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The ASEAN+3 Macroeconomic Research Office (AMRO) maintained its Philippine growth projections for this year and next year, despite global trade uncertainties.

In its latest ASEAN+3 Regional Economic Outlook, AMRO said it sees the Philippine economy growing by 5.6% this year and 5.5% in 2026, unchanged from its July estimates.

If realized, the Philippines would be the second-fastest growing economy in the region until 2026, behind Vietnam which is seen to grow by 7.5% this year and 6.4% next year.

While the AMRO’s projection for 2025 was within the National Government’s 5.5-6.5% target but below the 6-7% goal for 2026.

AMRO Group Head and Lead Economist Runchana Pongsaparn said the Philippine gross domestic product (GDP) growth projection for 2025 and 2026 are slower than the 5.7% expansion in 2024.

“It’s partly because of the weaker export, just like in other countries in the region, where we expect that the impact of the US (United States) tariff is going to kick in towards the end of the year and next year,” she said in an online briefing on Thursday.

Since August, Philippine goods entering the US have been slapped with a 19% levy, the same rate imposed on the country’s neighbors Indonesia, Cambodia, Malaysia and Thailand.

Ms. Pongsaparn said they expect Philippine consumption to grow steadily on the back of slower inflation, a robust labor market and remittances.

Asked if the growing corruption scandal would have an impact on growth, Ms. Pongsaparn said the impact would be minimal if it is “short-lived.”

“In terms of the scandal, I think we would have to see to what extent it’s actually going to affect the wider economy because if the event is short-lived and then it does not severely affect the investment sentiment, then that could be contained and may not affect the growth forecast materially. So, we still wait and see the overall impact,” she said.

On the other hand, AMRO Chief Economist Dong He said public spending as well as public and private investments should shield the economy from risks surrounding climate and services exports.

“The Philippines, because of its geography, is quite exposed to climate risks,” he said. “So, infrastructure really has to be strengthened. Some of these issues with flooding have to do with the infrastructure.”

Mr. He also said that the Philippines should continue upskilling its workforce, especially in the age of artificial intelligence (AI).

“The Philippines is a very service-oriented economy… But look, in the age of AI, how do we operate these services? So, that would also require upskilling of human resources in terms of public investment and also private sector investment,” he said.

The think tank upwardly revised its growth outlook for the ASEAN+3 region to 4.1% this year from its earlier projection of 3.8%. It also raised its 2026 growth projection to 3.8% from 3.6% previously.

ASEAN+3 comprises the Association of Southeast Asian Nations (ASEAN) members plus China — including Hong Kong — Japan and South Korea.

AMRO said the better outlook came amid the region’s “robust first-half performance and stronger-than-expected export momentum.”

It also raised its GDP forecast for the ASEAN region to 4.6% this year from 4.4%; and 4.3% in 2026 from 4.2% previously.

However, AMRO noted that more protectionist policies, slower growth in major economies, more volatile global financial markets, and higher global commodity prices pose risks to the region’s economic growth.

It also said governments in the ASEAN+3 region should use a monetary-fiscal-macroprudential policy mix to support growth and be prompt in addressing potential risks from structural changes in the market.

AMRO added that it should also “deepen regional financial cooperation to help reduce vulnerabilities stemming from heavy resilience on the US dollar.”

Meanwhile, AMRO’s Philippine inflation estimates for 2025 and 2026 were also unchanged at 1.8% and 3.2%, respectively.

These are slightly higher than the Bangko Sentral ng Pilipinas’ forecast of 1.7% for this year and 3.3% for 2026.

For ASEAN+3, inflation is projected to average 1% in 2025 and 1.1% in 2026. For ASEAN alone, inflation is seen to settle at 2.5% this year and 2.8% next year.

“Well-calibrated policy mixes and strong fundamentals — including robust banking systems, deepening financial markets, ample foreign reserves, and available policy space — have provided critical buffers,” it said.

