rose A. Inosante, Reporter

Jobless rate inches up in March

The Philippines’ unemployment rate inched up to 3.9% in March from a month earlier, even as the number of jobless Filipinos fell by the tens of thousands from a month and a year earlier, according to the statistics agency.

In its latest Labor Force Survey, the Philippine Statistics Authority (PSA) said the jobless rate rose to 3.9% in March from 3.8% in February, but flat from a year ago.

This is equivalent to 1.93 million jobless Filipinos in March, slightly lower than the 1.94 million unemployed in February and the two million jobless in March last year.

The country’s unemployment rate averaged at 4% in the first three months of 2025, unchanged from the same period last year.

PSA data also showed underemployment worsened to 13.4% in March from 10.1% in February and 11% a year earlier.

The ranks of underemployed Filipinos — those who want longer work hours or an additional job — reached 6.44 million in March. This was higher than 5.39 million in March 2024 and 4.96 million in February.

“Underemployment rose by 1.05 million, it was mainly contributed by what we call the ‘invisible underemployed.’ They work for 40 hours and above but seek additional work or other jobs with higher salaries,” National Statistician Claire Dennis S. Mapa said at a media briefing.

He added that the rise in the underemployment rate in March was spread out across all sectors.

For the first three months, the unemployment rate stood at 12.3%, unchanged from last year.

PSA data showed 49.96 million Filipinos were part of the labor force in March, lower than the 51.09 million in February and 51.15 million in March 2024.

The labor force participation rate (LFPR) — the proportion of the working-age population (15 years old and over) that is part of the total labor force — slipped to 62.9% in March from 64.5% in February. Year on year, the LFPR fell from 65.3%.

“In March 2025, we saw that a substantial number decided to go back to school. That means that they had to forego their opportunities in the labor market to continue their studies,” Mr. Mapa said.

He said some may have also opted out of the labor force due to “household family duties.”

The employment rate was steady at 96.1% from a year ago, but slightly lower than the 96.2% in February.

However, the number of Filipinos with jobs dropped by over a million to 48.02 million in March, from 49.15 million a year ago, signaling concerns about labor participation and underemployment.

For the first quarter, the average employment rate was unchanged at 96%.

Mr. Mapa said that the decline in the employment rate in March can be traced to the drop in jobs in the agriculture sector.

He said the suspension of government hiring may have also affected the labor data in March.

“There was a ban on hiring in government positions, we think this had an impact on the reduction of employed persons,” he said, referring to the election ban on hiring of new government employees that runs from March 28 to May 12.

By sector, services remained the top employer, accounting for 62% of total employed persons in March, followed by agriculture (20.1%) and the industry sector (17.9%).

The education sector saw the largest annual increase in jobs during the month, adding 210,000 jobs. This was followed by administrative and support service activities (+145,000), fishing and aquaculture (+138,000), arts, entertainment and recreation (+91,000), and human health and social work activities (+51,000).

On the other hand, agriculture and forestry saw the biggest annual decline in employment (-609,000). This was followed by public administration and defense and compulsory social security (-349,000), manufacturing (-281,000), wholesale and retail trade, repair of motor vehicles and motorcycles (-175,000), and professional, scientific and technical activities (-100,000).

Wage and salary workers accounted for 63.4% of the workforce in March, followed by self-employed individuals without paid employees (27.9%), unpaid family workers (6.6%), and employers in family-operated farms or businesses at 2.1%.

Working hours averaged 41.2 hours per week in March, increasing from the average 40.7 hours reported last year and the 41.4 hours in February.

“The Philippines’ unemployment rate remained low, signaling a robust labor market that should help support domestic demand and overall economic growth amidst external headwinds,” Chinabank Research said in a statement.

University of the Philippines Diliman School of Labor and Industrial Relations Assistant Professor Benjamin B. Velasco, in a Facebook chat, said the month-on-month uptick in the jobless rate could be due to the loss of seasonal jobs in construction and trade.

“The loss of jobs in those sectors could not be compensated by higher temporary employment created by the election season — falls under the administrative and support service activities,” Mr. Velasco said.

