Stocks end higher on bargain hunting before GDP

Philippine stocks rebounded on Thursday as bargain hunters took advantage of lower prices after the index plunged to a three-year low the prior session, but sentiment stayed cautious before the release of third-quarter gross domestic product (GDP) data.

The bellwether Philippine Stock Exchange index (PSEi) rose by 0.3% or 17.53 points to close at 5,835.59, while the broader all shares index increased by 0.25% or 9.05 points to end at 3,543.43.

“The local market bounced back as investors hunted for bargains after the preceding day’s decline,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message. “Trading remained tepid, however, amid investors’ cautiousness while waiting for the Q3 GDP data.”

“Philippine equities crept higher ahead of tomorrow’s GDP report, although value turnover remained tepid at a little over PHP 5 billion as most investors remain on the sideline,” AP Securities, Inc. said in a market note.

Value turnover went up to PHP 5.42 billion on Thursday with 891.42 million shares traded from the PHP 4.72 billion with 406.27 million issues exchanged on Wednesday.

A BusinessWorld poll of 18 economists and analysts yielded a median estimate of 5.3% GDP growth in the third quarter. If realized, this would be slower than the 5.5% expansion in the second quarter but slightly faster than the 5.2% expansion in the third quarter of 2024.

Economy Secretary Arsenio M. Balisacan earlier said that growth could have slowed in the period amid a corruption probe, slow public disbursements, global uncertainties and adverse weather conditions.

“Positive cues from Wall Street driven by the US Supreme Court’s skepticism over President Donald Trump’s tariff policies also helped in today’s session,” Mr. Tantiangco added.

US Supreme Court justices raised doubts on Wednesday over the legality of Mr. Trump’s sweeping tariffs in a case with implications for the global economy that marks a major test of Mr. Trump’s powers, Reuters reported.

Conservative and liberal justices alike sharply questioned the lawyer representing Mr. Trump’s administration about whether a 1977 law meant for use during national emergencies gave Mr. Trump the power he claimed to impose tariffs or whether the Republican president had intruded on the powers of Congress.

The majority of sectoral indices closed higher on Thursday. Mining and oil jumped by 4.46% or 530.4 points to 12,421.40; financials rose by 1.03% or 19.85 points to 1,945.83; holding firms increased by 0.28% or 13.41 points to 4,703.16; services went up by 0.15% or 3.49 points to 2,258.56; and property climbed by 0.15% or 3.36 points to 2,146.10.

Meanwhile, industrials went down by 0.16% or 13.86 points to 8,574.55.

Advancers beat decliners, 98 to 68, while 72 names were unchanged.

Net foreign buying dropped to PHP 211.43 million on Thursday from PHP 339.58 million on Wednesday. — Alexandria Grace C. Magno with Reuters

Inflation holds steady at 1.7% in Oct.

Philippine headline inflation steadied in October as slower price increases in vegetables and meat offset higher utility costs during the month, the Philippine Statistics Authority (PSA) said on Wednesday.

PSA data showed that the consumer price index (CPI) stood at 1.7% in October, unchanged from September’s print but eased from 2.3% a year ago.

This was a tad slower than the 1.8% median forecast from a BusinessWorld poll of 17 analysts conducted last week, but within the Bangko Sentral ng Pilipinas’ (BSP) 1.4-2.2% forecast.

October also marked the eighth straight month that inflation fell below the central bank’s 2-4% target band.

In the 10 months to October, average inflation matched the BSP’s full-year target of 1.7%.

Meanwhile, core inflation, which discounts volatile prices of food and fuel, eased to 2.5% from 2.6% in September. Still, it was slightly faster than the 2.4% print in October 2024.

This brought year-to-date core inflation to 2.4%, easing from the 3.1% clip seen in the comparable year-ago period.

Housing, water, electricity, gas and other fuels contributed most to the CPI during the month and posted a 2.7% inflation rate, National Statistician Claire Dennis S. Mapa said.

Electricity alone posted a 4.1% inflation in October, accelerating from the 1.2% clip seen in September.

In October, the Manila Electric Co. hiked the overall electricity rate by PHP 0.2331 per kilowatt-hour (kWh) to PHP 13.3182 per kWh. This means residential customers consuming 200 kWh had to pay an additional PHP 47 in their bill last month.

Meanwhile, inflation for water supply also quickened to 5.7% in October from 5.3% a month earlier.

In September, the Metropolitan Waterworks and Sewerage System okayed the proposed P0.14 per cubic meter (cu.m.) hike for Maynilad and a P0.15 per cu.m. rollback for Manila Water for the October-December period.

Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan said the government’s efforts to manage supply conditions and ensure price stability helped inflation hold steady in October.

