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THE GIST
NEWS AND FEATURES
Global Philippines Fine Living
INSIGHTS
INVESTMENT STRATEGY
Economy Stocks Bonds Currencies
THE BASICS
Investment Tips Explainers Retirement
WEBINARS
2024 Mid-Year Economi Briefing, economic growth in the Philippines
2024 Mid-Year Economic Briefing: Navigating the Easing Cycle
June 21, 2024
Investing with Love
Investing with Love: A Mother’s Guide to Putting Money to Work
May 15, 2024
retirement-ss-3
Investor Series: An Introduction to Estate Planning
September 1, 2023
View All Webinars
DOWNLOADS
economy-ss-8
Inflation Update: Weak demand softens shocks
July 4, 2025 DOWNLOAD
948 x 535 px AdobeStock_433552847
Economic Updates
Monthly Economic Update: Fed cuts incoming   
June 30, 2025 DOWNLOAD
equities-3may23-2
Consensus Pricing
Consensus Pricing – June 2025
June 25, 2025 DOWNLOAD
View all Reports

Archives: Business World Article

More room for easing amid slow inflation — analysts

More room for easing amid slow inflation — analysts

The Bangko Sentral ng Pilipinas (BSP) has more room to further reduce interest rates due to an easing inflation outlook, though the need to be cautious remains amid uncertainties.

“The February inflation outturn supports the BSP’s prevailing assessment that inflation will remain within the target range over the policy horizon,” the central bank said in a statement late on Wednesday. 

The February consumer price index (CPI) eased to 2.1% from 2.9% in January and 3.4% a year ago. This was also the slowest inflation print in five months.

The February print was also well below the 2.6% median estimate in a BusinessWorld poll of 18 analysts conducted last week.

“We think February CPI supports, not just a continuation of the BSP’s easing cycle next quarter, but a policy rate cut regardless of the Fed,” HSBC economist for ASEAN Aris D. Dacanay said in a report.

Citi Economist for the Philippines Nalin Chutchotitham said there is “ample room to resume its rate-cutting cycle, especially against a backdrop of growth headwinds.”

She said inflation is expected to stay at the lower end of the BSP’s 2-4% target range for the rest of the year.

Citi revised its full-year inflation forecast to 2.6% this year from 3.2% previously. It expects inflation to settle at 2.2% in March, 2.6% in the second and third quarters and 2.7% in the fourth quarter.

“The modest upward trajectory that we forecast for the rest of 2025 largely reflects base effects from sequential softening in rice and energy prices between April to December, even as we expect inflation momentum to remain subdued, largely on expected decline in crude oil prices.”

“Even so, inflation will stay firmly in the lower half of BSP’s target for the rest of 2025,” Ms. Chutchotitham added.

The BSP expects inflation to average 3.5% this year

Mr. Dacanay said risks to the inflation are tilted to the downside as “retail rice prices still have room to decrease while global energy prices are easing.”

“The pressure to ease policy rates even further has been growing with household consumption slightly stumbling due to today’s high-interest rate environment,” Mr. Dacanay said.

“Given low inflation, we believe the BSP has room to rebalance its risks from FX stability and inflation to supporting growth. And this room to rebalance risks will likely grow larger in the coming months.”

The Philippine economy expanded by a weaker-than-expected 5.2% in the fourth quarter, bringing full-year growth to 5.6% or below the government’s target.

“With the government aiming to boost rice supply in the economy via its buffer stocks, we can expect retail rice prices to continue delivering downward pressure on inflation,” Mr. Dacanay said.

Rice inflation contracted to 4.9% in February, the lowest rice inflation since the 5.7% decline in April 2020.

“The decline in rice prices is particularly important, as historical data show that rice has the greatest influence on consumer behavior,” Bank of the Philippine Islands (BPI) Lead Economist Emilio S. Neri, Jr. said.

“Spending on other items usually deteriorates when rice prices are high. With rice prices now falling, consumer spending may see a notable recovery this year.”

Further easing

The central bank said it will continue to monitor headwinds and global uncertainties.

“Nonetheless, uncertainty over global economic policies and their potential impact on the domestic economy continue to warrant close monitoring,” the BSP said.

The central bank said it will “carefully consider all new available information at its April 3 meeting.

BSP Governor Eli M. Remolona, Jr. earlier said that despite keeping rates steady at its February meeting, it is still in easing mode. He signaled the possibility of up to 50 bps worth of rate reductions this year.

For this year, Citi expects the central bank to deliver three rate cuts in increments of 25 bps at each of its April, August and December meetings. This would bring the benchmark to 5% by end-2025.

“Due to the room to absorb FX-induced inflation, we think February CPI builds a case for the BSP to continue its easing cycle regardless of the Fed,” Mr. Dacanay said.

Inflation falling towards the lower end of the target will act as a buffer if the policy rate differential between the BSP and Federal Reserve is too narrow, or if the BSP were to cut even if the Fed does not, he said.

Ms. Chutchotitham likewise said that the Philippines does not need to be in lockstep with the Fed.

“I think that the BSP continues to focus on what’s happening with the domestic economy, their mandate stresses on inflation mainly. And I think that the Fed is one factor to consider… but (that’s) only one factor,” she added.

Last year, the BSP began its easing cycle ahead of the US central bank, delivering its first rate cut in August versus the Fed’s first move in September. 