The think tank said the region’s inflation outlook provides central banks with room to be more accommodative in its monetary policy to support growth. — Katherine K. Chan

The Philippines’ unemployment rate dropped to 3.9% in August, driven by renewed hiring in the agriculture and construction sectors, the Philippine Statistics Authority (PSA) reported on Wednesday.

The August jobless rate is an improvement from the three-year high of 5.3% in July, and 4% in August 2024, preliminary Labor Force Survey data showed.

The number of jobless Filipinos slid to 2.03 million in August from 2.59 million in July and 2.07 million a year earlier.

PSA Undersecretary and National Statistician Claire Dennis S. Mapa attributed improvement in the labor market in August to the recovery in some industries that were affected by typhoons in July.

“What we observed was that the biggest decline in July was in agriculture, retail trade, and construction — but they’ve now bounced back,” he told a news briefing in Filipino.

“So, in a way, the job losses in July turned out to be temporary, and those who were displaced have returned. Basically, these are the industries that recovered,” he added.

For the first eight months, the jobless rate stood at 4.1%, a tad higher than the 4% rate a year ago.

In August, the agriculture and forestry sector gained 1.35 million jobs from July, a month that was battered by bad weather. This brought the total number of workers in the sector to 8.73 million, up from 7.38 million a month prior. Year on year, the sector gained 300,000 workers in August.

The Philippines is struck by more tropical cyclones annually than any other region, with an average of 20 storms each year. According to the national weather bureau, typhoon activity peaks between July and October, accounting for nearly 70% of all cyclone formations during this period.

Labor Secretary Bienvenido E. Laguesma welcomed the improved jobs data, saying the government is committed to “future-proofing” and “weather-proofing” jobs.

“We hope and look forward to sustaining these favorable employment statistics through stronger collaboration and partnerships with business organizations and the private sector, as well as government agencies and departments,” he said via Viber.

Underemployment falls

Meanwhile, underemployment eased to 10.7% in August from 11.2% a year prior and 14.8% a month before.

This was equivalent to 5.38 million Filipino workers that wanted more working hours or an additional job in August.

Of the underemployed workers in August, 62.4% worked less than 40 hours a week, while 37.6% worked 40 hours or more a week.

For the January-to-August period, the underemployment rate rose to 12.7% from 12.1% a year ago.

Also, the employment rate improved to 96.1% in August from 94.7% in July, with the total employed persons rising to 50.1 million.

This brought the eight-month average employment rate to 95.9%, down from 96% a year ago.

Wage and salary workers accounted for 64.4% of employed persons, followed by self-employed without any paid employees (27%), unpaid family workers (7%) and employers in own family-operated farm or business (1.6%).

Among wage and salary workers, those employed by private establishments accounted for 78%, followed by those employed in government or government-controlled corporations (14.1%).

The labor force participation rate climbed to 65.1% in August from 60.7% in July, equivalent to 52.13 million Filipinos aged 15 and older either working or seeking work.

PSA data showed the service sector remained the country’s biggest employer in August, accounting for 61.5% of total jobs, followed by agriculture at 20.4% and industry at 18.1%.

Wholesale and retail trade, agriculture and forestry, and construction were the top sub-sectors.

On an annual basis, construction gained 540,000 workers, followed by fishing and aquaculture (448,000), administrative and support service activities (307,000), agriculture and forestry (300,000), and other service activities (239,000).

In contrast, wholesale and retail trade; repair of motor vehicles and motorcycles posted the largest annual decline in workers at 788,000, followed by public administration and defense, compulsory social security (-220,000); education (-151,000); human health and social work activities (-134,000); and real estate activities (-75,000).

Youth employment also improved, with the employment rate among those aged 15 to 24 rising to 88.3% from 81.9% in July, the local statistics agency said.

On average, employees worked 41 hours a week, up from 40.7 hours in August last year.

Threat of bad weather

Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan called for continued investment in workforce development, infrastructure and digitalization — especially for micro, small, and medium enterprises — to build resilience in vulnerable sectors. 

“We aim to enhance resilience in sectors vulnerable to disruptions, such as retail trade and agriculture, by prioritizing improvements in logistics, infrastructure, digitalization, and workforce development,” he noted.