“The steady headline inflation rate shows that our coordinated interventions are helping to maintain adequate supplies and keeping essential goods affordable,” he said in a statement. “We remain vigilant in managing risks from weather disturbances, global market volatility, and other domestic factors that may affect prices in the coming months.”

Meanwhile, slower inflation for food and non-alcoholic beverages tempered inflationary pressures in October.

The heavily weighted food and nonalcoholic beverage index eased to 0.5% in October from the 1% clip logged the month earlier.

“Our food basket, food and non-alcoholic beverages, has the biggest weight in the inflation basket at 37.75% more or less,” Mr. Mapa said.

Food inflation slowed year on year to 0.3% from 0.8% the previous month and 3% in October 2024.

This came as inflation for vegetables, tubers, plantains, cooking bananas and pulses eased to 16.6% from 19.4% in September.

Likewise, the PSA recorded slower inflation for meat and other parts of slaughtered land animals in October at 5.2% from 6% a month ago.

However, Mr. Mapa noted that inflationary pressures from food remain as prices of fish and other seafood picked up to 8.2% from 7.9% in September.

Rice prices

Rice inflation remained in the negative for the tenth month in a row at -17% in October from -16.9% in September.

Mr. Mapa said rice prices continued to decline amid increased unmilled rice production in the last quarter of the year.

“Our production is high, but of course, prices in the world market are also starting to drop. So that actually affected, in a good manner, our retail rice prices, because it continues to decline,” he said in Filipino.

Citing PSA data, Mr. Mapa said a kilo of regular-milled rice was sold at an average price of PHP 40.09 in October, dropping by 20.2% from PHP 50.22 a year ago. Well-milled rice was also cheaper at an average PHP 46.49 per kilo, down 15.9% from PHP 55.28 last year. Meanwhile, special rice was priced at PHP 56.39 per kilo last month, falling by 11.8% from PHP 63.97 in October 2024.

“Despite the import ban on rice, the price of the grain was largely stable while meat and dairy prices eased, offsetting the increase in utility rates,” Aris D. Dacanay, economist for the Association of Southeast Asian Nations at HSBC Global Investment Research, said in an e-mailed note.

Earlier, President Ferdinand R. Marcos, Jr. ordered a 60-day freeze on regular and well-milled rice imports from Sept. 1 to Nov. 2 to support local farmers amid the harvest season and to stabilize rice prices.

The suspension has been extended until yearend, with the government eyeing to open an import window in January before reimposing the ban from February to April.

Meanwhile, PSA data also showed that inflation in the National Capital Region (NCR) picked up to 2.9% in October from 2.7% in the previous month and 1.4% in the same month in 2024.

Outside NCR, inflation eased to 1.3% from 1.5% in September and the 2.6% clip a year ago.

Central Visayas still saw the highest inflation print among other regions at 2.6%, while prices in Bangsamoro Autonomous Region in Muslim Mindanao declined the fastest at -1.3%.

Inflation for the bottom 30% of income households declined at a faster pace of -0.4% in October from -0.2% in September. For the 10-month period, it averaged 0.3%, slower than 4.5% a year ago.

Inflation ahead

The BSP still sees inflation settling below its 2-4% target by yearend, citing the recent easing of rice prices in the country.

“Inflation is projected to average below the low end of the target range in 2025, primarily due to the easing of rice prices in previous months,” it said in a statement. “The risks to the inflation outlook are limited as price pressures are expected to ease amid stabilizing global commodity prices.”

However, the central bank said the outlook for domestic economic growth has weakened.

“This outlook reflects in part the impact on business confidence of governance concerns about public infrastructure spending. Indications of slowing demand also reflect lingering uncertainty from the external environment,” the BSP said.

For November, Mr. Mapa said fuel prices will likely drive up inflationary pressures following the latest pump price adjustment.

Oil firms in the country implemented fuel price hikes on Tuesday, amounting to PHP 1.70 per liter for gasoline, PHP 2.70 per liter for diesel and PHP 2.10 per liter for kerosene.

Mr. Mapa said they will continue to monitor the impact of recent typhoons on consumer prices, as well as Mr. Marcos’ earlier directive to impose a price freeze on basic and prime commodities until yearend.

“There are threats to overall food inflation. Some items are increasing, (such as) the price of fish (and) vegetable,” Mr. Mapa said, noting vegetable prices are sensitive to weather conditions.

In a note on Wednesday, Chinabank Research said inflation will likely remain low in the coming months, but noted that pump price adjustments and the weather’s impact on food prices still pose risks.

“We expect overall inflation to remain low for the rest of the year, though upward price pressures may arise from energy — a hefty increase in local pump prices was announced this week — as well as from weather-sensitive food prices,” it said.

Meanwhile, HSBC’s Mr. Dacanay said the benign inflation and clearer rice policies could push the BSP to cut rates by 25 basis points (bps) in December.