“Slower inflation keeps the door open for BSP rate cuts this year, especially if the GDP data in May falls short of expectations,” Mr. Neri said. “However, we continue to believe that the space for easing this year remains limited.”

Mr. Neri said global uncertainties could make the peso vulnerable amid the country’s current account deficit.

“Maintaining interest rates at appropriate levels may offset the impact of these uncertainties,” he added.

Customs confident of hitting 2025 target despite tariff cuts

Customs confident of hitting 2025 target despite tariff cuts

The Bureau of Customs (BoC) is confident it can meet its P1.06-trillion collection goal this year, despite lower tariffs on rice, electric vehicles (EV) and other commodities.

BoC Assistant Commissioner Vincent Philip C. Maronilla told BusinessWorld that the agency will focus on other potential nontraditional revenues to offset the tariff cuts.

This year, the BoC is targeting to collect PHP 1.06 trillion, 14.28% higher than the actual collection of PHP 931.05 billion in 2024.

“It will be a bonus if we exceed the target, so maybe it will be a little higher. It will be at the border of PHP 1.06 trillion,” he said.

He said the BoC has already factored in the lower tariffs from rice, pork and EVs in this year’s collection target.

“Because last year, those collections from those items (rice, pork, EVs) which are some of our main drivers were part of our projected revenue forecasts,” Mr. Maronilla said.

Last year, the BoC missed its full-year target by 0.92%.

Customs collections took a hit after Executive Order No. 62 took effect in July 2024. The order cut import tariffs on rice to 15% until 2028 to tame inflation. It also extended the effectivity of lower rates on pork, corn and mechanically deboned meat for poultry. The same order also extended the zero-tariff policy on electric vehicles and parts through 2028, as well as expanded the coverage to other types of e-vehicles.

“We’ve focused on some other potential nontraditional revenue to offset that (revenue loss from tariff cuts,” Mr. Maronilla said.

The BoC is focusing on plugging revenue leakages, he added.

“Number one, to plug the loopholes and number two, maybe recover some leakages in the revenue that happened during the previous times,” he said.

He noted the BoC is looking at encouraging violators to avail themselves of “certain programs that we have with a little penalty on the side.”

“And of course, we’re looking into updating and beefing up our reference values as a risk management tool to plug revenue leakages in terms of undervaluation or misinvoicing,” Mr. Maronilla said.

Meanwhile, the BoC said preliminary revenue collection reached PHP 79.34 billion in January, exceeding its PHP 78.015 billion target by 1.7%.

Year on year, the January figure was 8.1% or PHP 5.947 billion higher than the PHP 73.397 billion collected in January 2024.

“Our priority is to sustain revenue growth while ensuring seamless trade and robust border protection,” Customs Commissioner Bienvenido Y. Rubio said in a statement on Thursday.

Mr. Maronilla said the agency expects the volume of imports to increase ahead of the midterm elections.

“(There are) projections that volume this year might still come up and spending on importation might be up also because of some activities related to the elections,” he said. – Aubrey Rose A. Inosante, Reporter

Philippine banks’ exposure to real estate sector rises

Philippine banks’ exposure to real estate sector rises

The exposure of Philippine banks and trust entities to the property sector increased at the end of December amid a rise in residential and commercial real estate loans, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Banks’ real estate exposure ratio rose to 19.75% as of end-December from 19.55% at end-September. However, it was lower than 20.17% in the same period in 2023.

The BSP monitors lenders’ exposure to the real estate industry as part of its mandate to maintain financial stability.

Total investments and loans extended by Philippine banks and trust departments to the real estate sector grew by 5% to PHP 3.31 trillion as of end-December from PHP 3.15 trillion in 2023.

Central bank data showed real estate loans rose by 7.9% year on year to PHP 2.95 trillion at end-December from PHP 2.74 trillion a year ago.

Residential real estate loans climbed by an annual 9.6% to P1.1 trillion, while commercial real estate loans went up by 6.9% to PHP 1.85 trillion.

Past due real estate loans amounted to PHP 140.645 billion, higher by 4% from PHP 135.261 billion a year ago.

Broken down, past due residential real estate loans rose by 4.7% to PHP 99.727 billion, while past due commercial real estate loans edged higher by 2.3% to PHP 40.918 billion.

Meanwhile, gross nonperforming real estate loans inched up by 0.4% to PHP 108.807 billion as of the fourth quarter from PHP 108.389 billion a year ago.

This brought the gross nonperforming real estate loan ratio to 3.68% at end-December, lower than 3.96% a year earlier.

On the other hand, real estate investments declined by 13.8% to PHP 353.809 billion as of end-December from PHP 410.653 billion in the same period a year ago.

Of this, debt securities dropped by 10.5% year on year to PHP 236.881 billion, while equity securities fell by 19.8% to PHP 116.928 billion.

Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said the jump in real estate exposure was due to businesses expanding their operations in the latter part of the year.

“For residential, I would attribute that partly to ready-for-occupancy (RFO) units. We have a lot of RFOs now,” he said via phone call.

“Given there is a lot of supply now, a lot of these RFO promos are getting sweeter, that probably contributed to the increase,” he added.

Buying an RFO unit was much more difficult before the pandemic, Mr. Bondoc said, noting that buyers had to pay 5% to 10% of the total contract price before being able to transfer into the unit.