“The government is also ramping up investments in climate-resilient infrastructure and proactive measures, alongside timely emergency employment programs to support workers affected by disruptions.”

In a note, Chinabank Research said the threat of bad weather conditions persists and continues to pose a risk to job opportunities, especially in agriculture and fisheries, retail trade and construction.

“On a more positive note, seasonal demand due to the upcoming holidays should provide some support to the labor market this quarter,” it added.

University of the Philippines School of Labor and Industrial Relations Benjamin B. Velasco said historical data show an uptick in employment as the holiday season approaches.

“It can still be dampened by the impact of climate events on vulnerable sectors like agriculture,” he said via Facebook Messenger.

Mr. Velasco said the drop in unemployment and rise in labor force participation are positive developments as more people who were out of work or discouraged from working are now employed.

“Hopefully, more of them are in full-time work and good jobs, as shown in [a] slight decrease in the underemployed.”

PSA’s Mr. Mapa said the labor market in September may have been affected by the series of typhoons and the recent 6.9-magnitude earthquake that hit southern Philippines. — Chloe Mari A. Hufana, Reporter

Economists and tax experts warned that scrapping the value-added tax (VAT) may trigger a fiscal or even an economic crisis, as the Bureau of Internal Revenue (BIR) collected PHP 487 billion in the first eight months of 2025.

“Abolishing VAT will put the country in fiscal crisis, drive up inflation, constrain government spending for social welfare and other vital programs, and cause a ratings downgrade,” Foundation for Economic Freedom President Calixto V. Chikiamco told BusinessWorld in a Viber message.

“Feasible but insane.”

VAT is a 12% tax slapped on sales, leases, barters, and imports of goods and services in the Philippines. VAT collections account for around a fifth of the BIR’s total revenues.

Cavite Rep. Francisco A. Barzaga filed a bill on Monday seeking to remove the 12% VAT on goods and services, citing its disproportionate impact on low- and middle-income households amid elevated inflation and rising cost of living.

Mr. Barzaga had suggested that any revenue shortfalls could be offset by imposing “wealth taxes” and increasing excise duties on “nonessential and luxury goods,” including cigarettes, alcoholic drinks, vehicles and gambling activities.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said Mr. Barzaga’s “incredulous” proposal will result in an economic collapse.

“Removing VAT will not just result in a fiscal crisis. It would lead to an economic crisis,” he said in a Viber message.

Raymond “Mon” Abrea, chairman and chief executive officer of the Asian Consulting Group called the lawmaker’s proposal “reckless and populist.”

“The real issue is not the tax, but the billions lost to leakages and fake exemptions, including an estimated P88 billion abuses of PWD (persons with disability) perks in 2023,” he said in social media post on Tuesday.

Mr. Abrea said the “more prudent approach” would be trimming the VAT rate to 10% while eliminating unnecessary exemptions such as broadening the tax base, curbing abuse, and safeguarding fiscal stability without placing additional burden on consumers.

He earlier estimated that a 2% VAT reduction could cost the government around PHP 200 billion annually, while saving households roughly PHP 7,000 per year.

Mr. Abrea’s proposal to cut the VAT rate to 10% aligns with the bill filed by Batangas Rep. Leandro Antonio L. Leviste, who argued that the current tax system is “regressive.”

However, Mr. Chikiamco said lowering VAT will still have the “same bad effects although to a lesser degree.”

Eleanor L. Roque, a tax principal of P&A Grant Thornton, said abolishing VAT altogether is not feasible as the government relies on the VAT as a major source of tax collection.

“Congress can look at lowering the VAT rate and compare it with our peers in the ASEAN (Association of Southeast Asian Nations) region if they are looking for ways to help the taxpayers,” she said in a Viber message.

The Philippines’ 12% VAT rate is relatively higher compared with Southeast Asian countries. For instance, Indonesia’s VAT is at 12%, while Cambodia, Malaysia, Vietnam and Laos are at 10%; Singapore at 9% and Thailand at 7%.