“All in all, we think October inflation plus the clarity over rice policies strengthen the case for a December rate cut by the BSP,” he said. “With no issues in inflation, monetary policy has the runway to pump the economy to, hopefully, offset the fiscal fallout brought by a sharp drop in public infrastructure spending.”

Since it began its easing cycle in August 2024, the Monetary Board has cut its key policy rate by 175 bps to a three-year low of 4.75%.

BSP Governor Eli M. Remolona, Jr. has signaled further easing until early next year to support the economy as the ongoing flood control anomalies have hit business sentiment, clouding their growth outlook.

The Monetary Board will hold its last rate-setting meeting this year on Dec. 11. — Katherine K. Chan

Wave of telco investments seen as Konektadong Pinoy IRR finally released

The Philippines expects a wave of investments in the telecommunications sector, as the government on Wednesday released the implementing rules and regulations (IRR) of its open access law.

Department of Information and Communications Technology (DICT) Secretary Henry Rhoel R. Aguda said that about six to seven foreign companies plan to enter the Philippine telecommunications sector once the IRR of the Konektadong Pinoy Act takes effect. He did not name the firms.

Mr. Aguda told reporters that two of these players are expected to come in sooner.

“These are reputable companies. Out of the seven, two of these will hit the ground running,” he said.

The government is still in talks with the foreign players, Mr. Aguda said, noting that these companies will provide a variety of services particularly mobile, fiber and satellite services.

“Most of them are fiber. They will have to go through their due diligence. It is easy to say that they are interested. The rubber meets the road when they start digging the fiber and building the tower,” Mr. Aguda said.

The Konektadong Pinoy Act, or the Open Access in Data Transmission Act, lapsed into law on Aug. 24, while the IRR was signed on Wednesday.

The law streamlines the licensing process for new entrants, boosting competition in data transmission.

“We need the type of telco industry that is vibrant. The IRR will be effective within 15 days after we publish it,” Mr. Aguda said.

Expanding connectivity from 30,000 to 100,000 cell sites and achieving full fiberization will require investments that are at least equal to previous benchmarks, Mr. Aguda said.

“A typical telco company invests around a billion US dollars to USD 1.5 billion annually when expanding its network,” Mr. Aguda told a Palace briefing in Filipino. “If they’ve been investing about one to USD 1.5 billion every year, I think that’s the minimum amount of investment that should come in,” he added.

Mr. Aguda said the IRR addresses the concerns of the telecommunications companies, particularly on the issue of cybersecurity and a level playing field.

The IRR provides transparency in pricing and the timely regular publication of updated pricing information to ensure fair trading within and between each data transmission.

Data transmission industry participants (DTIPs) will be allowed to construct, install, establish, maintain, lease or own, networks or facilities without the need of a legislative franchise, while also promoting asset sharing between current and new players.

The DICT, through its ICT Industry Development Bureau, will develop and issue guidelines outlining minimum cybersecurity standards and requirements, aligned with the DTIP’s risk profile for each data transmission segment

“The State shall promote data transmission infrastructure sharing and co-location to eliminate the uneconomic duplication of these facilities in the data transmission industry,” according to the IRR.

Mr. Aguda said the DICT will be the primary policy, planning and coordinating body of the government for the Konektadong Pinoy Act. It is tasked to formulate plans and policies to implement an open access mechanism in the industry.

The DICT will implement initiatives to encourage DTIPs to adopt and deploy new and next-generation technologies, prioritizing unserved or underserved areas, including educational institutions.

Incentives include income tax holidays, value-added tax exemptions, zero-rating from the date of registration, and duty exemption.

For Samuel V. Jacoba, founding president of the National Association of Data Protection Officers of the Philippines (NADPOP), the IRR addresses the concerns of telcos, particularly with the IRR remaining firm on requiring entrants to secure cybersecurity certifications after two years of operations.

“Within two years from registration or authorization, DTIPs shall secure a cybersecurity certification or cybersecurity compliance from the DICT Cybersecurity Bureau,” the IRR said.

Mr. Jacoba said two years will be enough time for new operators to establish baseline cybersecurity compliance anchored on global standards.

He noted incumbent telco operators should already have baseline cybersecurity compliance, so this requirement should not be an issue.

“Incumbent telco operators at this time should already have baseline cybersecurity compliance, so they need not look into this requirement as an issue,” Mr. Jacoba said.

Sought for comment, PLDT Inc. and Smart Communications, Inc. Chairman and Chief Executive Officer Manuel V. Pangilinan said: “It is probably not as bad as we expected, is my impression.”

However, Mr. Pangilinan declined to further comment on the Konektadong Pinoy, noting that he has not personally read it. He added that this will make PLDT evaluate and change its strategy.