“Now, there are promos if you are an investor and buyer of RFOs, all you have to do is secure bank loans. Have that approved and you can transfer. You don’t have to pay a hefty downpayment,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the rise in real estate loans is also consistent with faster growth in overall loans “making it cheaper to finance new real property developments.”

The latest BSP data showed bank lending jumped by 12.2% year on year to P13.1 trillion in December, its fastest growth in two years.

Mr. Ricafort said this may be offset by the higher vacancy rates amid the ban on Philippine offshore gaming operators (POGOs).

“Some buyers, however, would be opportunistic and snap up bargains amid higher vacancy rates and increased supply after the POGO exit,” he added.

For the coming months, Mr. Bondoc said he expects increased demand for real estate loans, especially for the residential segment as promos for RFOs are becoming more attractive.

‘We’re likely to see greater purchases of these RFOs. Since these require bank loans also, this will likely result in the exposure of real estate to the banking sector, which will bode well for the property sector in general.”

Mr. Ricafort said further policy rate cuts and reserve requirement ratio (RRR) reductions would also bolster bank lending in general.

Despite surprising markets with a policy pause last month, BSP Governor Eli M. Remolona, Jr. has said the central bank is still in easing mode, signaling the possibility of up to 50 basis points (bps) worth of cuts this year.

Last month the BSP also announced it will cut the RRR of universal and commercial banks and nonbank financial institutions with quasi-banking functions by 200 bps to 5% from 7%, effective March 28.

In 2020, the central bank raised the real estate loan limit of banks to 25% of their total loan portfolio from 20% previously to help free up additional liquidity as a relief measure during the coronavirus pandemic. — Luisa Maria Jacinta C. Jocson

Term deposit yields inch down as inflation eases

Term deposit yields inch down as inflation eases

Yields on the Bangko Sentral ng Pilipinas’ (BSP) term deposits went down on Wednesday following slower-than-expected inflation in February, which could open the door for further monetary policy easing.

The BSP’s term deposit facility (TDF) attracted bids amounting to PHP 250.471 billion on Wednesday, above the PHP 190 billion on the auction block as well as the PHP 194.816 billion seen a week ago for the same volume offer. The central bank made a full PHP 190-billion award of the papers.

Broken down, tenders for the seven-day papers reached PHP 115.922 billion, higher than the PHP 100 billion auctioned off by the central bank and the PHP 110.14 billion in bids for the same offer volume seen the previous week. The BSP accepted PHP 100 billion in bids as planned.

Accepted yields ranged from 5.74% to 5.77%, narrower and slightly lower than the 5.5% to 5.775% band seen a week ago. This caused the average rate of the one-week deposits to inch down by 0.14 basis point (bp) to 5.754% from 5.7554% previously.

Meanwhile, bids for the 14-day term deposits amounted to PHP 134.549 billion, above the PHP 90-billion offering and the PHP 84.676 billion in tenders for the same offer a week ago. The central bank made a full PHP 90-billion award of the tenor.

Accepted rates were from 5.76% to 5.79%, narrowing from the 5.7% to 5.815% margin recorded a week ago. With this, the average rate for the two-week deposits inched down by 0.53 bp to 5.7752% from the 5.7805% logged in the prior auction.

The central bank has not auctioned off 28-day term deposits for more than four years to give way to its weekly offerings of securities with the same tenor.

The term deposits and the BSP bills are used by the central bank to mop up excess liquidity in the financial system and to better guide market rates.

TDF yields went down on Wednesday after the release of the latest headline inflation data, which showed that the average rise in prices of consumer goods eased more than expected last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“More benign inflation data could support a BSP rate cut as early as the next rate-setting meeting on April 3,” Mr. Ricafort said.

Headline inflation sharply slowed to 2.1% in February from 2.9% in January and 3.4% a year ago, the Philippine Statistics Authority reported on Wednesday.

This was the slowest monthly print in five months or since the 1.9% in September 2024. The February print was also well below the 2.6% median estimate in a BusinessWorld poll of 18 analysts conducted last week.

Despite surprising markets with a policy pause last month, BSP Governor Eli M. Remolona, Jr. has said the central bank is still in easing mode, signaling the possibility of up to 50 bps worth of cuts this year.

Mr. Ricafort added that the peso’s recent strength against the dollar also led to lower TDF yields as this could support further easing in inflation, which would give the central bank more room to cut borrowing costs.

The peso has closed at the P57 level since late February after trading at the P58 range earlier this year as the dollar hit multi-month lows due to concerns over the US economy’s health. — Luisa Maria Jacinta C. Jocson

Banks likely to continue posting record incomes

Banks likely to continue posting record incomes

Philippine banksmay continue to post record-high net incomes this year as robust economic growth is expected to spur lending.

“We expect another record year for banks given the accelerating domestic economy, loan growth pickup and robust expansive balance sheets of the corporate sector,” First Metro Investment Corp. Head of Research Cristina S. Ulang said.

“Banks’ earnings in 2024-2025 are likely to remain robust and could approach or surpass record levels… With consumer and business confidence improving post-pandemic, loan growth has accelerated, particularly in key segments like retail and corporate lending,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said.

Borrowing costs will remain elevated compared to pre-pandemic levels even with the Bangko Sentral ng Pilipinas (BSP) expected to continue its easing cycle, he said. “This, combined with prudent cost-of-funding strategies, supports higher net income margins.”