Federation of Free Workers Vice-President Julius H. Cainglet said the rise in the underemployment rate could be due to Filipinos looking for extra work.

“Workers seek additional jobs since the wages in their existing jobs are not enough to sustain their family’s needs. They need living wages, not starvation wages,” Mr. Cainglet said in a Viber message.

Chinabank Research said the rise in underemployment shows the need for more quality jobs for Filipinos.

Mr. Velasco said that the annual increase in employment in the education sector shows the need for new teachers as the student population grows.

“The (increase in) administrative and support services is due to temporary employment related to elections. There are thousands of ward leaders and so-called volunteers doing paid work for candidates,” Mr. Velasco added. — A.H.Halili

BSP to ease policy but may stay cautious

Benign inflation gives the Bangko Sentral ng Pilipinas (BSP) room to reduce benchmark interest rates further, but it could stay cautious due to the economic uncertainty caused by the United States’ protectionist policies, analysts said.

The slower April inflation print affirms that there is room for further easing, BSP Assistant Governor Zeno R. Abenoja also said on the sidelines of the 58th Asian Development Bank Annual Meeting in Milan, Italy on Wednesday, but the pace and size of rate cuts will still need to be studied.

“The BSP has the monetary space to do additional cuts because, number one, the actual inflation for the first four months of the year is 2% — just at the lower end of the target of 2-4%,” GlobalSource Partners Country Analyst and former BSP Deputy Governor Diwa C. Guinigundo said in a phone interview. “Based on actual first four-month average of 2%, and the next three years’ risk-adjusted inflation forecast, the BSP has the flexibility to do it.”

Mr. Guinigundo said he expects the BSP to cut rates by two to four more times this year.

“However, I’m sure the BSP will be more circumspect, more careful in doing further monetary policy easing for the reason that there is greater uncertainty in the global financial markets and in the global economy,” he said, noting the Trump administration’s evolving tariff, tax and immigration policies.

“All of this could translate into higher inflation and lower growth in the US. And since the US is the biggest economy in the world, chances are many of us will be affected in the process. So, I think the BSP will have to monitor what is happening in other economies and what the central banks are also or will be doing in the process.”

Philippine headline inflation slowed to 1.4% in April from 1.8% in March and 3.8% a year prior. This brought average inflation in the first four months to 2%.

Accounting for risks, the BSP expects inflation to average 2.3% in 2025 and 3.3% in 2026.

The central bank resumed its easing cycle last month with a 25-basis-point (bp) rate cut, bringing the policy rate to 5.5%.

The Monetary Board has four remaining meetings this year, with the next one scheduled for June 19.

BSP Governor Eli M. Remolona, Jr. told Bloomberg on Wednesday that they are open to cutting rates by a further 75 bps this year amid cooling inflation.

“The inflation number in April confirms or reaffirms the analysis that was done in the last meeting, that inflation will continue to be manageable moving forward this year,” Mr. Abenoja told reporters.

“At that time, the Monetary Board mentioned that there’s flexibility to support this shift to a more accommodative monetary policy stance. But perhaps the pace, the timing, and the magnitude, we have to look at the data in each meeting.”

Mr. Abenoja said the low inflation in April was partly due to the normalization of food inflation.

He added that cooling inflation is unlikely to be a signal of slowing consumer spending.

“It may not yet be evident that there is a significant slowdown of demand coming from the external shocks. We don’t think this is yet a reflection of that. It’s more of the supply issues resolving themselves, including for rice,” he added. “We could also be benefiting, including moving forward, from the reduction in international oil prices.”

The first-quarter gross domestic product (GDP) report to be released on May 8 (Thursday) will be a crucial data point for the BSP’s next policy decision, Mr. Abenoja said.

“It will be one of the major indicators that will be analyzed by the Monetary Board. So we will see,” he added. “The Monetary Board can discuss how much of that scope of flexibility can be undertaken in the remaining four meetings for monetary policy.”