Lower prices

Mr. Aguda said the DICT, in partnership with the Australian government, has completed a real-time mapping of all fiber optic lines nationwide.

This will guide efforts to expand connectivity to 100% of households, supporting the government’s goal of providing every Filipino with fast, stable and reliable internet access.

Mr. Aguda also expects internet prices in the country to drop further and service quality to improve with the entry of new players.

While the IRR has yet to set out specific fees for new entrants, he said the DICT has already begun easing regulatory requirements to encourage participation.

For instance, the operating licenses of tower companies have been extended to 15 years from five years at no additional cost, he noted.

Mr. Aguda also noted that even before the IRR was released, existing telecommunications companies had already lowered rates.

“Right now, you can already get unlimited data for less than PHP 500 — a substantial drop from last year,” he said.

The IRR would also further enhance competition, leading not only to lower prices but also to improved internet quality.

“What we want is not just cheaper service, but reliable service. With the same amount, you’ll get more data and better quality once the IRR is fully implemented,” Mr. Aguda said.

Incumbent telecommunications players are expected to expand and improve their services beyond urban centers with the expected entrants of more foreign players in the telco industry with the Konektadong Pinoy Act, Digital Pinoys said.

“We do anticipate increased investment in the connectivity sector as a result of the Konektadong Pinoy law. It provides predictability and policy direction — two major factors that investors look into before committing capital to infrastructure, particularly in underserved and far-flung areas,” Ronald B. Gustilo, a national campaigner for the Digital Pinoys said via Viber.

Konektadong Pinoy will drive growth because it will expand the market base, he said, adding that when more Filipinos gain reliable access to the internet, the demand for digital service such as e-commerce and financial technology rises.

“For telcos already operating, they will have to see the law as both a challenge and an opportunity. It will push them to move beyond the urban centers and improve their service quality, while also opening doors for public-private partnerships, shared infrastructure, and alternative connectivity models, he said,

Despite being a national priority since 2022, the Philippines’ digital transformation has progressed slowly due to weak broadband infrastructure and outdated policies that hinder competition and investment, a World Bank report from July said.

Only 28% of households had fixed broadband access in 2023 — far behind neighboring countries — and the country accounts for over half of the region’s unconnected mobile broadband users.

The digital divide is also widening, with internet access rising much faster among wealthier households than poorer ones. — Ashley Erika O. Jose, Reporter with Chloe Marie A. Hufana

Peso slides after inflation report

The peso weakened against the dollar on Wednesday as steady October inflation supported expectations of a December rate cut by the Bangko Sentral ng Pilipinas (BSP).

The local unit closed at PHP 58.83 per dollar, dropping by 31.5 centavos from its PHP 58.515 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened Wednesday’s session weaker at PHP 58.65 against the greenback. Its intraday high was at PHP 58.63, while its worst showing was at PHP 58.85 versus the dollar.

Dollars traded rose to USD 1.44 billion from USD 1.33 billion on Tuesday.

“The dollar-peso closed higher as inflation data came short of expectations, supporting bets of another rate cut from the BSP come December,” a trader said in a phone interview.

Headline inflation stood at 1.7% in October, steady from the September clip but slowing from 2.3% in the same month a year ago.

This was a tad below the 1.8% median estimate in a BusinessWorld poll of 17 analysts and was within the BSP’s 1.4-2.2% forecast for the month.

October was also the eighth straight month that the consumer price index was below the central bank’s annual 2-4% target.

For the first 10 months, inflation averaged 1.7%, matching the BSP’s full-year forecast.

Last month, the central bank trimmed benchmark interest rates by 25 basis points (bps) for a fourth consecutive meeting to bring the policy rate to 4.75%. The Monetary Board has now reduced borrowing costs by a total of 175 bps since it began its easing cycle in August 2024.

BSP Governor Eli M. Remolona, Jr. has said that one more cut is possible at their Dec. 11 meeting. He also left the door open for further easing until next year to help boost domestic demand due to a softer economic outlook as a widening corruption scandal involving government infrastructure projects has affected business sentiment.

The peso was also dragged lower by a stronger dollar amid increased risk aversion in global markets, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Thursday, the trader sees the peso moving between PHP 58.60 and PHP 59 per dollar, while Mr. Ricafort sees it ranging from PHP 58.70 to PHP 58.95. — A.M.C. Sy

PSEi plunges to three-year low on growth woes

Philippine stocks retreated on Wednesday, with the benchmark index plunging to a three-year low, amid fears over slowing economic growth that were worsened by negative sentiment from Wall Street due to concerns over the valuation of the artificial intelligence (AI) sector.

The bellwether Philippine Stock Exchange index (PSEi) fell by 0.83% or 48.98 points to close at 5,818.06, while the broader all shares index decreased by 0.68% or 24.50 points to end at 3,534.38.

