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April inflation that’s likely to go below 2% gives the Philippine central bank “a lot of policy space,” while first-quarter growth that could be near or below the government’s 6-8% target would be an “important factor” in the Monetary Board’s policy meeting next month, according to its governor.

“I think it would be a good number,” Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. told reporters at the presidential palace on Monday, referring to last month’s inflation. “It gives us a lot of policy space. It makes our life easier.”

Inflation likely settled at 1.3% to 2.1% last month, according to BSP estimates released last week, which gives it leeway to cut benchmark interest rates further.

A BusinessWorld poll of 14 analysts last week yielded a median estimate of 1.8% for the consumer price index (CPI) in April, same as the March print.

The Philippine Statistics Authority is set to release the April inflation data on Tuesday (May 6), and preliminary first-quarter GDP data on Thursday (May 8).

Gross domestic product (GDP) growth that could be below the full-year goal of 6-8% also puts pressure on the BSP to ease monetary policy and stimulate growth. 

“Growth will be an important factor [when] we decide in June,” Mr. Remolona said.

The BSP’s next policy meeting is on June 19.

The Monetary Board in April resumed its easing cycle with a 25-basis-point (bp) rate cut, bringing the key rate to 5.75%. It lowered rates by a total of 75 bps in 2024.

Philippine GDP likely expanded by 5.8% in the first quarter, according to a median forecast of 15 economists and analysts polled by BusinessWorld, picking up from the revised 5.3% in the fourth quarter of 2024.

However, it would be a tad slower than the 5.9% growth recorded in the first quarter of 2024.

“Low inflation may be a sign of better supply control, but can also reflect slowing demand, of which the latter can negatively impact growth. Rate cuts can help with driving demand higher as it makes borrowing costs cheaper, allowing credit growth,” Reinielle Matt M. Erece, an economist at Oikonomia Research and Advisory, Inc., said in a Viber message.

Mr. Erece said he understands why the BSP is “hesitant,” as heightened global uncertainty can affect inflation.

“Right now, the Fed is hawkish on policy as they weigh in on the impacts of tariffs. This may be the time for the BSP to perhaps deviate from the Fed’s moves and decide policy based on what the country needs.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said inflation likely eased to 1.6% year on year in April. He expects inflation to average 2.2% for the full year, well within the BSP’s 2%-4% target range.

With subdued inflation and slowing economic growth, he said the BSP is expected to continue cutting policy rates to support growth.

“Relatively benign inflation at 2% levels is already possible for most of 2025, well within and even at the lower end of the BSP’s inflation target of 2%-4%, thereby could justify/support future local policy rate cut/s that would match future Fed rate cuts in 2025,” he noted.

Filomeno S. Sta. Ana III, cofounder and coordinator of Action for Economic Reforms, said Mr. Remolona’s statement points to the further easing of monetary policy.

“Inflation is no longer a binding constraint,” he said in a Viber chat. “What should worry us is fiscal policy that has encouraged unproductive, inefficient and corruption-prone government spending, made worse by government’s rolling back of tax reforms.”

Mr. Remolona earlier signaled further rate reductions this year as the benchmark is still “slightly restrictive.” Rate cuts will likely be delivered in “baby steps” or in 25-bp increments, he said. – Chloe Mari A. Hufana, Reporter

The Philippine government is optimistic that a deal on tariffs can be reached with the US, as it is set to continue negotiations for a lower tariff rate.

“The negotiation is a process. Not a one-time meeting. We believe the meeting went very well and our points were well received,” Trade Secretary Ma. Cristina A. Roque said in a statement on Monday.

Ms. Roque, Special Assistant to the President for Investment and Economic Affairs Frederick D. Go and Philippine Ambassador to the US Jose Manuel D. Romualdez met with the US Trade Representative (USTR) Jamieson Greer in Washington on May 2.

Before the trip, the Trade secretary said that the aim is to bring back the tariffs to at least the pre-“Liberation Day” level.

Last month, US President Donald J. Trump announced higher reciprocal tariffs on most of the country’s trading partners, with Philippine goods facing the second-lowest rate in Southeast Asia at 17%.