“Meanwhile, fee-based income streams, such as credit card fees, transaction fees, and income from wealth management, continue to grow due to increased economic activity and digital banking adoption,” Mr. Rivera added.

“Banks are poised for another solid year in 2024 and moving forward to 2025, with a high likelihood of record net incomes if the economy maintains its growth momentum and external risks remain manageable. However, sustained performance will depend on effective credit risk management and adaptation to a dynamic macroeconomic environment.”

The Philippine banking system’s combined net profit increased by 9.76% to PHP 391.28 billion in 2024 from PHP 356.49 billion in 2023, latest BSP data showed.

Several listed banks have reported that they booked all-time high net incomes in 2024, including Metropolitan Bank & Trust Co., Bank of the Philippine Islands, China Banking Corp., Security Bank Corp., and East West Banking Corp., driven by higher net interest earnings amid the elevated rate environment.

The BSP last year cut benchmark interest rates by a total of 75 basis points (bps) via three consecutive 25-bp reductions since it began its easing cycle in August, bringing the policy rate to 5.75%.

The Monetary Board, in its first meeting for 2025 held on Feb. 13, kept borrowing costs unchanged in a “prudent” move.

BSP Governor Eli M. Remolona, Jr. said uncertainty over the trade policy of US President Donald J. Trump and its potential impact on the Philippines led to the decision to keep rates unchanged for now.

Still, the BSP continues to be in an easing cycle, with the pause letting the central bank hedge itself against the risk of policy reversal, he said.

Mr. Remolona added that the central bank will likely continue reducing interest rates by 25 bps at a time, with 50 bps in cuts still on the table this year.

Margins

Mr. Rivera said the expected rate cuts could have mixed effects on Philippine banks, depending on their impact on loan demand, asset quality, and funding costs.

“A 50-bp rate cut will likely be neutral to slightly negative for banks’ margins but supportive of loan demand in consumer and corporate segments. The impact on nonperforming loans (NPL) will depend on how the broader economy responds. If rate cuts successfully spur growth, credit risks could remain manageable,” he said.

“Large firms may take advantage of lower borrowing costs for expansion or refinancing, but their appetite will also depend on business confidence and economic conditions. If uncertainty remains high, demand may be lukewarm,” Mr. Rivera added. “Rate cuts generally support retail loans (auto, housing, personal loans), but household debt levels and inflation will determine how much of this demand materializes.”

Regina Capital Development Corp. Head of Sales Luis A. Limlingan likewise said that while further monetary easing may compress banks’ margins, it could also boost loan demand, especially from consumers and small and me-dium enterprises.

“Large banks with strong CASA (current and savings account) ratios can better defend margins, while smaller banks may face pressure. NPL risks remain, especially in unsecured consumer credit,” he said.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said lower interest rates may help stabilize banks’ NPLs as it could ease the cost of doing business.

“Hopefully, with the cost of doing business improving and inflation stabilizing, consumption recovery will materialize, thus improving consumer and business sentiment and loan uptake,” Mr. Ravelas added.

Ms. Ulang added that lower interest rates will be positive for banks’ funding costs and can boost their profitability.

“Rates are not going to stay higher for longer… The cost of borrowing will ease and borrowers’ ability to pay will even be better as economic growth accelerates this year.” — Aaron Michael C. Sy

Philippine govt debt rises to new high of PHP 16.3T

Philippine govt debt rises to new high of PHP 16.3T

The national Government’s (NG) outstanding debt hit a fresh high of PHP 16.31 trillion at the end of January as it ramped up borrowings, the Bureau of the Treasury (BTr) said on Tuesday.

Preliminary data from the BTr showed that outstanding debt jumped by 1.63% or PHP 261.47 billion to PHP 16.31 trillion from PHP 16.05 trillion at end-2024.

“The month-over-month rise in debt stock was due to the net incurrence of new domestic and external debt, as well as the impact of peso depreciation against the US dollar from PHP 57.847 at the end of 2024 to PHP 58.375 at the end of January 2025,” the Treasury said in a statement.

National Government outstanding debtThe debt stock rose by 10.29% from PHP 14.79 trillion at end-January 2024.

“This level remains manageable and in line with the government’s target to support economic development while ensuring fiscal sustainability,” the BTr said.

NG debt is the total amount owed by the Philippine government to creditors such as international financial institutions, development partner-countries, banks, global bond holders and other investors.

BTr data showed the bulk or 67.9% of total outstanding debt was from domestic sources, while 32.1% was from foreign creditors.

Domestic debt increased by 1.41% or PHP 153.68 billion to PHP 11.08 trillion as of January from PHP 10.93 trillion in December. Year on year, it rose by 9.07% from PHP 10.16 trillion recorded at end-January 2024.

“This was mainly due to the net issuance of government securities of PHP 152.17 billion as gross issuances of PHP 270.01 billion exceeded repayments of PHP 117.84 billion to partly finance the projected deficit for the quarter,” the BTr said.

The valuation effect of the peso depreciation against the US dollar increased domestic debt by PHP 1.51 billion in January.

Meanwhile, external debt went up by 2.1% to PHP 5.23 trillion as of end-January from PHP 5.12 trillion at end-2024.

Year on year, external debt climbed by 12.98% from PHP 4.63 trillion.

“This was driven by net availment of foreign loans amounting to PHP 59.3 billion, as well as the upward revaluation caused by unfavorable US and third currency movements amounting to PHP 46.74 billion and PHP 1.75 billion, respectively,” the Treasury said.