This was the PSEi’s worst finish in over three years or since it closed at 5,783.15 on Oct. 3, 2022.

The main index opened Wednesday’s session at 5,891.23, higher than Tuesday’s close, but sank to an intraday low of 5,763.68. It managed to recoup some of its losses before the closing bell.

“The Philippine market closed lower amid heavy selling pressure despite inflation figures aligning with expectations. However, the upcoming release of GDP (gross domestic product) data and corporate earnings from major index constituents will likely influence market sentiment and determine the market’s next direction,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“The local market dropped as investors traded cautiously while looking forward to the third-quarter GDP data release, which is expected to be below target,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

The Philippine economy likely grew by 5.3% in the third quarter, according to the median forecast of 18 economists and analysts in a BusinessWorld poll. This would be slower than the 5.5% expansion in the second quarter and is below the government’s full-year GDP growth target of 5.5%-6.5%.

The Philippine Statistics Authority will release third-quarter GDP data on Friday (Nov. 7).

“Negative spillovers from Wall Street amid overvaluation concerns with the US’ artificial intelligence sector also affected the local bourse today,” Mr. Tantiangco added.

All sectoral indices closed in the red. Mining and oil sank by 3.62% or 446.88 points to 11,891; holding firms dropped by 1.3% or 61.88 points to 4,689.75; property fell by 0.99% or 21.62 points to 2,142.74; industrials went down by 0.69% or 60.24 points to 8,588.41; services decreased by 0.57% or 12.99 points to 2,255.07; and financials retreated by 0.52% or 10.20 points to 1,925.98.

“Metropolitan Bank & Trust Co. was the day’s index leader, climbing 2.26% to PHP 68. Aboitiz Equity Ventures, Inc. was the main index laggard, falling 4.78% to PHP 26.90,” Mr. Tantiangco said.

Decliners overwhelmed advancers, 137 to 53, while 61 names were unchanged.

Value turnover went down to PHP 4.72 billion on Wednesday with 406.27 million shares traded from the PHP 6.37 billion with 538.81 million issues exchanged on Tuesday.

Net foreign buying edged down to PHP 339.58 million from PHP 339.79 million. — A.G.C. Magno

Flexible rice tariff adjustments OKd

The Economy and Development (ED) Council has approved the recommendation to allow a more flexible rice tariff scheme starting in 2026, the Department of Economy, Planning, and Development (DEPDev) said.

“Starting Jan. 1, 2026, a more gradual and flexible tariff adjustment shall be adopted, with adjustments by 5 percentage points per 5% change in international prices, subject to a minimum rate of 15% and a maximum rate of 35%,” DEPDev said in a statement on Tuesday.

This was the recommendation presented by the Tariff and Related Matters Committee (TRMC).

However, this fell short of farmer groups’ demand to restore the 35% rice tariff, slamming the lower rate for flooding the market with cheap imports and gutting farmgate prices.

The ED Council also approved the TRMC recommendation to maintain the current Most Favored Nation tariff rate on rice imports at 15% until Dec. 31, for both in-quota and out-quota imports.

President Ferdinand R. Marcos, Jr. had issued Executive Order (EO) No. 102 extending the rice import freeze until Dec. 31, in line with the Department of Agriculture recommendation.

However, DEPDev Secretary and ED Council Vice Chairperson Arsenio M. Balisacan said Mr. Marcos’ order makes tariffs “redundant,” and will not affect local prices.

“The TRMC’s recommendation is part of a broader government strategy to ensure stable rice prices and protect both farmers and consumers, while safeguarding macroeconomic stability,” DEPDev said.

Meanwhile, the Council also tweaked scope and implementation arrangements of the Jalaur River Multipurpose Project-Stage II to facilitate the completion of the remaining project works and ensure delivery of irrigation water to farmer beneficiaries.

It also approved new rules for formulation, prioritization and monitoring of Infrastructure Flagship Projects (IFP) amid a corruption crackdown on flood control projects.

This seeks to streamline the IFP list, tighten agency accountability, and lock projects into the government’s planning and budgeting pipeline.

ODA loans

At the same meeting, the ED Council greenlit two official development assistance (ODA) loans from the World Bank amounting to PHP 53.25 billion.

This includes the Department of Education’s PHP 38.27-billion Program for Learning Upgrading and School Development (PLUS-D) that aims to bolster learning outcomes, education management and delivery systems in the country.

PLUS-D is set for implementation from 2026 to 2032 and will introduce system-level interventions, provide targeted support to schools, and establish monitoring and evaluation mechanisms, DEPDev said.

The program, with public schools as the primary beneficiaries, focuses on raising literacy and numeracy among Kindergarten to Grade 6 learners.