However, the reciprocal tariffs have been paused for 90 days until July. A baseline 10% tariff remains in place.

At a Palace briefing, Mr. Go said there will be more meetings with the USTR, although the Trade Undersecretary Allan B. Gepty would lead the talks.

He did not elaborate on a timeline.

Mr. Go said the meeting with the USTR focused on the local semiconductor and electronics industries since these are the top exports to the US.

Discussions also centered on the coconut, garment, furniture, food processing, and automotive industries, he added.

“The coconut industry is very important to us because it is our number one agricultural export to America,” he said in Filipino. “We brought up all the concerns and issues of our stakeholders, and as I said earlier, I believe it was very well received.”

In 2024, the US was the country’s top export market, receiving USD 12.12 billion worth of Philippine goods. The US was the Philippines’ fifth-largest source of imports accounting for USD 8.17 billion.

The Philippines’ top exports to the US are semiconductors, electronic integrated circuits, and insulated wire and other insulated electric conductors.

The country’s top imports from the US are soya beans, electronic integrated circuits, and wheat and meslin.

When asked if the USTR had committed to lowering the 17% reciprocal tariff imposed by Mr. Trump, Mr. Go said, “Let’s allow the process to take place.”

“I ask for your patience; let’s just wait for the outcome,” he added.

He refused to divulge if the US promised anything during the dialogues due to confidentiality agreements but noted it will take several negotiations to reach a favorable resolution.

The Foreign Trade Office of the DTI will now handle the negotiations with their American counterparts, he noted.

“We have to let the technical working groups work on a framework for discussions… both sides will have to work together to put a framework before the 90-day moratorium period is over,” he added.

Mr. Go noted the Philippine delegation was “well prepared” for the meeting, adding they discussed with Cabinet officials and the business sector before flying out.

Meanwhile, Department of Economy, Planning, and Development (DEPDev) Undersecretary Rosemarie G. Edillon said that the meeting with the USTR showed the Philippine government’s intention to strengthen trade relations with the US.

“We are very interested, especially in our trade relations, and to inform them of our initiatives to reduce, if not totally eliminate, what they call nontariff barriers,” she added.

Asked to comment, former Trade Undersecretary Rafaelita M. Aldaba said that the Philippines should get “as many products as possible in the exemption list.”

“In exchange we can offer zero tariffs on products that are important to the US,” she added.

In previous statements, Ms. Roque said that the Philippines might increase imports of US products, particularly soybeans and frozen meat, in exchange for lower tariffs.

According to the DTI Export Marketing Bureau, the US was the country’s third-largest trading partner last year, with total trade amounting to USD 20.29 billion.

Ateneo School of Government Dean and Economics Professor Philip Arnold P. Tuaño said that the country should also seek the reauthorization of the Generalized System of Preferences (GSP) while negotiating for lower tariffs.

“We should negotiate for lower tariffs on Philippine goods entering the United States and possibly also request the USA to reauthorize the GSP, which allows eligible developing countries to export their goods to the US tariff-free,” said Mr. Tuaño in an e-mail.

“[We should] also argue for preferential rates for strategic goods under the supply-chain resilience program, such as semiconductors and agricultural products,” he added.

While active, the Philippines was the GSP’s fifth-largest beneficiary, with about USD 1.6 billion in duty-free exports in 2020. This made up 10% of the total US GSP imports, which amounted to USD 16 billion.

The trade preference scheme eliminated duties on approximately 5,000 or 47% of the total US tariff lines. However, these benefits expired on Dec. 31, 2020. – Justine Irish D. Tabile and Chloe Mari A. Hufana, Reporters

The Philippine government on Monday launched a 10-year employment masterplan, which is targeting to increase the labor force participation rate (LFPR) to 68.2% by 2034.

“This is a very ambitious plan. If you look at the targets, it’s simple, we want to raise our LFPR from 64% to 68%,” Department of Economy, Planning, and Development (DEPDev) Undersecretary Rosemarie G. Edillon told reporters on the sidelines of the launch on Monday.

“So, this is actually a big ask, especially since by 2035, the majority of the workforce will be coming from Gen Z and Gen Alpha. So, we actually need a big policy reform,” she added.