External debt consisted of PHP 2.7 trillion in global bonds and PHP 2.52 trillion in loans, the BTr said.

NG-guaranteed obligations slipped by 0.11% to PHP 346.27 billion as of end-January from the end-December level of PHP 346.66 billion.

Year on year, guaranteed obligations fell by 0.69% from PHP 348.66 billion.

As of end-January, the net repayment of domestic guarantees stood at PHP 1.55 billion, while external guarantees amounted to PHP 250 million.

“The redemption of matured guarantees more than offset the currency valuation adjustments on US dollar and third-currency denominated guarantees amounting to PHP 0.83 billion and PHP 0.58 billion, respectively,” the BTr said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the increase in outstanding debt reflected the continued budget deficit in recent months that “fundamentally required additional borrowings” by the government.

The NG posted a budget deficit of PHP 1.506 trillion in 2024, narrowing by 0.38% year on year. However, it overshot the PHP 1.48-trillion deficit ceiling set by the Development Budget Coordination Committee (DBCC) by 1.48%.

Mr. Ricafort also said the weaker peso against the US dollar in January increased the peso value of external debt.

He expects the NG debt to set new records as the government ramped up borrowings in the early part of 2025.

“(There is also) the need to hedge both local and foreign borrowings of the National Government given the Trump factor that caused volatility in the global financial markets,” he said.

Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said debt is expected to further increase.

“I would expect debt to rise this year as a result of both expansionary fiscal policy to promote growth and an election year, which usually results in higher government spending. Financing this spending is difficult to achieve with a tight fiscal space and borrowing might be needed,” he said.

Mr. Erece said the debt is still manageable “as long as the government improves its revenue generation and minimizes corruption.”

At end-December, the country’s debt as a share of gross domestic product (GDP) inched up to 60.7% from 60.1% a year earlier. This is slightly higher than the 60% threshold considered manageable by multilateral lenders for developing economies.

The Philippines’ debt-to-GDP ratio of 60.7% positions it “competitively” with its Southeast Asian peers, according to the BTr. It is higher than Thailand’s 56.6% and Indonesia’s 36.8%, but below Malaysia’s 64.6% and Singapore’s 173.1%.

The government aims to bring down the debt-to-GDP ratio to 60.4% this year, 60.2% in 2026 and 56.3% in 2028.

The National Government plans to borrow PHP 2.55 trillion this year — PHP 2.04 trillion from the domestic market and PHP 507.41 billion from external sources. — Aubrey Rose A. Inosante

Philippine homeownership dreams stifled by costs, wages

Philippine homeownership dreams stifled by costs, wages

Michael Joseph D. Server, a 28-year-old Filipino entrepreneur, has been renting a condominium unit in Quezon City near the Philippine capital for two years now and doesn’t plan to buy his own house soon.

“Owning a home is one of the biggest financial decisions you can make,” he told BusinessWorld. “Outside of saving for a downpayment, there are a number of factors I’d need to take into consideration before making a concrete decision.”

A study by PhilhealthCare, Inc. (PhilCare), a health maintenance organization, found that 39% of Generation Z (Gen Z) people — those born in the late 1990s to early 2000s — cited homeownership as one of their top worries.

“For a young working professional, it can be challenging to acquire a property right away, especially with the rising prices,” Roy Amado L. Golez, Jr., director of research and consultancy at Leechiu Property Consultants, said in an e-mailed reply to questions.

“If their only source of income is their salary, they need to set aside enough funds for a downpayment and make sure they’re able to sustain installment payments,” he added.

Buying a house today has changed drastically from just a few decades earlier.

“Housing availability was already a major issue even decades ago,” Mr. Golez said. “There were not enough homes for the general population, and this caused terrible traffic even then.”

“During the time of our parents, buying a home in Metro Manila meant buying a house and lot or townhouse with a lot of space. Land prices in general were still affordable relative to household income,” he pointed out. 

Alyssa C. Uy, an account director and freelancer, owns a condo unit where she lives in some days, but for the most part, she still lives in her parents’ house.

“Given the current market and landscape for homeownership, it’s quite difficult to own and eventually maintain the fees for a home, whether it’s land tax or other association fees,” she said in an Instagram message.

While she has multiple income sources to help her sustain the ownership, she said she needs more to live comfortably especially once a family comes into the picture.

Owning a condo unit was much easier a few years ago, when financing for one that costs PHP 2 million to PHP 3 million was effortless, Joey Roi H. Bondoc, a director and head of research at Colliers Philippines, said by telephone.

“The required monthly income for you to be able to get a bank approval was much easier at that time,” he said. “But because of the increase in prices, the hurdles also got higher. That has eventually resulted in young people having a difficult time buying these condominium units.”

The average appraised value of new housing units in the Philippines stood at P86,417 per square meter in the third quarter of 2024, 31% higher than in 2020, according to data from the Philippine central bank.

Jet Yu, founder and chief executive officer at PRIME Philippines, said the property market has undergone a “significant transformation” in the past decades, with more people living in urban areas.

“This shift has driven increased demand for housing in metropolitan areas, pushing property prices higher and reshaping homeownership trends,” he said in an e-mailed reply to questions.

Data from property developer DMCI Homes, Inc. showed that inquiries for rental and rent-to-own properties as well as units for purchase have been increasing steadily over the years.