It also approved the P14.98-billion Accelerating Water Supply and Sanitation for the Poor and Lagging Areas project. This is targeted to improve access to safe water supply and sanitation services in underserved communities.

The project will be implemented in the Loboc Cluster (Bohol), Siargao Island (Surigao del Norte), and Jolo (Sulu).

The ED Council also endorsed an EO that facilitates voluntary Social Security System, Philippine Health Insurance Corp., Pag-IBIG Fund contributions for contract of service and job order personnel in National Government agencies.

“The proposed EO seeks to close gaps in social protection coverage by making it easier for non-regular government workers to maintain contributions through a voluntary, payroll-based mechanism,” it said. — Aubrey Rose A. Inosante

Inflation to pick up until early 2026

Philippine inflation is projected to accelerate until the first semester of 2026 but will likely remain within the 2-4% target, the Bangko Sentral ng Pilipinas (BSP) said.

“That increase in the fourth quarter of 2025 and also the first half of 2026 is driven or could be driven mainly by statistical effects, as well as some of the anticipated adjustments of some of the utilities that we have seen,” BSP Deputy Governor Zeno Ronald R. Abenoja said during the BSP-ADB (Asian Development Bank) ASEAN (Association of Southeast Asian Nations) Economic Outlook seminar on Tuesday.

However, he said inflation may moderate from the second half of 2026 as global oil prices are projected to stabilize.

“After that, we think that the relatively stable oil prices in the international markets would help contain inflation pressures moving forward,” he added.

The BSP forecasts inflation to average 1.7% this year, before picking up to 3.1% in 2026. It sees inflation easing to 2.8% in 2027.

The ADB projects Philippine inflation to settle at 1.8% in 2025 and 3.2% in 2026.

“Overall, inflation continued to be relatively muted. And it’s not within the target; it’s below the target range so far for 2025,” Mr. Abenoja said.

For the first nine months, headline inflation averaged 1.7%. A BusinessWorld poll of 17 analysts yielded a median estimate of 1.8% for the consumer price index in October, within the central bank’s 1.4-2.2% forecast. The October inflation data will be released on Wednesday, Nov. 5.

Mr. Abenoja noted that the BSP’s inflation forecasts account for the monetary policy decisions aimed at managing inflation pressures.

Since August 2024, the central bank has lowered borrowing costs by a total of 175 basis points, bringing the policy rate to 4.75%.

“Although headline inflation could be up because of some supply-side shocks, the underlying pressures have started to come down, and that has been one of the factors that was considered in shifting to a more accommodative stance,” Mr. Abenoja said.

BSP Governor Eli M. Remolona, Jr. has remained dovish, signaling at least two more rate cuts until next year as they now see the nominal rate closer to 4%.

The Monetary Board will hold its last policy-setting meeting this year on Dec. 11.

Economic growth

On the other hand, ADB Regional Lead Economist James P. Villafuerte said the National Government’s higher budget allocation for infrastructure could help drive economic growth.

“In the Philippines, our main instrument for stimulus is actually the increased national budget of around 5% allocated for infrastructure,” he said.

The 2026 Budget of Expenditures and Sources showed that the government’s infrastructure spending program for next year is set at P1.51 trillion or 5.3% of the gross domestic product (GDP).

“Social services in the Philippines have also received substantial support, such as funding for education, healthcare, and social programs like the 4Ps (Pantawid Pamilyang Pilipino Program) and also the new Walang Gutom food voucher initiative by President Marcos,” Mr. Villafuerte added.

The ADB projects Philippine GDP growth at 5.6% this year, within the government’s 5.5-6.5% goal. This also positions the Philippines to be the second-fastest economy in the region, after Vietnam which is projected to grow by 6.7% this year.

Mr. Villafuerte said Vietnam and the Philippines are the “industrial and trade powerhouses” in ASEAN.

For 2026, the ABD expects the Philippine economy to grow by 5.7%, lower than the government’s 6-7% target. Still, the Philippines is likely to be the second-fastest in the region behind Vietnam’s 6%.

Meanwhile, the BSP said the Philippine banking system’s solid performance remains one of the economy’s buffers against global trade woes and financial market volatility.

“The banking system, if you look at the balance sheet, [banks] continue to be solid, they continue to expand… Overall, the Philippine banking system continues to be effective and they’re supportive of domestic economic activity,” Mr. Abenoja said.

However, he noted that the government still has to employ the proper policy mix to manage emerging domestic and global headwinds.

“The environment continues to be challenging. The sand dunes continued to shift if you look around in our policy environment,” Mr. Abenoja said. “And at this time, we have to rely on robust policy frameworks to make sure that we remain vigilant and agile (and that) we are well informed.” — Katherine K. Chan

Philippines jumps to 56th in digital competitiveness index

The Philippines improved five spots in the World Digital Competitiveness Ranking by the International Institute for Management Development (IMD), but remained a laggard in the Asia-Pacific region.

