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The Philippine economy can still grow within the 5.5-6.5% target this year as spending is expected to “normalize” in the fourth quarter, Department of Budget and Management (DBM)Secretary Amenah F. Pangandaman said.

Ms. Pangandaman, who also chairs the Development Budget Coordination Committee (DBCC), said the gross domestic product (GDP) growth target of 5.5-6.5% for this year “remains attainable.”

“Spending is expected to catch up and normalize toward the latter part of the year,” she told BusinessWorld in a Viber message on Oct. 15.

“Momentary slowdown in public infrastructure spending is expected as agencies do due diligence, especially DPWH (Department of Public Works and Highways) as it reviews and evaluates its roster of projects,” she said.

Finance Secretary Ralph G. Recto earlier this week said economic growth likely cooled in the third quarter, adding that the slowdown may continue until early 2026 as heightened scrutiny over anomalous projects dampens government expenditure.

President Ferdinand R. Marcos, Jr. had flagged anomalous flood control projects during his State of the Nation Address in late July. This sparked several investigations into alleged corruption involving lawmakers, government officials, and private contractors.

Earlier, Economy Secretary Arsenio M. Balisacan said the DBCC will wait for third-quarter data to be released on Nov. 7 before revising growth targets.

However, he noted that achieving the full-year growth goal has “become harder” due to a likely slowdown in government spending.

In the first half, GDP growth averaged 5.4%, slower than 6.2% a year ago.

Ms. Pangandaman said the economic team remains “vigilant and proactive” in managing fiscal risks while staying aligned with the medium-term fiscal framework.

In June, the DBCC tempered its growth forecast to 5.5-6.5% for 2025 and 6-7% for 2026, mainly due to “heightened global uncertainties” arising from the Middle East conflict and US tariffs.

Ms. Pangandaman said the country’s growth momentum will be supported by key factors, including sound macroeconomic fundamentals, easing inflation, and a lower interest rate environment.

She also cited favorable credit and financial markets, stronger private sector momentum, and more efficient public spending as driving economic growth.

In a separate statement on Thursday, Mr. Recto said the economy is expected to post stronger economic growth ahead, citing improved governance and institutional reforms following the flood control mess.

“Growth is being supported by low inflation, easing policy rates, strong consumer spending, and a vibrant labor market,” he said.

Headline inflation averaged 1.7% in the first nine months of the year, matching the forecast of the Bangko Sentral ng Pilipinas.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the DBCC may need to revise its macroeconomic assumptions to reflect more realistic conditions amid persistent global headwinds, fragile consumer confidence, and fiscal constraints.

The economic managers should also prioritize targeted stimulus and institutional reforms to support resilience, he said.

“It will be challenging but not impossible, despite the third-quarter slowdown,” Mr. Rivera said in a Viber message on Thursday.

“Growth will depend on whether domestic consumption and investment rebound during the holiday season, if government spending accelerates, and if inflation remains within target,” he added.

Ser Percival K. Peña-Reyes, director of the Ateneo Center for Economic Research and Development, said the DBCC should revise its growth targets in light of the corruption scandal over flood control projects.

“Corruption scandals have had a chilling effect on investor sentiment,” he said in a Viber message on Thursday.

Mr. Peña-Reyes said the economy likely expanded by 5.6% in the third quarter, accelerating from 5.2% growth in the same period a year earlier.

For the full-year, growth will likely settle at 5.5%, matching the lower end of the government’s target range but slower than the revised 5.7% in 2024.

Foundation for Economic Freedom President Calixto V. Chikiamco said the Philippine economy’s performance is likely to “disappoint” this year given the headwinds facing the Philippines.

“The picture could be worse next year when the Trump tariffs start to bite and global slowdown occurs,” he said in a Viber message.

Recto rejects VAT reduction

In addition, Mr. Recto warned against some lawmakers’ proposals to lower the value-added tax (VAT) rate to 10%, saying this move could result in “massive revenue losses” and force the government to borrow to fund basic operations.