Jose Enrique “Sonny” A. Africa, executive director at think tank IBON Foundation, said scrapping VAT would “ease the disproportionate tax burden on ordinary Filipinos.”

“Abolishing it and compensating with stronger billionaire wealth, corporate and wealthy family income taxes will make the tax system much fairer and more equitable,” he said in a Viber message.

Mr. Africa said that implementing a “billionaire wealth tax” could yield PHP 500 billion to PHP 600 billion in government revenues annually, and would be enough to supplement the funding shortfalls from the removal of VAT.

However, proposals to abolish VAT or amend the VAT law are unlikely to get the support of Finance Secretary Ralph G. Recto, who authored the legislation that raised the VAT rate to 12% in 2005.

Meanwhile, the BIR said it collected PHP 487.12 billion in VAT as of end-August period, up 8.87% from PHP 447.42 billion a year ago. However, this was 1.64% short of the BIR’s PHP 495.26-billion VAT collection goal for the January-to-August period.

VAT collection accounted for 22.77% of the agency’s total revenues of PHP 2.14 trillion during the eight-month period.

In an e-mailed document to BusinessWorld, the BIR said VAT collection from “government investments in healthcare, infrastructure and agriculture” helped drive overall revenue collection so far this year.

The BIR is expected to collect PHP 796.87 billion from net of VAT refunds this year, climbing to PHP 1.3 trillion by 2028, the latest Budget of Expenditures and Sources of Financing said.

Meanwhile, the Bureau of Customs is projected to generate PHP 589.5 billion from VAT on imports in 2025, with collections reaching PHP 695.77 billion by 2028.

Earlier, the World Bank said that the Philippines can boost its revenue collections by expanding its VAT base and improving tax administration.

World Bank Country Director for the Philippines, Malaysia, and Brunei Zafer Mustafaoğlu said the country has “substantial space to increase VAT revenues by improving compliance and reducing exemptions and special rates.” — Aubrey Rose A. Inosante, Reporter with Kenneth Christiane L. Basilio

President Ferdinand R. Marcos, Jr. on Wednesday signed eight new petroleum service contracts (PSCs), representing a potential investment of around USd 207 million (around PHP 12 billion) over a seven-year exploration period.

The Department of Energy (DoE) said the awarding of these service contracts (SC) means that exploration for potential petroleum and hydrogen sources in key areas across the Sulu Sea, Cagayan, Cebu, Northwest Palawan, East Palawan, and Central Luzon can now begin.

“Unlocking over USD 200 million in investments, these service contracts represent our continued efforts to attain greater energy security, and therefore, economic stability, and self-reliance,” Mr. Marcos said in his speech during the official presentation of the signed agreements at Malacañan Palace.

The Philippines is a major importer of petroleum products, which are primarily sourced from the Middle East.

Mr. Marcos said the country imported over 340,600 barrels of liquid fuel last year, equivalent to approximately 99.68% of the Philippines’ entire petroleum supply.

To reduce dependence on imported oil and increase the utilization of indigenous resources, the Philippines also explores the potential of hydrogen as an alternative fuel.

“These service contracts signify not only our determination to secure new energy sources, but also our readiness to embrace innovation and sustainability while reducing import dependence,” said Energy Secretary Sharon S. Garin.

“From conventional petroleum to native hydrogen, we are expanding the frontiers of Philippine energy exploration,” she added.

Asked about the potential interference by China in the contracted areas, specifically those located in west of Palawan, the Energy chief said that all projects are well coordinated with the Department of National Defense “whether near the disputed areas or not.”

The DoE said that all the awarded contracts have undergone a transparent and competitive selection process under the Philippine Conventional Energy Contracting Program.

PSC Nos. 80 and 81 located in the southern Sulu Sea were awarded to a consortium comprising of Australia’s Triangle Energy (Global) Limited, United Kingdom’s Sunda Energy Plc., Pangilinan-led PXP Energy Corp. and The Philodrill Corp.