The country ranked 56^th out of 69 economies, with an overall score of 50.87 (out of 100), in the 2025 World Digital Competitiveness Ranking of the IMD World Competitiveness Center.

This was an improvement from last year when the Philippines ranked 61^st, its worst ranking since the report was launched in 2017.

Among 14 Asia-Pacific economies, the country ranked 13^th, ahead only of Mongolia (67^th).

Switzerland ranked first in the global digital competitiveness index with a score of 100, followed by the United States (99.29), Singapore, (99.18), Hong Kong (97.79), and Denmark (97.23).

The ranking measures a country’s readiness to adopt and explore digital technologies to transform government practices, business models, and society overall.

The index measures a country’s capacity based on three key factors: knowledge or the quality of human capital, excellence of technological infrastructure, and future readiness.

The Philippines ranked 65^th in the knowledge factor, 52^nd in future readiness and 54^th in technology.

According to IMD, the country showed weakness in the ease of starting a business (66^th), enforcing contracts (66^th), communications technology (66^th), and secure internet servers (63^rd).

However, the Philippines ranked high in investments in high-tech exports (3^rd) and telecommunications (9^th).

The country also slipped one spot in the knowledge factor, amid low rankings in talent (56^th), training & education (62^nd) and scientific concentration (63^rd).

According to IMD, the Philippines inched up by two spots in the technology factor, ranking 46^th in capital and 47^th in technological framework. However, it ranked 67^th for regulatory framework.

For future readiness, IMD said the country improved by six spots due to its performance in adaptive attitudes (40^th), business agility (50^th), and IT integration (57^th).

IMD noted that the Philippines’ business process outsourcing (BPO) sector, which serves foreign clients across North America, Europe and Asia, is vulnerable to trade barriers.

“Trade-related barriers (e.g., remote work taxes, licensing hurdles, and data flow restrictions) make it harder or firms to maintain contracts and retain talent, especially in smaller BPO centers with limited shock absorption capacity,” according to the report.

Globally, countries’ digital competitiveness is challenged by increased volatility in trade relations, IMD said.

It also cited the growing difference among countries and regions on how they regulate, develop, and adopt technologies.

“Trade conflicts were once thought to be confined to disputes over tariffs or quotas, but are now clearly extending deep into the intangible roots of the digital economy: intellectual property, data flows, technical standards, and strategic technologies,” José Caballero, a senior economist at the IMD World Competitiveness Center, said.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the Philippines’ low ranking in the digital competitiveness index highlights the need to address structural bottlenecks like digital infrastructure quality, broadband affordability, and skill readiness.

“While connectivity has improved, it remains uneven and costly outside major cities. Moreover, the shortage of highly skilled digital talent and slow technology adoption among micro, small, and medium enterprises limit how fast digital transformation spreads across the economy,” he said in a Viber message.

Higher production costs and slow trade activity could delay technology upgrading and job creation among high-value sectors, Mr. Rivera added.

“To stay competitive, the Philippines must double down on digital infrastructure investment, talent development, and innovation incentives, while pursuing trade diversification and stronger regional digital partnerships to cushion external shocks,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the growth in online transactions and digital payment systems provide an opportunity to boost the country’s digital competitiveness.

The IMD report was published in partnership with IMD’s local partner institute, Asian Institute of Management’s Rizalino S. Navarro Policy Center for Competitiveness. — Beatriz Marie D. Cruz, Reporter

Philippine external debt service bill dips to USD 7.5 billion at end-July

The Philippines external debt service burden declined by 5% at end-July as less foreign loans matured, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Debt servicing on external borrowings slipped to USD 7.53 billion in the first seven months from USD 7.935 billion in the same period last year.

Broken down, principal payments dropped by 12.2% to USD 2.894 billion from USD 3.296 billion a year earlier.

Interest payments inched down by 0.1% to USD 4.636 billion from USD 4.639 billion the previous year.

“The slight year-on-year decline in the external debt servicing bill could largely be attributed to lower share of foreign borrowings in the (National Government’s) total borrowing mix in recent years to better manage or minimize risk of forex (foreign exchange) losses entailed in foreign borrowings,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Based on its fiscal program, the National Government (NG) plans to source 81% or PHP 2.11 trillion of its PHP 2.6-trillion financing from local lenders this year, while the rest will be from foreign lenders. Domestic borrowings were slightly higher in this year’s borrowing mix versus the 75:25 borrowing mix in 2024.

“Furthermore, lower foreign debt maturities in recent months also reduced external debt servicing,” Mr. Ricafort added.

The debt service burden represents principal and interest payments after rescheduling, according to the BSP.