Inflation to stay low

For his part, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said he anticipates at least 75 bps more in cuts from the BSP this year following the April consumer price index (CPI) result as inflation is likely to stay within target for the rest of the year

“I wouldn’t be surprised if they went further with 100 bps, given how subdued inflation has been recently and will likely continue to be going forward,” Mr. Chanco said in an e-mail. “Our base case now is that inflation will hover just below the 2% lower bound of the BSP’s target range for the rest of this year, especially with global oil prices tanking amid the US’ trade war.”

“The real rate of interest in the Philippines is still very elevated as things stand, especially in the wake of the recent declines in inflation, so the Monetary Board has ample room to cut rates without overdoing it.”

Moody’s Analytics economist Sarah Tan likewise said they expect the CPI to stay at the lower bound of the BSP’s 2-4% annual target this year.

“Even if global inflation rises due to supply-chain disruptions stemming from evolving US trade policies, it is unlikely that inflation in the Philippines will exceed the upper limit of the target range,” Ms. Tan said.

“Continued progress on the inflation front will create room for further monetary policy easing over the remainder of the year. We anticipate at least one more 25-basis-point rate cut in the second half of 2025. A lower policy rate would help ease the financial burden on households and provide some relief to the domestic economy, offsetting the negative effects of a weakening trade environment as US tariffs increase,” she added.

Meanwhile, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc. (UnionBank), said they expect inflation to bottom out before accelerating anew by August amid the typhoon season.

Still, UnionBank expects the CPI to remain within target this year and next.

Mr. Guinigundo added that upside price risks could come from potential second-round effects like transport fare and wage hikes.

“Upside risks to inflation remain… At present, the low inflation, low oil prices and strong peso gives the BSP leeway to cut,” Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said in a Viber message. — Aubrey Rose A. Inosante and Luisa Maria Jacinta C. Jocson

PSEi extends climb as BSP chief signals more cuts

Philippine shares climbed further on Wednesday on hopes for further rate cuts from the Bangko Sentral ng Pilipinas (BSP) amid easing inflation and with the United States and China set to hold trade talks.

The bellwether Philippine Stock Exchange index (PSEi) increased by 0.72% or 46.76 points to close at 6,465.45, while the broader all shares index went up by 0.59% or 22.26 points to 3,768.38.

Market sentiment was broadly positive as the PSEi traded as high as 6,531.99 intraday but gave up some of its gains before the closing bell.

“The local market extended its rise as investors continued to digest the Philippines’ April inflation of 1.4%, which is seen to give the BSP more room to cut policy rates,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Investors also cheered the progress between the US-China relations as representatives from the two countries are set to discuss trade matters this week.”

“Philippine shares were bought up second day straight post-inflation with the local bourse reaching 6,500 level, but gains were tempered by profit taking later in the session,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The Philippine central bank is open to cutting its key interest rate by a further 75 basis points (bps) for the rest of the year as inflation continued to ease, according to BSP Governor Eli M. Remolona, Jr., Bloomberg reported.

“On the table, yes,” Mr. Remolona said in a mobile-phone message on Wednesday when asked if it’s possible for the Bangko Sentral ng Pilipinas to reduce the benchmark rate by 75 bps more this year after inflation further slowed in April.

The Monetary Board last month resumed its easing cycle after an unexpected pause in February as it slashed benchmark rates by 25 bps, bringing the policy rate to 5.5%.

Meanwhile, US Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China’s economic tsar He Lifeng in Switzerland for trade talks this weekend.

Almost all sectoral indices closed higher on Wednesday. Industrials rose by 1.36% or 122.24 points to 9,112.02; services increased by 1.18% or 24.22 points to 2,072.38; financials went up by 1.13% or 27.77 points to 2,486.22; mining and oil climbed by 0.16% or 16.10 points to 9,721.48; and holding firms inched up by 0.08% or 4.46 points to 5,391.64.

Meanwhile, property declined by 0.35% or 8.16 points to 2,292.81.

Value turnover increased to PHP 8.27 billion on Wednesday with 958.47 million issues traded from the PHP 6.15 billion with 876.09 million shares exchanged on Tuesday.

Advancers beat decliners, 113 versus 72, while 48 issues were unchanged.