“As thousands of new households are created each year, the need for housing, whether for lease or purchase, therefore remains strong,” Januel O. Venturanza, DMCI Homes vice-president for marketing, told BusinessWorld.

“The challenge is finding the right home and arrangement — whether for rent, rent-to-own or purchase — that suit the customer’s lifestyle and budget,” he said in an e-mailed response.

Mr. Yu said the interest in homeownership is prevalent among the younger generation.

“More financially independent and willing to take risks, many Millennials view condo ownership as a symbol of success,” he said, referring to people born between the 1980s and the late 1990s. “Similarly, Gen Z — also known as Zoomers — are entering the workforce, bringing with them a preference for condo living.”

Both Millennials and Gen Z — people born from 1997 to 2012 — are “shaping residential condo demand,” Mr. Yu said.

He noted that in recent years, there has been a noticeable shift toward renting, particularly among young professionals and small families. “The increasing popularity of rent-to-own schemes has provided flexibility for those not yet ready to commit to full ownership.”

Central bank data showed that the prices of condominium units fell 9.4% in the third quarter from a year earlier, reversing 10.6% growth in the previous quarter and 8.3% a year ago.

Filipinos preferred single-detached homes and land ownership a few decades ago, Mr. Yu said, but with rising land prices, horizontal residential developments have become scarce, particularly in Metro Manila. 

“As a result, vertical living — primarily through condominiums — has become the norm in major commercial business districts and is now widely accepted in key cities across the country,” he said. “With the median age of Filipinos at 25.34 years, a significant portion of the population will continue to drive condo sales and rentals in the coming years.”

Property developers have been cutting the sizes of units to a studio or one-bedroom type to cater to younger buyers, Mr. Yu said.

“Due to affordability issues, renting of homes by families has always been the practice,” Mr. Golez said. “This is especially true for single or starter families. Of course, owning your own home has always been the dream of every Filipino.”

But elevated real estate prices are the main barrier to homeownership.

“In general, the cost of construction, land and financing has grown faster than the salary levels of the population,” Mr. Golez said.

The House of Representatives in February approved on second reading a bill that seeks to give minimum wage workers a PHP 200 daily increase. The Senate approved a counterpart proposal for a PHP 100 daily wage increase for private-sector workers in February last year.

Labor groups have said these proposed increases are not enough amid spiraling prices especially of food.

Mr. Golez said inflation’s effect on building materials, labor, construction and financing costs, as well as the growing scarcity of land in Metro Manila would continue to push up property prices.

“There are potential buyers that have been commenting on how they find primary unit property prices are on the high side,” he said. “However, we don’t see a high possibility for developers to lower prices.”

Mr. Yu said elevated property prices are driven by sustained urbanization and steady demand for residential properties, particularly in key cities.

“A young population with a strong motivation to invest in condominiums continues to fuel this demand,” he added.

Condominium prices had been rising more than 10% annually before the COVID-19 pandemic, he pointed out.

“However, in the past year, there were quarters where condo prices slightly dipped,” he said. “Moving forward, price increases are expected to remain moderate, likely within the single-digit percentage range.”

Central bank data showed housing prices nationwide declined 2.3% in the third quarter, the first contraction in more than three years.

‘Buyer’s market’

Analysts said homeownership prospects are possible for young professionals despite these hurdles.

“If there is one phrase to describe this market, it’s a buyer’s market at this point, meaning they can really haggle prices,” Mr. Bondoc said.

Colliers data showed that the vacancy in Metro Manila’s secondary market rose to an all-time high of 23.9% in 2024 as Chinese workers left the Philippines after a ban on Philippine offshore gaming operations.

“Now it’s a buyer’s market, and the market dynamics are shifting toward the preferences of young buyers, whether in terms of amenities, in terms of pricing, and even in terms of foreign exchange,” Mr. Bondoc added.

The Bangko Sentral ng Pilipinas (BSP) said real estate loans rose 7.9% in the third quarter of 2024 from 7.2% a quarter earlier and 5% a year ago.

“This shows sustained demand for real estate loans,” it said in an e-mailed statement. “Against this backdrop, property analysts remain positive about the strong demand for real estate loans in the country.”

It expects the continued supply of residential condominiums as developers offer more appealing payment terms for pre-selling and ready-for-occupancy projects.

It added that the industry growth would continue to be driven by urbanization, e-commerce, tourism recovery and evolving work models.

While owning a home may seem like an impossible goal, it is still achievable with the right financial habits, Mr. Venturanza said.

“Start preparing as early as possible, define and tenaciously pursue long-term goals, and do your research,” he said. “Look at developer track records, compare properties and identify which ones offer truly superior overall value.”

Mr. Golez said young professionals should start saving and investing as soon as they can.

“Create an emergency fund of six to 12 months of personal overhead. Do your research on the property you want to purchase and look at other options available to you,” he said.

“The more information you have, the better armed you will be in deciding on your housing investment. Always have the habit of setting aside a portion of what you earn today. You’ll eventually have enough to start buying your own home,” he added.

Mr. Venturanza said a good portion of DMCI customers are below 35 years old.

“Property prices continue to increase, so developers are trying to find ways to address this issue of affordability,” he said.

He added that they are looking to offer flexible and friendlier payment terms.

“Young professionals and families are a significant part of our target market, and we recognize their evolving needs when it comes to housing,” he said.