PSC 80 spans about 780,000 hectares, while PSC 81 covers 532,000 hectares. These contracts will be co-managed by the DoE and the Ministry of Environment, Natural Resources, and Energy of the Bangsamoro Autonomous Region in Muslim Mindanao.

Separately, PSC No. 82 was awarded to Triangle Energy, allowing it to proceed with petroleum exploration across 480,000 hectares in Cagayan basin.

For native hydrogen exploration in Central Luzon, the government awarded PSC Nos. 83 and 84 to US-based Koloma, Inc. SC 83 covers 126,645 hectares while SC 84 covers 85,082 hectares.

Gas 2 Grid Pte. Ltd. secured PSC No. 85 to explore 127,475 hectares in onshore Cebu.

A consortium of Filipino companies composed of Philodrill, Anglo Philippine Holdings Corp., PXP Energy, and Forum Energy Philippines Corp. received PSC No. 86, which covers 132,000 hectares in the Northwest Palawan Basin.

Situated in the East Palawan Basin, PSC No. 87 was awarded to Israel’s Ratio Petroleum Ltd.

With contracts in place, the companies can commence their respective work programs, which include geological and geophysical studies, seismic surveys, and drilling activities, as appropriate, to assess the potential of the contract areas.

Aside from exploration, service contractors will fund and undertake educational scholarships, capacity-building, and community development programs.

Edgar Benedict C. Cutiongco, president of the Philippine Petroleum Association, said that the PSCs unlock the potential of indigenous hydrocarbon resources to offer “a cost-effective and competitive energy supply” for consumers.

He said that reducing reliance on imported fuels “directly contributes to price stability and economic resilience.”

“The timely execution of these PSCs is expected to catalyze exploration and discovery activities, ensuring a reliable and secure energy supply for the future,” Mr. Cutiongco told BusinessWorld.

“The success of these initiatives will depend on the industry’s collective commitment to responsible and efficient resource development.”

Former Energy Undersecretary Jose M. Layug, Jr. said that the signing of eight PSCs is “a good signal for revival of oil and gas exploration in the Philippines.”

The President has urged investors to leverage their investments to drive meaningful progress for the Philippines.

“In return, I encourage our investors to turn your investments into engines of progress. Operate with accountability, with respect for the environment, and fairness towards the communities that host your operations,” Mr. Marcos said.

“Let us prove that responsible enterprise and national development can go hand-in-hand — that growth built on transparency and responsibility is growth that will last,” he added. — Sheldeen Joy Talavera, Reporter

Headline inflation accelerated to a six-month high in September, mainly due to costlier fuel and vegetables, but remained below the central bank’s 2-4% target, the Philippine Statistics Authority (PSA) said on Tuesday.

Preliminary data from the PSA showed the consumer price index  quickened to 1.7% in September from 1.5% in August, but eased from 1.9% in September 2024.

This was the fastest inflation rate since 1.8% in March.

It was also within the Bangko Sentral ng Pilipinas’ (BSP) 1.5-2.3% forecast for the month, but below the 1.9% median estimate in a BusinessWorld poll last week.

September also marked the seventh straight month that inflation settled below the BSP’s 2-4% target.

In the nine months to September, inflation averaged 1.7%, easing from 3.4% in the same period last year.

Meanwhile, core inflation, which excludes volatile prices of food and fuel, eased to 2.6% in September from 2.7% in August. Still, it was faster than the 2.4% clip a year earlier.

Core inflation averaged 2.4% in the nine-month period, slowing from 3.1% in the same period last year.

National Statistician Claire Dennis S. Mapa said the September inflation print was “not a surprise” as recent typhoons drove vegetable prices higher.

“This September, there were no surprises because, of course, we expected the large increase to be in vegetables, but we already saw that in August; it just continued into the month of September,” Mr. Mapa said in mixed English and Filipino. “This is still the effect of the flooding and typhoons we experienced in July. There were really many typhoons then.”

According to the PSA, the transport index was the main driver of faster inflation in September, picking up to 1% from a 0.3% decline the previous month. In September, gasoline declined at a slower pace of 0.9% from 6.1% in the previous month, while diesel quickened to 5.1% from  a 0.8% fall.