Net foreign buying went down to PHP 671.55 million on Wednesday from P690.87 million on Tuesday. — Revin Mikhael D. Ochave with Bloomberg

BTr says it’s unlikely to issue more global bonds this year

MILAN, Italy — The Philippine government is not likely to issue another global bond this year as it has almost completed its program for foreign borrowings, the Bureau of the Treasury (BTr) said.

On the sidelines of the 58^th ADB Annual Meeting, National Treasurer Sharon P. Almanza told reporters they do not expect to launch any more sizable offshore bond issuances for the remainder of the year.

“Probably not. We were able to raise almost USD 3.2 billion already, we’re almost done. Almost done for the year,” she said in mixed English and Filipino.

In January, the National Government (NG) raised USD 3.29 billion from its sale of US dollar and euro bonds, its first global bond offer for the year.

The NG’s commercial borrowing program is pegged at USD 3.5 billion this year.

This year’s overall financing program is set at PHP 2.55 trillion, of which 20% or about PHP 500 billion will come from foreign sources.

Asked if they will issue bonds to meet the target, Ms. Almanza said “it depends” but said they are not looking at any more substantial bond offers like a Sukuk or a retail bond issuance.

Meanwhile, the Treasury is also seeking to include more of its recently launched fixed-rate Treasury notes (FXTN).

“We really want to have benchmark size ones. And one way to build size is through book building. It’s kind of like a retail treasury bond (RTB) but not exactly, in the sense that it’s an FXTN,” she said.

“Because for RTB, we cannot do a reissuance. RTB is just one time. Now, we’re shifting. We will still have RTB but maybe the size will not be the same as before. Maybe smaller,” she added.

In April, the government sold P300 billion worth of FXTN, which was 10 times the initial PHP 30-billion offering.

Ms. Almanza said the FXTN notes will now be added to the lineup of the BTr’s bond issuances.

“Because the intention is to have more benchmark bonds. That’s what the investors want. They want big weight because right now we have so many ISINs (International Securities Identification Numbers).”

“Now, if we’re able to convert most of our issuances to bigger size, it’s better because there is liquidity, and the volume dictates liquidity,” she added.

While the government is seeking to further reduce foreign currency exposure in its overall borrowings, Ms. Almanza said the current 80:20 mix is at a good level.

“It’s a function of liquidity. If all of that is domestic, potentially rates may go up and then, we will crowd out investment… Even if you want to source 90% (domestic), our deficit is so big. If our deficit is only PHP 1 trillion, we could possibly do 90:10,” she said.

“In 2019, the deficit was so small, so the requirements were small as well. We were only borrowing less than PHP 1 trillion in domestic. Now, we’re borrowing PHP 2 trillion.”

The NG’s deficit ceiling is capped at PHP 1.54 trillion or 5.3% of economic output this year.

Ms. Almanza noted the importance of local currency conversion.

“It’s very important because we will be able to manage our FX (foreign exchange) exposure even if we cannot source majority or at least we cannot source 80% from our local market.”

“Right now, our market is very liquid. We are confident that liquidity is sufficient so that we will be able to raise substantial funding from the market. But what if there will come a time that liquidity will dry up? Maybe it still makes sense to borrow abroad.”

Bond index

Meanwhile, Ms. Almanza said that efforts to re-enter JPMorgan Chase & Co.’s emerging market government bond index are still underway.

“They said most countries are able to get in the index, on average, around three years,” she said, noting they began the process in 2023.

She said participation by nonresidents in the market has been very small.

“I think the highest that we have is about less than 8%, that’s way back in 2008, during the peak of the Global Financial Crisis,” she added.

JPMorgan is scheduled to have a consultation survey in May and June, with the results likely out by October.

“They will start to have that survey and meet individual investors and hopefully they will be able to convince each of them,” Ms. Almanza said.

“They will tell the investors the updates, all these initiatives that we’re doing and hopefully, the investors are also able to really feel that somehow the liquidity has improved because we’ve seen participation starting this year.”

She noted that in the FXTN offer, more than 10% of the participants were foreign investors.

The BTr has been working on measures to encourage foreign participation, Ms. Almanza said.