Launched by the DEPDev, the Department of Trade and Industry (DTI), and the Department of Labor and Employment, the Trabaho Para sa Bayan (TPB) Plan aims to strengthen and future-proof the country’s workforce.

Under the plan, the government set near-term and long-term initiatives aimed at addressing challenges faced by the local labor market, such as rapid digitalization, geopolitical tensions, climate change, and demographic shifts.

Ms. Edillon said that the country’s LFPR is the lowest among the Association of Southeast Asian Nation (ASEAN) countries.

“Taking out the COVID-19 (coronavirus disease 2019) years, our LFPR is about less than 65%, but for the other countries, it is actually in the high 60s. You have Vietnam over there with an LFPR in the high 70s,” she added.

Preliminary data from the Philippine Statistics Authority showed that LFPR in February was estimated at 64.5%. For the first two months, the average LFPR stood at 64.2%.

However, the new jobs masterplan did not indicate any targets on how many jobs will be created until 2034.

“The problem with having a target with respect to jobs is that it’s very difficult, especially since we are moving towards a framework for flexible work arrangements where it would be possible for you to hold more than one job,” said Ms. Edillon.

“We’re also moving towards having a framework for part-time jobs. So, it’s difficult [to see] how it will translate into the number of jobs,” she added.

Labor Secretary Bienvenido E. Laguesma said that there have been previous targets to create a million jobs.

“But this does not ensure there will be enough jobs created for the new entrants (to the labor market),” he said.

“It’s not that simple to say that we want to create one or two million jobs by a certain year. What we want to see is that every Filipino family will have a job,” he added.

The TPB Plan also set a target of decreasing the unemployment rate to 3% by 2034 from 3.8% in 2024 and the underemployment rate to 7-9% from 13.3% last year.

In addition, the masterplan also aims to increase the female LFPR to 59% by 2034, which Ms. Edillon said is the lowest in the ASEAN region.

“Ours is about 48.8%, while in Vietnam it is actually 72.5%. So can you just imagine how much more human capital we could add if we could actually increase the LFPR for women?” she added.

The TPB Plan is also targeting to improve the country’s domestic industry diversification and production, as well as export complexity.

Citing the Global Innovation Index, Ms. Edillon said that the two factors measure the level of sophistication of the economy.

“That is actually the goal, that we will be a more competitive country before 2034. So that is actually the goal of the National Innovation Agenda and Strategy Document,” she added.

The TPB Plan outlines priority strategies that aim to address labor demand, supply, and governance, as well as how to future-proof labor demand, supply, and governance.

Strategies to ensure labor demand include expansion of market access, encouraging investments in priority sectors, ensuring ease of doing business, establishment of a dynamic innovation ecosystem, and promotion of technology adoption and enterprise-based education and training.

To improve labor supply, the TPB Plan recognized the need to expand lifelong learning opportunities, upgrade the design of skills training programs, enhance overseas Filipino reintegration programs, and increase program take-up among disadvantaged sectors.

Meanwhile, the TPB also cited 18 policy recommendations, which are seen to create an “inclusive and dynamic labor market environment.”

These policies include the Konektadong Pinoy bill, the Lifelong Learning Development Bill, tax incentives for employees on a work-from-home program, the Freelancers’ Protection Act, and the Amendment of the Maternity Leave Law, among others. — Justine Irish D. Tabile

The national government’s (NG) budget deficit ballooned in March as revenues slipped and state spending jumped ahead of the election ban, the Bureau of the Treasury (BTr) said.

Data from the BTr showed the fiscal gap widened by 91.78% to PHP 375.7 billion in March from PHP 195.9 billion in the same month a year ago.

Government spending surged by 35.37% to PHP 655 billion in March from PHP 483.8 billion a year prior.

Primary spending — which refers to total expenditures minus interest payments — soared by 37.29% to PHP 566.9 billion from PHP 412.9 billion.

Interest payments jumped by 24.21% to PHP 88.1 billion from PHP 70.9 billion in the previous year.

In March, revenue collection fell by 3.01% year on year to PHP 279.3 billion, as nontax revenues plunged by 69.36% to PHP 19.6 billion.