The heavily weighted food and nonalcoholic beverage index rose to 1% in September, picking up from 0.9% in August.

Food inflation quickened to 0.8% in September from 0.6% the previous month, but slower than 1.4% a year ago.

This was mainly driven by a year-on-year rise in vegetables, tubers, plantains, cooking bananas and pulses at 19.4% in September from 10% in August. This was the fastest pace in vegetable inflation in nine months or since 21.1% in January.

On the other hand, corn saw a slower annual decline of 4.5% from 11.8% in August.

“What we really saw were rain and flooding, particularly in our vegetable-producing provinces,” Mr. Mapa said. “So, this had an impact in August and continued into September.”

“We see that this may continue in the coming months because we have had storms again in the past month. It is possible that our inflation rate will remain somewhat elevated,” he added.

Last month, typhoons Mirasol, Ragasa (locally known as Nando) and Bualoi (Opong), coupled with the southwest monsoon, brought heavy rains and flooding in parts of the country.

“The slight uptick in inflation underscores the sensitivity of domestic food prices to supply disruptions,” Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan said in a statement. “We are working closely with various agencies to stabilize supply, keep essential goods affordable, and safeguard household welfare.”

Rice deflation continues

Meanwhile, the decline in rice prices moderated in September, with the annual rate easing to -16.9% from -17% in August. September marked the ninth straight month of rice deflation.

“Rice prices generally continued to decline due to adequate supply, lower international rice prices, and government measures to stabilize prices,” the BSP said in a statement.

The average price of local regular milled rice slipped by 1.02% month on month to PHP 37.79 per kilo in the last week of September from PHP 38.18 per kilo, based on data from the Agriculture department.

Well-milled rice also dropped by nearly 1% to PHP 43.10 per kilo from PHP 43.52, while special rice rose by 0.2% to PHP 57.10 per kilo from PHP 56.99.

On Sept. 1, the National Government implemented a 60-day import ban on regular and well-milled rice to address falling farmgate prices of unmilled rice.

On the other hand, meat inflation slowed to 6% from 7.1% in August, while fish and other seafood prices also cooled to 7.9% from 9.5%.

Meanwhile, inflation in the National Capital Region (NCR) slowed to 2.7% in September from 2.9% in August. However, it was quicker than 1.7% in September 2024.

Outside NCR, inflation accelerated to 1.5% from 1.1% in August, but slower than the 2% clip a year ago.

Central Visayas remained the region with the highest inflation rate at 4.1%, while the Bangsamoro Autonomous Region in Muslim Mindanao saw the biggest decline in prices at -1.5%.

For the bottom 30% of income households, inflation saw a slower annual decline to -0.2% from -0.6% in August. The nine-month average stood at 0.3% from 4.6% a year ago.

Outlook

Despite emerging risks to inflation, the central bank said inflation will likely average below the 2-4% target this year, mainly due to easing rice prices.

“Nonetheless, higher rice tariffs and rising global food prices could raise supply-side pressures over the policy horizon. Meanwhile, higher electricity rates could be offset by expectations of subdued global oil prices owing to a stable production outlook,” the BSP said.

The BSP sees inflation averaging 1.7% this year.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the below-expectation inflation print could prompt the BSP to cut interest rates on Thursday.

“Growth has been especially uncertain lately and we think that the BSP would be delivering a cut to pre-empt downside risks to growth in general,” he said. “So, lower-than-expected (inflation) gives more reason for BSP to cut now and not run the risk of being behind the curve.”

However, Chinabank Research sees emerging inflation risks as a signal for the central bank to pause at its upcoming meeting.

“While overall price growth is still expected to remain low for the rest of the year, increased upside risks to the inflation outlook could prompt the BSP to adopt a more cautious stance and keep interest rates on hold at Thursday’s policy meeting,” it said in a note.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said developments in rice supply and transport costs will continue to drive inflation in the coming months.

“In the coming months, inflation may continue to edge higher due to risks such as weather-related supply disruptions, holiday spending, the global oil price situation, and a weak (peso) that could raise import costs,” he said in a Viber message.