‘There are several issues that we’re trying to address, one of which is liquidity. That’s one concern of nonresident investors.”

For example, the Treasury has been working on the consolidation of its issuances.

The Treasury is also working to enhance transparency and predictability in its issuances, she added.

JPMorgan’s Government Bond Index-Emerging Markets (GBI-EM) tracks the performance of sovereign and quasi-sovereign bonds issued by emerging market countries. The country’s inclusion will need to be approved by a certain percentage of investors reviewing the index.

The Philippines’ global peso notes were removed from the GBI-EM in January last year due to illiquidity. – Luisa Maria Jacinta C. Jocson, Senior Reporter

DoF: Philippines’ vulnerability warrants more financial support

MILAN, Italy — The Philippines will still need financing assistance due to its exposure to shocks like climate risks and even as it graduates to upper middle-income status, the Department of Finance (DoF) said, urging the Asian Development Bank (ADB) to continue expanding its support to the country.

“As we carry this partnership forward, we call on the bank to further deepen its commitment to our development agenda, and towards addressing global challenges,” Finance Undersecretary Joven Z. Balbosa said during the Governors’ Business Session at the 58^th ADB Annual Meeting here on Monday.

Mr. Balbosa delivered the speech for the Philippines as temporary alternate governor, as Finance Secretary Ralph G. Recto, who sits on the ADB Board of Governors, was unable to attend.

“Even as the Philippines progresses towards becoming an upper middle-income country, we remain among those most vulnerable to the impacts of climate change, and we urgently require sustained support from our development partners for a united and cohesive response,” he said.

The Philippines is currently classified as a lower middle-income economy, based on the latest World Bank data. The Marcos administration is targeting to achieve upper middle-income status by 2026.

The Department of Economy, Planning, and Development (DEPDev) earlier said that the transition to a higher income level will entail a “shift in access to resources.”

The Philippines’ eligibility for concessional financing and access to traditional official development assistance (ODA) would diminish upon reaching the upper middle-income threshold.

In 2024, the Philippines was the second-biggest recipient of ADB financial assistance with $6.02 billion, just after India ($7.26 billion).

The latest data from DEPDev showed that the total active ODA in the country reached $37.29 billion as of December 2023, higher by 15% from 2022.

Meanwhile, Mr. Balbosa also called on the ADB to “ensure availability and concessionality of financing for climate resilience.”

The Philippines remains the most at-risk country globally for 16 straight years, according to the latest edition of the World Risk Index.

Earlier data from the ADB also showed that the Philippines could potentially lose 18.1% of its gross domestic product (GDP) by 2070 due to climate change under a high emissions scenario.

The ADB should also scale up its efforts to improve access to technology amid rapid digital innovation, Mr. Balbosa said.

“We trust that through ADB’s continued assistance, we can achieve a whole-of-government approach to integrate sector-specific digital solutions and initiatives with digital public infrastructure that would further contribute to our growth and fiscal targets.”

Mr. Balbosa also highlighted the Philippines’ massive infrastructure spending needs.

“We likewise look forward to the bank’s continued support in terms of financing, as well as strengthening institutional capacity, recognizing that by investing in infrastructure, we do not only provide essential services and improve connectivity, but also spur employment opportunities.”

The government is targeting to spend 5-6% of GDP on infrastructure annually.

Mr. Balbosa also pushed for the ADB to “continue collaborating with other international finance institutions in supporting vulnerable countries and finding innovative ways to finance programs and projects that contribute to global growth and development.”

“We call on the international community to deepen collaboration and urge international financial institutions like ADB to be adequately equipped and step in more decisively to support lower- and middle-income countries through timely and accessible financing, technical assistance, knowledge support, and enhanced policy dialogue.”

Mr. Balbosa also reiterated the need for economies in the region to collaborate amid the unpredictability in trade policies.

“We recognize the importance of international cooperation and multilateralism, especially in the context of a hyperglobalized world.”

He said that there is a need to “carefully consider potential unintended spillovers and spillbacks from trade measures.”

The Philippines, like the rest of Southeast Asia, was not spared by the United States’ barrage of reciprocal tariffs in early April.