“The entire VAT collection for 2025 of PHP 1.39 trillion can only fund nine months’ worth of payroll, premium, and pension of active and retired government workers,” said Mr. Recto, who authored the measure that hike the VAT rate in 2005.

Several lawmakers have filed bills seeking to either scrap or cut the 12% VAT rate. VAT collections account for about a fifth of the Bureau of Internal Revenue’s total revenues.

Mr. Recto said excise tax collections, projected at PHP 576 billion this year, would not be enough to cover the PHP 965-billion budget for basic, tertiary, and technical-vocational education programs. — Aubrey Rose A. Inosante, Reporter

Businesses and policymakers face a widening gap between the demand for skilled labor and the workforce’s readiness to fill green jobs, as the Philippines accelerates its transition to a green economy.

Industry leaders and government officials warn that unless the country scales up training programs, the promise of economic growth from renewable energy, electric vehicles and sustainable construction could be undermined by the lack of qualified workers.

“Are we ready for these changes?” Francis A. Macatulad, program director at the Asia Society for Social Improvement and Sustainable Transformation (ASSIST), a nonprofit that promotes capacity-building and sustainable practices, told BusinessWorld in a virtual interview. “Unfortunately, we are not. We don’t have the technicians.”

His warning underscores a structural challenge for Southeast Asia’s second-most-populous nation.

As climate change reshapes economies worldwide, the Philippines is under pressure to retrofit aging infrastructure, decarbonize energy systems and adopt greener modes of transportation. But the country is still scrambling to align its workforce with those demands.

The World Economic Forum projects that green and energy-transition roles such as renewable energy engineers and electric vehicle specialists will be among the fastest-growing job categories in the coming years.

The International Labour Organization (ILO) estimates that the shift to a green economy could create 24 million jobs globally by 2030.

The Asia-Pacific region is particularly exposed, with 43% of its workforce considered vulnerable to climate-related shocks and the disruptions from decarbonization, according to the ILO. For the Philippines, where millions of workers remain in carbon-intensive or informal industries, the transition risks leaving many behind without targeted support.

Labor Undersecretary Carmela I. Torres said the government is working to balance the creation of green jobs with inevitable losses in traditional industries such as coal and fossil fuel-based transportation.

“The transition to a green economy should be just and inclusive, ensuring that workers in traditional industries are not left behind,” she said in an e-mailed reply to questions. “This aims to shift towards environmentally friendly practices while ensuring the creation of decent work opportunities and addressing social inequalities.”

Still, she acknowledged persistent challenges: gaps in training programs, limited funding, and the lack of awareness among workers and employers about opportunities in the green sector.

Some of the country’s biggest companies are trying to bridge the gap by embedding sustainability across their organizations.

Ayala Corp., one of the Philippines’ oldest business groups, ensures its sustainability agenda extends beyond dedicated teams.

“Our corporate strategy, business development, investor relations, and treasury teams, among others, are updated on the latest and most relevant thinking in sustainability to ensure that it is embedded into our long-term planning and investments,” Francisco R. Milan, Ayala’s chief human resources officer, said in an e-mailed reply to questions.

Ayala Land, Inc., the group’s property arm, hosts quarterly forums on topics such as decarbonization, regenerative design and water resource management. Globe Telecom, Inc., meanwhile, launched an online Sustainability Academy in 2021 to help its 8,000 employees adopt sustainable practices at home and at work.

“Across the group, sustainability and human resource teams are working closely to identify ways to more widely embed the value of sustainability among all employees,” Mr. Milan said.

The Aboitiz Group has also made sustainability central to its real estate and infrastructure ventures. Aboitiz InfraCapital, Inc.’s economic estates, including Lima Estate in Batangas, have earned a five-star Building for Ecologically Responsive Design Excellence (BERDE) district certification. It features a sustainability hub with a waste-to-eco brick facility, rainwater harvesting and compost-to-fertilizer systems.

“It’s about shifting how everyone in the organization thinks about placemaking and future-proofing for the new economy,” Monica L. Trajano, vice-president for business development at Aboitiz unit LIMA Land, Inc., told BusinessWorld in an interview.