A BusinessWorld poll showed 10 of 16 analysts expect the Monetary Board to keep rates steady at 5% on Thursday.

BSP Governor Eli M. Remolona, Jr. earlier said the policy rate is now at their “Goldilocks” rate or “sweet spot” for both inflation and output. However, he said last month that they are open to cutting rates again this October if the country’s economy weakens due to slow demand. — Katherine K. Chan

The Philippines’ dollar reserves rose to its highest in 11 months at end-September, driven by higher global gold prices, earnings from the central bank’s investments and the National Government’s foreign currency deposits.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that gross international reserves (GIR) reached USD 108.805 billion as of end-September, up 1.6% from USD 107.098 billion in August.

This was the highest GIR level in nearly a year or since the USD 111.084 billion seen in October 2024.s

However, it was 3.5% lower than USD 112.707 billion in September last year.

“The Philippines’ gross international reserves rose in September 2025 due to higher global gold prices, income from Bangko Sentral ng Pilipinas’ investments, and foreign currency deposits by the National Government with the BSP,” the BSP said in a statement.

Dollar reserves are the central bank’s foreign assets held mostly as investments in foreign-issued securities, foreign exchange and monetary gold, among others.

These are supplemented by claims to the International Monetary Fund (IMF) in the form of reserve position in the fund and special drawing rights (SDRs).

BSP data showed the level of dollar reserves in the nine-month period is enough to cover about 3.6 times the country’s short-term external debt based on residual maturity.

It is also equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income, well above the three-month standard.

“The latest GIR level provides a robust external liquidity buffer,” the central bank said in a statement.

Ample foreign exchange buffers protect the country from market volatility and ensure that it is capable of paying its debts in the event of an economic downturn.

The BSP’s foreign investments inched up by 0.3% to USD 87.243 billion as of end-September from USD 86.987 billion in the previous month. However, it went down by 8.4% from USD 95.199 billion in the same period a year ago.

Central bank data also showed that its gold holdings were valued at USD 16.385 billion, jumping by 12.8% from the USD 14.523 billion seen at end-August and by 50.9% from USD 10.86 billion last year.

Meanwhile, foreign exchange holdings slumped by 44.9% to USD 505.1 million in September from USD 916.1 million in August and by 75.3% from USD 2.042 billion a year earlier.

The Philippines’ reserve position in the IMF edged up by 0.2% to USD 737.7 million at end-September from USD 736.4 million in August. It climbed by 0.9% from USD 731.1 million in September 2024.

SDRs — or the amount the Philippines can tap from the IMF’s reserve currency basket — were unchanged month on month at USD 3.935 billion. Year on year, it was 1.5% higher than USD 3.875 billion.

The BSP also reported that net international reserves inched up by 1.6% to USD 108.8 billion as of end-September from USD 107.1 billion as of end-August.

Net international reserves refer to the difference between the BSP’s reserve assets (GIR) and reserve liabilities, including short-term foreign debt, and credit and loans from the IMF.

“This GIR uptrend appears to be above expectations as the end-September GIR already exceeds the BSP’s year-end target of USD 105 (billion),” Security Bank Corp. Chief Economist Angelo B. Taningco said in an e-mail.

However, Mr. Taningco noted that a weakening peso could pose risks to the country’s dollar reserves in the coming months.

“Potential risks on GIR in upcoming months include persistent peso depreciation pressures induced by foreign capital outflows and higher (United States) Treasury yields,” he said.

At end-September, the local currency closed at PHP 58.196 per US dollar, falling by PHP 1.066 from its PHP 57.13 finish on Aug. 29.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort also noted a USD 411-million month-on-month decline in the central bank’s foreign exchange holdings amid the foreign exchange market volatility and “political noises.”

Earlier this month, the BSP revised its GIR projection for this year to USD 105 billion, slightly higher than its previous forecast of USD 104 billion. In 2026, it expects GIR to reach USD 106 billion. — Katherine K. Chan