For example, DMCI Homes offers amenities that cater to younger buyers, such as coworking spaces and fitness facilities.

“Developers need to be more creative and implement out-of-the-box strategies to really attract the young market at this point,” Mr. Bondoc said.

Daisy Isabel Crichton-Stuart, a 23-year-old web developer and entrepreneur based in Manila, sees the opportunities of owning a home even if it’s not an easy task.

“It’s the best time in history to acquire wealth,” she told BusinessWorld. “Everybody has a shot at building their own wealth through many platforms and spaces of opportunity. This can be done through resourcefulness and skill, in addition to plain grit.”

“I have been looking into owning a home recently, but it likely won’t be tomorrow,” she added. – Luisa Maria Jacinta C. Jocson, Reporter

PERA contributions rose to PHP 491.4 million at end-2024

PERA contributions rose to PHP 491.4 million at end-2024

Filipinos’ Personal Equity and Retirement Account (PERA) contributions jumped by 24% year on year at end-2024, data from the Bangko Sentral ng Pilipinas showed.

Accumulated contributions to PERA climbed to PHP 491.4 million at end-2024 from PHP 396.3 million as of 2023, the central bank said.

The total number of PERA contributors likewise rose by 6.4% to 5,912 at 2024’s close from 5,555 a year prior.

The bulk (69.5%) of the accumulated PERA contributions came from employee contributions, equivalent to PHP 341.7 million at end-2024 across 4,211 contributors.

This was followed by overseas Filipino workers’ (OFW) contributions at PHP 82.2 million with 789 contributors.

Lastly, there were 912 self-employed contributors for a total of PHP 67.4 million in contributions.

Launched in 2016, PERA is a voluntary fund scheme meant to supplement retirement benefits from the Government Service Insurance System (GSIS) or the Social Security System (SSS), as well as private employers.

Contributors aged 18 and above and have a tax identification number are allowed to open a PERA account. Self-employed and locally employed contributors can make an annual contribution of PHP 200,000 while OFWs can invest up to PHP 400,000.

The PERA Law also offers various incentives to contributors, such as tax exemptions on earnings from PERA investments, a 5% income tax credit on contributions that can be used for paying income tax liabilities, and a tax-free distribution on qualified withdrawal of PERA investments.

“The increase in PERA contributions in 2024 suggests a growing awareness among Filipinos about the value of retirement planning, despite the relatively low number of participants,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said.

“More Filipinos, especially the employed sector, are recognizing the need to secure their retirement, given economic uncertainties and the rising cost of living.”

Mr. Rivera said the rise in contributions could also be attributed to the effort of the central bank, financial institutions and employers to promote PERA.

“While many Filipinos still struggle with daily expenses, certain groups like OFWs and professionals, may have had more financial flexibility to set aside funds for retirement,” he said.

“With concerns over the long-term sustainability of the SSS and GSIS pension funds, some workers may be looking for alternative or supplemental retirement income sources.”

In 2020, the BSP launched the digital platform for PERA to make it more accessible, allowing Filipinos to open accounts, choose different accredited products, and settle transactions online.

The central bank earlier said the wider use of PERA can help increase government savings, foster investment and capital market development, which would support economic growth. — Luisa Maria Jacinta C. Jocson

Manufacturing growth slows in Feb.

Manufacturing growth slows in Feb.

Philippine manufacturing activity in February expanded at its slowest pace in 11 months amid softer growth in orders and output, data from S&P Global showed.   

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) stood at 51 in February, easing from the 52.3 in January.

This was the lowest PMI reading in 11 months or since the 50.9 reading in March 2024. February also marked the second straight month of slowing growth.

Manufacturing Purchasing Managers’ Index (PMI) of select ASEAN economies, February 2025A PMI reading above 50 denotes better operating conditions than in the preceding month, while a reading below 50 shows a deterioration.

“Robust growth observed from the end of the previous year into the beginning of this year waned in February, as the latest survey data indicated slower expansions in output and new orders,” Maryam Baluch, economist at S&P Global Market Intelligence, said in a statement on Monday.

The Philippines posted the second-fastest PMI reading among six Association of Southeast Asian Nations (ASEAN) member countries, after Indonesia (53.6) and ahead of Thailand (50.6).

Malaysia (49.7), Vietnam (49.2), and Myanmar (48.5) all posted a contraction in factory activity in February.

In its report, S&P Global said the manufacturing conditions in the Philippines continued to improve in February, although this was the “least marked in nearly a year.”

“However, underlying data showed a mixed picture, with the sector showing a slight cooldown as growth in new orders and output moderated on the month, leading to a softer increase in purchasing activity,” it said.

S&P Global said growth in new orders moderated in February after the robust increase seen in the fourth quarter of 2024. New factory orders rose at the slowest pace in seven months, while growth in new export orders was subdued.

Production growth also moderated in February, with output growth at the weakest since July 2024.

As demand cooled, manufacturers tempered their purchasing activity. February saw the slowest expansion in the last 15 months.

S&P Global noted manufacturing firms reported a fresh rise in backlog of work for the first time in five months.

“Although the rate of accumulation in work-in-hand was modest, it was the most pronounced seen in nearly two years. Consequently, companies utilized their inventories to meet order requirements and thereby reduced their input stock holdings, signifying the first decrease in three months,” it said.