“We must be able to integrate agility and innovation as we emphasize sustainability and best practices,” she added.

Working with urban planning consultants such as Singapore-based Surbana Jurong Pte Ltd., Aboitiz has identified specific workforce gaps in renewable energy and sustainable construction. “There is a skill gap in practical areas like installation, maintenance, repair and even the basic knowledge in sustainable construction,” Ms. Trajano said.

‘Mindset shift’

While infrastructure upgrades are critical, advocates stress that behavior change is just as important.

“Designing green is the easiest part,” Christopher C. de la Cruz, chief executive officer at the Philippine Green Building Council, said in an interview. “Staying green is the biggest problem.”

He noted that even the most energy-efficient systems are wasted if occupants use them improperly. “It’s a mindset shift.”

The council administers the BERDE green building rating system and partners with organizations such as the Philippine Business for Education to develop training programs. It also works with universities like the University of San Carlos in Cebu to update curricula so graduates are equipped with green skills from the outset.

Green jobs are for everyone — including janitors, messengers, and plumbers, Mr. De la Cruz said. “If you’re able to transition your work today into a cleaner kind of work that contributes [to mitigating] the climate crisis, then it’s a green job.”

Nonprofit groups are stepping in to address the training deficit. ASSIST, for example, works with technical-vocational associations in Mindanao and Metro Manila to give instructors updated training materials.

It has also established an advisory committee with the Technical Education and Skills Development Authority (TESDA) and chambers of commerce to identify skill gaps.

“We are upskilling the current tech-voc students, or in some cases reskilling technicians to be able to work with the new technologies,” Mr. Macatulad said.

The Philippines already has a legislative framework in place. The Green Jobs Act of 2016 seeks to identify skill needs, train and certify workers and provide financial support including tax deductions for green-skill programs.

The Labor department and TESDA have also issued a joint memo to strengthen career guidance and training alignment with industry needs.

“Efforts such as those by TESDA are crucial for developing a workforce capable of meeting these demands,” Ms. Torres said. “Both public and private sector investments are needed to support the development of a robust green job training ecosystem.”

For the private sector, investment in education is vital to long-term competitiveness.

“We recognize that no single institution or the private sector acting alone can produce the necessary talent at scale,” Mr. Milan said. Government investment in education is critical so Philippine schools can produce a workforce that supports the drive of industries for sustainability, he added.

Aboitiz’s Ms. Trajano called the skill gap both a challenge and an opportunity.

“Our biggest opportunity as a country is our labor force, and we really must focus on that, with the public and private sectors working together,” she said. “The skill gap is also our biggest opportunity in terms of influencing the quality of our educational institutions.”

As the Philippines braces for the impacts of climate change — rising sea levels, stronger typhoons, and disrupted agricultural cycles — building a workforce ready for the green economy has become more than an economic necessity.

The Philippines is in a race against time. “There are a lot of projects that will be coming on stream very soon, and they need technicians,” Mr. Macatulad said.  — Patricia B. Mirasol, Multimedia Producer

The Philippines’ pension system remained the third worst in the world, according to the 2025 edition of Mercer CFA Institute’s Global Pension Index.

The Philippines’ score, which is graded based on adequacy, sustainability, and integrity, improved to 47.1 in 2025 from 45.8 in 2024, primarily due to “clarification of regulations,” the report said.

However, the score was way below the 64.5 global average, and the third-lowest score among 52 retirement income systems in the index. Last year, the Philippines’ pension system was also the third worst out of 48 systems.

In the report, the pension systems in the Philippines, Turkey, Argentina and India, were given a “D” grade. This means the pension system has some “desirable” features but also has “major weaknesses” that should be addressed.

“Without these improvements, its efficacy and sustainability are in doubt,” the report said.

The Netherlands had the best pension system with a score of 85.4. Aside from the Netherlands, the pension systems in Iceland, Denmark, Singapore and Israel were also given an “A” grade, which meant they had robust and sustainable systems that deliver good benefits with a high level of integrity.