Broken down, income from the BTr slumped by 83.32% to PHP 8.7 billion while revenues from other offices declined by 26.9% to PHP 10.9 billion.

Tax revenues, on the other hand, rose by 15.97% to PHP 259.6 billion in March from PHP 223.9 billion a year ago.

Bureau of Internal Revenue (BIR) collections jumped by 20.86% to PHP 175.7 billion, while Bureau of Customs’ (BoC) revenues went up by 7.3% to PHP 80.4 billion.

“The sharp widening of the budget deficit in March and the first quarter was driven primarily by stronger government spending, particularly on infrastructure and social programs, alongside a moderation in revenue growth,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said.

“Disbursements likely ramped up ahead of the election-related spending ban, while revenues, although growing, may have faced headwinds from slower-than-expected collections in certain tax components,” he added.

The 45-day election ban on the release of public funds for public works projects began on March 28. This is done to prevent incumbent officials from using these funds during the election period for their advantage.

First quarter

The budget deficit in the January-March period widened to PHP 478.8 billion, higher by 75.62% from the PHP 272.6-billion gap in the same period in 2024.

However, the Treasury said this was still in line with its PHP 1.5-trillion full-year deficit program.

Expenditures jumped by 22.43% to PHP 1.477 trillion as of end-March from PHP 1.21 trillion in the same period a year ago.

The Treasury said government spending in the first quarter already accounted for 23.89% of the PHP 6.2-trillion full-year disbursement program.

Primary spending increased by 21.96% to PHP 1.24 trillion and interest payments jumped by 24.88% to PHP 241 billion.

“The strong spending performance can be attributed to the higher disbursements recorded in the Department of Public Works and Highways (DPWH) for its road infrastructure program and regular operating requirements, and in the Department of Social Welfare and Development (DSWD) for its various protective services programs.”

It also cited National Tax Allotment (NTA) transfer shares, annual block grant to the Bangsamoro Autonomous Region and releases for the local government support fund.

“Likewise, the transfer of P32.8 billion (inclusive of accrued interest) to the Coconut Farmers and Industry Trust Fund in accordance with the mandated schedule of capitalization contributed to the larger spending outturn,” the BTr said.

Meanwhile, state revenues increased by 6.9% to PHP 998.2 billion in the first quarter from PHP 933.7 billion a year earlier. This year, the government is projecting to collect PHP 4.64 trillion in revenues.

Tax revenues rose by 13.55% to PHP 931.5 billion from PHP 820.4 billion last year.

The BTr said that its overall collections remain on track due to a “strong” performance from the BIR and Customs.

“The revenue agencies’ sustained growth for the third consecutive month was driven by their ongoing revenue enhancement measures, particularly the intensified campaign against the use of fake receipts, intensified crackdown on illicit trade, digitalization, and improvements in tax payment facilitation, among other initiatives,” it said.

BIR revenues climbed by 16.67% to PHP 690.4 billion, due to “higher collections from personal income tax (PIT), corporate income tax (CIT), percentage taxes, value-added tax (VAT), excise taxes, documentary stamp tax, and percentage taxes.”

Customs collections grew by 5.72% to PHP 231.4 billion driven by “higher VAT from non-oil imports and excise tax collections from oil and non-oil imports.”

On the other hand, nontax revenues slumped by 41.21% year on year to PHP 66.7 billion as of end-March.

BTr revenues plunged by 55.3% to PHP 32.3 billion while collections from other offices decreased by 16.5% to PHP 34.3 billion.

“Largely due to timing as 18 government-owned and -controlled corporations (GOCCs) remitted PHP 28.23 billion in early first-quarter dividends back in 2024 compared with only three GOCCs with PHP 0.027 billion early dividends for the current year,” the BTr said.

“Nevertheless, nontax revenues are expected to improve in the succeeding months, with dividends from the GOCCs set to be remitted to the National Treasury starting May 2025.”

The BTr said that the NG is still on track to keeping to its deficit targets for the year.

“With dividend remittances and other nontax receipts expected to materialize in the succeeding quarters, and as expenditures continue to track the full-year program in a more balanced manner, the 2025 fiscal deficit is projected to remain within the P1.5-trillion target.”