The country was slapped with a 17% reciprocal tariff, though this was suspended until July, save for the 10% baseline which remains in effect.

“In terms of trade, we see the need to further strengthen regional cooperation and tap new and emerging trade partners as a means to unlock growth opportunities,” Mr. Balbosa said.

“We remain committed to an open and rules-based trading system, and in preserving the integrity of regional and global value chains,” he added. – Luisa Maria Jacinta C. Jocson, Senior Reporter

Green investments in Philippines slide in 2024

The Philippines’ private investments in green projects declined in 2024 as higher investments in solar and wind energy projects were offset by the drop in waste management and green cement projects.

Private green investments in the Philippines went down by 12% to USD 1.28 billion in 2024 from USD 1.46 billion in the previous year, according to the 2025 Southeast Asia’s Green Economy report by Bain & Company, GenZero, Standard Chartered and Temasek.

Investments in solar and wind energy projects surged 1.5 times and six times, respectively, the report showed.

However, these were offset by the reductions in investments in the waste management and green cement sectors.

The Philippines accounted for 16% of the total investments in SEA-6 (Southeast Asia-6), which is composed of Thailand, Malaysia, Singapore, Indonesia, the Philippines, and Vietnam.

Green investments in SEA-6 surged by 43% year on year to USD 8 billion in 2024, with Malaysia and Singapore contributing over 60% of deals, according to the report.

Power accounted for two-thirds of green investments in the region as the size of deals increased.

Investments in solar surged by 100% while waste management deals jumped by 60% year on year.

According to the report, a systems-based approach and wider collaboration in the region could drive growth in Southeast Asia’s green economy.

“(This) could drive significant regional economic impact – with SEA-6 economies potentially reaping up to USD 120 billion in GDP (gross domestic product) growth, 900,000 new jobs, and closing up to 50% of the emissions gap by 2030,” it said.

The report defined system-level solutions as “high-impact interventions that address systemic barriers across multiple systems to deliver transformative and amplified impact.”

It said that this approach could address cross-cutting barriers; maximize return on investment, and co-benefits; and prevent “negative, unintended spillovers” across systems.

Dale Hardcastle, co-director of Bain & Company’s Global Sustainability Innovation Center, said Southeast Asia may see an acceleration in the development of the green economy as governments and companies pivot priorities.

“By focusing on scalable, high impact systems-level solutions, Southeast Asia can rewrite the green economy playbook and turn current challenges into opportunities. The need now is to drive two key outcomes in parallel — significant emissions reduction and sustained economic growth — ensuring that the region not only meets its climate goals but also builds long-term resilience and prosperity,” he said.

While corporations in most of the six Southeast Asian countries show progress in setting targets and establishing roadmaps, there is a significant gap in green investments.

“With just five years to 2030, our window for action to avoid the worst effects of climate change is rapidly closing. We need to increase the momentum and focus on pragmatic solutions with near-term impact,” said Franziska Zimmermann, managing director for sustainability at Temasek.

“Stakeholders in this region have an opportunity to drive transformative, systems-level change that can balance energy security, sustainability, and economic growth,” she added.

The report noted the progress made in the Philippines in terms of infrastructure and technology brought by improved grid interconnectedness and electric vehicle (EV) charging stations.

There are 912 publicly accessible charging stations operational as of March 31, according to the Department of Energy.

Under the Comprehensive Roadmap for the Electric Vehicle Industry, the Philippines targets to deploy 7,300 EV charging stations by 2028.

The report said national energy plans such as the National Renewable Energy Program (NREP) and Clean Energy Finance and Investment Roadmap offer clearer direction for renewables and financing.

Under the NREP, the Philippines seeks to significantly increase the share of renewable energy in the country’s power generation mix to 35% by 2030 and 50% by 2040. — S.J.Talavera

2024 Mid-Year Economic Briefing: Navigating the Easing Cycle

Investing with Love: A Mother’s Guide to Putting Money to Work

Investor Series: An Introduction to Estate Planning

Inflation Update: Weak demand softens shocks

Monthly Economic Update: Fed cuts incoming