The Global Pension Index reviews an economy’s retirement income systems based on three weighted subindices: adequacy, sustainability, and integrity.

The Philippines’ adequacy score went down to 40.6 in 2025 from 41.7 in 2024. This was below the global average of 66.1 for adequacy.

Its sustainability score improved to 64.4 from 63.4, which was higher than the global average of 55.3.

For integrity, the Philippines’ score inched up to 33.2 from 27.7. However, this was significantly lower than the global average score of 74.7.

The Philippines was the only economy in the integrity sub-index that had an “E” grade, which indicates “a poor system that may be in the early stages of development or nonexistent.”

“The Philippines’ retirement income system comprises a small basic pension and an earnings-related social security pension,” the report said.

“Members can receive a lifetime pension if they have contributed for a minimum of 180 months for government and 120 months for nongovernment members. Both schemes provide calibrated benefits if the minimum number of contributions is not satisfied.”

The Mercer CFA Institute report said the Philippine pension systems could be improved if the minimum level of support for the poorest elderly is increased and the benefits are aligned with the country’s cost of living.

It also said the Philippines’ requirements for vesting in private sector plans should be improved.

The report said the local pension system lacks non-cashout options for retirement plan proceeds, so they are preserved for retirement purposes.

It also cited the need to improve governance requirements for the private pension system.

In the Philippines, there are two main pension funds — the Social Security System (SSS) for private workers and the Government Service Insurance System  for government workers.

Starting Jan. 1 this year, the SSS increased the contribution rate to 15%, up from 14%. Under Republic Act No. 11199 or the Social Security Act of 2018, the SSS implemented incremental contribution rate hikes of one percentage point every two years starting in 2019 from the original contribution rate of 11%.

All SSS pensioners as of Aug. 31, 2025 began receiving higher pensions starting September this year. Retirement and disability pensions will increase by 10% annually every September until 2027, while death or survivor pensions will rise by 5% each year. — A.M.C.Sy

Money sent home by overseas Filipino workers (OFW) went up by 3.2% year on year in August, as the weaker peso drove up the value of remittances, data from the Bangko Sentral ng Pilipinas (BSP) showed.

In a statement, the BSP said cash remittances coursed through banks increased by 3.2% to USD 2.977 billion in August from USD 2.885 billion in the same month last year.

Despite the annual growth, remittances declined by 6.4% month on month from the seven-month high of USD 3.179 billion in July.

The August tally was the lowest in three months or since the USD 2.658-billion remittances in May.

“Cash remittances from overseas Filipinos continued to grow… This developed on account of higher inflows from both land-based and sea-based workers,” the BSP said in a statement on Wednesday.

Money sent home by land-based workers climbed by 3% year on year to USD 2.35 billion in August, accounting for the bulk of cash remittances.

Remittances from sea-based workers likewise rose by 3.8% year on year to USD 626 million in August.

“Cash remittances rose 3.2% year on year in August to USD 2.98 billion, supported by steady overseas employment and resilient inflows from key markets like the US, Singapore, and Saudi Arabia,” Union Bank of the Philippines  Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

Robert Dan J. Roces, an economist at SM Investments Corp., said the 3.2% year-on-year increase in cash remittances in August indicates a “modest pickup” versus the 3% growth in July.

“This suggests that remittance flows have some resilience despite global headwinds, and reflects, in part, a lower comparative base or mild fluctuations in monthly flows,” he said in a Viber message.

Mr. Roces said the weak peso drives higher remittances in dollar terms as recipients “gain more local-currency value.”

“Evidence from BSP studies have highlighted the positive role of exchange rate depreciation as a driver of remittances,” he added.

In August, the peso averaged PHP 57.2525 versus the greenback, weakening from the PHP 56.7523-per-dollar average in July.

On the other hand, Mr. Asuncion said the month-on-month dip in remittances reflects “seasonal normalization after back-to-school spending and a less volatile peso.”

Meanwhile, personal remittances, which include both cash coursed through banks and informal channels as well as in-kind remittances, stood at USD 3.307 billion in August, rising by 3.2% from USD 3.204 billion a year earlier.