Under the latest Development Budget Coordination Committee (DBCC) figures, the NG capped its deficit ceiling at 5.3% of gross domestic product (GDP) this year.

Mr. Rivera said the NG’s budget gap reflects the need for “balancing fiscal support for development priorities with disciplined revenue mobilization to avoid long-term fiscal strain.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the wider fiscal deficit could also increase the need for additional borrowings to support cash flow.

“Faster growth in government expenditures also reflected increased debt servicing amid the dramatic increase in debt incurred since the COVID-19 (coronavirus disease 2019) pandemic started nearly five years ago,” he said.

On the other hand, Mr. Ricafort said the budget balance could revert to a surplus in April amid the seasonal increase in tax collections as the BIR deadline for filing was on April 15.

Mr. Ricafort said there may be a need for more fiscal reform measures to “reduce government expenses such as rightsizing of the government and tax reform to further increase collections to narrow the budget deficit and curb additional need for borrowings.”

“Additional tax revenue collections based on existing tax laws or through new tax reform measures and even higher tax rates would be needed, especially if inflation becomes more benign and better controlled since higher taxes could add to inflationary pressures,” he added.

The Finance department has said it has no plans to introduce new tax measures anytime soon, instead focusing on improving tax administration and efficiency. – Luisa Maria Jacinta C. Jocson, Senior Reporter

Headline inflation may have settled below the 2-4% target band again in April, the Bangko Sentral ng Pilipinas (BSP) said.

The central bank’s month-ahead forecast showed that inflation likely settled within the 1.3%-to-2.1% range in April.

If realized, April inflation would be much slower than the 3.8% print logged in April 2024.

At the upper end of the BSP forecast, inflation likely accelerated from the near-five-year low of 1.8% in March.

On the other hand, the low end of the forecast showed inflation could have hit its lowest clip in over five years or since 1.2% in November 2019. It would also mark the third straight month of deceleration.

The local statistics agency is set to release April inflation data on May 6 (Tuesday).

“Easing prices of rice, fish, fruits, and vegetables, favorable domestic supply conditions along with lower oil prices and the peso appreciation contributed to the downward price pressures for the month,” the BSP said.

Rice inflation has been on the decline after the government slashed tariffs on rice imports in July last year and following the food security emergency declared on the staple grain this February. In March, rice inflation decelerated to 7.7%.

The peso closed at PHP 55.84 per dollar on April 30, its strongest finish in more than seven months or since its PHP 55.69 finish on Sept. 20, 2024.

It was also the first time the peso hit the PHP 55 level since it closed at PHP 55.965 on Sept. 26, 2024.

Pump price adjustments stood at a net decrease of P0.80 a liter for kerosene in April. However, it stood at a net increase of P0.40 a liter each for gasoline and diesel.

“These could be offset in part by the higher electricity rates and LRT-1 fares,” the central bank added.

Starting April 2, the boarding fare at Light Rail Transit Line 1 (LRT-1) was raised to PHP 16.25 from PHP 13.29, while the distance per kilometer fare was increased to PHP 1.47 from PHP 1.21.

Manila Electric Co. (Meralco) hiked the overall rate by PHP 0.7226 per kilowatt-hour (kWh) to PHP 13.0127 per kWh in April from P12.2901 per kWh in March.

“Going forward, the Monetary Board will continue to take a measured approach in adjusting the monetary policy stance in line with its price stability objectives conducive to balanced and sustainable growth of the economy and employment,” the BSP said.

In April, the BSP resumed its rate-cutting cycle with a 25-basis-point (bp) rate cut. This brought the benchmark to 5.5%.

The Monetary Board had delivered a pause at its first policy review of the year in February as it waited to see how global trade policies would unfold.

BSP Governor Eli M. Remolona, Jr. has said there is room for further easing this year, but this will likely be delivered in “baby steps.”

The central bank earlier said risks to the inflation outlook have also eased and remained “broadly balanced” until 2027.

Accounting for risks, inflation is expected to average 2.3% in 2025, 3.3% in 2026, and 3.2% in 2027.

For the first quarter, inflation averaged 2.2%. — Luisa Maria Jacinta C. Jocson