Ms. Baluch noted that employment levels went up for the first time in three months, “with companies challenged to meet sustained demand improvements.”

S&P Global said price pressures further eased in February.

“Although material shortages and transportation costs continued to drive up input prices, the rate of increase was the slowest in the current nine-month sequence of inflation,” it said.

Output prices for Philippine-made goods inched up at the softest pace in 10 months, it added.

“Inflationary pressures eased, thus suggesting that the central bank will continue to proceed with a loosening of its monetary policy. This could in turn boost somewhat weakened business confidence and support further new order growth,” Ms. Baluch said.

The Bangko Sentral ng Pilipinas (BSP) left the benchmark rate unchanged at 5.75% at its Feb. 13 meeting. BSP Governor Eli M. Remolona, Jr. has said the central bank is still in its easing cycle and signaled the possibility of up to 50 basis points worth of reductions this year.

The Monetary Board’s next rate-setting meeting is on April 3.

S&P said manufacturers maintained a positive outlook for production in the coming year, but the degree of confidence fell to a 10-month low.

In an e-mail, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said the Philippines was the only country in ASEAN that “suffered a loss in momentum” in February.

“[The Philippines] PMI softened for a second straight month to an 11-month low of 51.0, now a far cry from its recent high of 54.3 in December,” he said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the PMI reading reflects the slowdown in demand after the holiday season.

“Furthermore, uncertainties on Trump’s higher US import tariffs and other protectionist policies since his inauguration also a drag on global investments and international trade, including those in the Philippines,” he said.

“However, offsetting positive factor would be election-related spending, the May 12, 2025 midterm elections that could lead to increased spending by the government for various projects, especially infrastructure and other programs before the election ban,” Mr. Ricafort added. – Aubrey Rose A. Inosante, Reporter

Planned local online gambling ban seen to hurt govt revenue

Planned local online gambling ban seen to hurt govt revenue

The proposed ban  on Philippine inland gaming operators (PIGOs) may hurt National Government (NG) revenues as well as stocks of listed gaming-related companies, analysts said.

Unicapital Securities Equity Research Analyst Jeri R. Alfonso said the government is unlikely to shut down local online gambling operations which generate significant revenues.

“Shutting down online gambling entirely would deal a heavy blow to government funds. In our view, a full-on ban is unlikely,” she said in a Viber message.

Senate President Francis G. Escudero has called for a review of PIGOs, also known as local e-gambling businesses, saying that these are also as harmful as Philippine offshore gaming operators (POGOs).

Mr. Escudero suggested a ban on PIGOs if these are determined to negatively affect the lives of Filipinos. The Philippine government issued a total ban on POGOs last year.

“The gaming industry is a revenue provider for the government, with Philippine Amusement and Gaming Corp. (PAGCOR) ranking as the third-biggest revenue source after the Bureau of Internal Revenue and the Bureau of Customs,” Ms. Alfonso said.

Last year, PAGCOR remitted PHP 4.59 billion in cash dividends to the Bureau of the Treasury. It represented 75% of its net income in 2023.

“Banning local online gaming will unduly deprive the government of billions of pesos in much-needed revenues. The PAGCOR already has a suitable regulatory framework for the industry to make sure we have a viable gaming sector that meets sizable market demand and contributes significantly to the government’s social programs,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

Mr. Colet also said a ban on online gambling could drive Filipinos to use unregulated platforms.

“A ban might have the unintended effect of pushing many participants into a black market, which would be worse for everyone. The better approach is to regulate, not eliminate,” he said.

Gaming-related companies listed on the Philippine Stock Exchange (PSE) closed in the red on Monday.

Shares of Tanco-led digital entertainment company DigiPlus Interactive Corp. dropped by 3.31% or PHP 1.15 to PHP 33.6 apiece, while stocks of gaming technology provider DFNN, Inc. fell by 10.71% or 27 centavos to PHP 2.25 per share.

“With the hanging uncertainty around this issue, we do expect gaming stocks to face volatility in the near term. Given the sector’s sensitivity to regulatory risks, investors must remain cautious on trading the stocks in the gaming sector,” Ms. Alfonso said.

“Rather than a full ban, we think the government will implement stricter policies instead, and not a complete ban. Besides this, thousands of Filipino workers will be displaced once this pushes through,” she added.

Mr. Colet said the ban could be a boon for land-based casinos as they could see more players.

“To a limited extent, (the ban is) potentially good for purely land-based casinos who might see a pickup in foot traffic,” he said

“That said, an outright ban creates regulatory uncertainty around the entire gaming sector because that means there is nothing that would stop the government from banning all forms of gambling altogether,” he added.

On Monday, shares of Bloomberry Resorts Corp., which operates integrated casino-resort Solaire, rose by 5.64% or 18 centavos to P3.37 each.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the proposed ban requires a “balancing act” by legislators.

“This is a delicate balancing act in view of traditional and online versions, which would require consistency in the application of legislation,” he said in a Viber message.

“The traditional version could be controlled better by authorities compared to the online version, given the potential adverse effects on society by both on different levels,” he added.

PAGCOR is eyeing to generate up to PHP 480 billion in gross gaming revenue (GGR) this year, mainly driven by the electronic games segment. It recorded PHP 410.5 billion in GGR for 2024, up by 24.8% from PHP 328.88 billion in 2023.– Revin Mikhael D. Ochave, Reporter

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