This includes principal and interest payments on fixed medium- and long-term credits, including International Monetary Fund credits, loans covered by the Paris Club and commercial bank rescheduling, and new money facilities. It also covers interest payments on fixed and revolving short-term liabilities of banks and nonbanks.

However, the debt service data exclude prepayments on future years’ maturities of foreign loans and principal payments on fixed and revolving short-term liabilities of banks and nonbanks.

In the seven months to July, the debt service burden as a share of gross domestic product (GDP) stood at 2.9%, slightly lower than 3.2% a year ago.

Based on the latest BSP data, the country’s outstanding external debt stood at a record USD 148.87 billion in the April-June period.

This brought the external debt-to-GDP ratio to 31.2% at end-June, higher than 28.9% seen a year ago.

Mr. Ricafort said less foreign debt and lower borrowing costs of other central banks such as the US Federal Reserve could partly reduce the foreign debt service bill for the rest of the year.

“For the coming months, lower share of foreign borrowings in the NG total borrowing mix and any further reduction in Fed rates and other global interest rates could somewhat help reduce or at least temper future external debt servicing bills,” he said.

For the next three years, the NG’s programmed financing mix consists of 77% domestic borrowings and 23% foreign.

“However, this would also be a function of future NG budget deficit that would lead to additional NG borrowings, including external debt,” Mr. Ricafort added.

The latest government data showed that the country’s budget deficit widened by 15.15% year on year to PHP 1.117 trillion as of September. This was 71.6% of the government’s PHP 1.56-trillion ceiling for 2025.

The BSP’s external debt data cover borrowings of Philippine residents from nonresident creditors, regardless of sector, maturity, creditor type, debt instruments or currency denomination.

The central bank gathers data on external debt through reports submitted by borrowers, banks, and major foreign creditors. — Katherine K. Chan

Peso rises to two-week high on divided Fed, inflation bets

The peso continued to strengthen against the dollar on Tuesday, posting a two-week high, as several US Federal Reserve officials signaled that they are open to another rate cut next month despite the cautious tone adopted by its chief.

Bets of within-target Philippine headline inflation in October also supported the currency against the greenback.

The local unit closed at PHP 58.515 per dollar, rising by 27.5 centavos from its finish of PHP 58.79 on Monday, Bankers Association of the Philippines data showed.

This was its best finish in nearly two weeks or since it ended at PHP 58.41 a dollar on Oct. 22.

The peso opened Tuesday’s session stronger at PHP 58.70 against the greenback. Its intraday best was at PHP 58.51, while its weakest showing was at PHP 58.75 versus the dollar.

Dollars exchanged inched up to USD 1.327 billion on Tuesday from USD 1.326 billion on Monday.

“The peso continued to appreciate after several Federal Reserve officials expressed openness towards delivering a rate cut in the December Fed meeting,” a trader said in an e-mail on Tuesday.

Fed officials continued offering competing views of where the economy stands and the risks facing it in the absence of economic data suspended due to the shutdown, Reuters reported.

The Fed cut rates last week, but Chair Jerome H. Powell suggested that might be the last cut of the year. Traders are now pricing in a 65% chance of a rate cut in December, compared with 94% a week earlier, CME FedWatch showed.

On Monday, Fed Governor Lisa Cook portrayed a tug-of-war view of the policy debate, saying elevated risks to both the central bank’s employment and inflation mandates leave the Dec. 9-10 meeting “live” for a possible rate cut, but not a lock.

Speaking earlier in the day, San Francisco Fed chief Mary Daly offered a similarly even-handed perspective, saying she viewed last week’s cut as further “insurance” against labor market weakening and has an “open mind” about the need for a similar move in December.

The peso continued to correct ahead of the release of Philippine October inflation data on Wednesday (Nov. 5), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He said the October consumer price index (CPI) “is expected to be slightly higher versus 1.7% in September 2025 but still considered benign or still below the BSP’s (Bangko Sentral ng Pilipinas) inflation target range of 2%-4% and could still support future local policy rate cuts.”

A BusinessWorld poll of 17 analysts yielded a median estimate of 1.8% for the October CPI, which would be up slightly from the 1.7% clip in September but slower than the 2.3% seen in the same month last year.

This would be within the BSP’s 1.4-2.2% forecast for the month and mark the eighth straight month that inflation was below its 2%-4% annual goal.

The trader said the peso may rise further on Wednesday on expectations of within-target Philippine inflation.

The trader sees the peso moving between PHP 58.35 and PHP 58.60 versus the greenback, while Mr. Ricafort said the local unit could trade from PHP 58.40 to PHP 58.65. — Aubrey Rose A. Inosante with Reuters

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

February Economic Update: Cut to the chase

Inflation Update: Nowhere but up