Workers with contracts of one year and above sent home the bulk of personal remittances at USD 2.54 billion, up 3% year on year.

Personal remittances from workers with contracts of less than one year also rose by 4% year on year to USD 690 million.

Eight-month period

In the eight months to August, cash remittances from migrant Filipinos climbed by 3.1% to USD 22.909 billion from the USD 22.217 billion posted in the same period last year.

Remittances from land-based workers grew by 3.3% year on year to USD 18.32 billion as of end-August, while sea-based OFW remittances rose by 2.5% to USD 4.59 billion.

Money sent home from the United States accounted for 40.4% of the remittances in the first eight months of the year.

This was followed by Singapore (7.1%), Saudi Arabia (6.3%), Japan (4.9%) the United Kingdom (4.8%), the United Arab Emirates (4.5%), Canada (3.4%), Qatar (2.9%), Taiwan (2.8%) and South Korea (2.6%).

Meanwhile, personal remittances went up by 3.1% to USD 25.51 billion in the eight-month period from USD 24.74 billion the previous year.

“With year-to-date growth slightly ahead of target and holiday inflows ahead, remittances remain on track to meet BSP’s full-year growth forecast,” Mr. Asuncion said.

Mr. Roces said remittances typically rise in the September-to-December period, which may boost the full-year tally.

The BSP expects cash remittances to grow by 3% to USD 35.5 billion this year. — Katherine K. Chan

Finance Secretary Ralph G. Recto has ordered the formation of a multi-sectoral working group to address tax woes raised by business leaders, the Department of Finance (DoF) said.

According to a DoF statement, Mr. Recto gave the order after a dialogue with the Makati Business Club on Oct. 14, where corporate executives flagged key policy concerns and proposed solutions to improve the investment climate.

The working group will be led by the DoF and include private sector representatives, giving the business community a chance to raise any tax concerns.

“We want to support the government in its quest to make this a very good business environment and investment destination. That’s our overall aim. We’re here to support you,” Makati Business Club (MBC) Executive Director Rafael ASG Ongpin was quoted as saying in the DoF statement. “We’re here because this government has been very open and very collaborative, and we really see the value of that.”

The meeting included representatives of multinational firms such as Mondelez Philippines, Inc.; Unilever; SGV & Co.; Pepsi-Cola Products Philippines, Inc.; the American Chamber of Commerce of the Philippines; Texas Instruments, Inc.; and e-commerce platform Shopee.

One of the concerns raised by business leaders was the implementation of Revenue Memorandum Circular (RMC) No. 5-2024, which outlines taxation of cross-border services involving foreign corporations.

In February last year, 10 business groups including the Philippine Chamber of Commerce and Industry and Management Association of the Philippines had urged the Bureau of Internal Revenue (BIR) to rescind the circular, which would raise the cost of doing business in the Philippines.

They had said the circular violates existing income tax treaties entered into by the Philippines with various countries.

“These treaties generally provide that business profits of a treaty resident shall not be taxed in the Philippines if the foreign treaty resident does not have a permanent establishment in the Philippines,” the business chambers had said.

In response, Mr. Recto pledged to review existing tax circulars and explore digital tools aimed at improving transparency and efficiency in tax assessments.

BIR Commissioner Romeo D. Lumagui, Jr., who also attended the meeting, acknowledged concerns raised over the mentioned tax memorandum and backed Mr. Recto’s proposal for amendments.

In addition, the Finance chief reaffirmed the government’s push to accelerate digitalization to curb corruption and increase efficiency in the delivery of public services to business leaders.

“The government is only 20% or 25% of the economy — you’re 75%. Today, you have more than 50.1 million people working, with more than 32 million in the private sector,” Mr. Recto said.

He also called for stronger private sector engagement in the DoF’s digitalization program, particularly in the BIR, Bureau of Customs and Bureau of the Treasury.

“Whatever support you think we can provide — inputs, technology, we’d be more than happy to do that,” MBC Chairman Edgar O. Chua was quoted as saying. — Aubrey Rose A. Inosante