EV stakeholders told to brace for ‘One Big Beautiful Bill’

The Department of Trade and Industry (DTI) on Wednesday warned that the Trump administration’s “One Big Beautiful Bill (BBB) Act” may have a negative impact on Philippine enterprises involved in electric vehicle manufacturing and supply-chain operations.

The US Senate on Tuesday approved the massive tax cut and spending bill by the narrowest of margins, advancing a package that would slash taxes, reduce social safety net programs and boost military and immigration enforcement spending while adding $3.3 trillion to the national debt.

The legislation now heads to the House of Representatives for possible final approval. US President Donald J. Trump has said he wants to sign it into law by the July 4 Independence Day holiday.

“Noting that the Philippines is part of the electric vehicle (EV) supply chain, the BBB’s proposed changes may have an effect on the demand for the country’s green metals that feed into the EV supply chain in the US,” DTI said.

The US measure includes provisions terminating federal tax credits for new and used electric vehicles and restricting the eligibility for clean vehicle tax incentives.

“The DTI advises all relevant industries and stakeholders — particularly those involved in EV manufacturing, supply-chain operations, and financial services — to consider conducting an early assessment of potential impacts and prepare appropriate risk mitigation strategies,” it added.

The DTI cited Section 112002 of the House-approved version of the bill, which will terminate the tax credit of up to $7,500 that US taxpayers can claim for electric vans, sport utility vehicles, and pickup trucks with a manufacturer’s suggested retail price of $80,000.

“The tax credit is set to expire on Dec. 31, 2032. However, if BBB is passed, the incentive will be terminated by Dec. 31. Further, only manufacturers that have not sold 200,000 units of new clean vehicles can qualify for the tax credit,” it added.

The BBB will also remove the tax credit of up to $7,500 that can be claimed for clean commercial vehicles that were placed in service within the year.

Under Section 112003 of the BBB, the incentive will expire this year, with only clean commercial vehicles ordered or purchased before the expiration eligible for the credit.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the proposed removal of the incentives on EVs could impact global supply chains.

“This could slow down sales and demand for EVs in the US and would have an adverse impact on global supply chains, including those in the Philippines, which are suppliers or exporters of parts and components for these EVs,” he said in a Viber message.

However, he said that the law could also “lead to some increase in demand for internal combustion engine vehicles.”

“That could benefit supply chains worldwide, including suppliers from the Philippines,” he added.

Meanwhile, Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said the proposed BBB Act may “have indirect but strategic implications” for the Philippines.

“As the US aims to reduce reliance on China and secure its biotech supply chains, it could redirect investments and sourcing to allied countries like the Philippines through friendshoring strategies,” he said in a Viber message.

“Key Philippine sectors that may benefit include electronics, information technology-enabled services, pharma support services and chemical manufacturing,” he added.

However, he said the country should strengthen its value chain, regulatory standards and investment incentives to take advantage of opportunities.

“On the flip side, if the act leads to tighter tech and intellectual property controls, it could also limit Philippine firms’ access to certain US-led biotech partnerships or funding,” he said.

“Policy readiness, talent development, and deeper US-Philippines economic cooperation will be critical to maximize gains,” he added. — with Reuters

Shares slip as focus shifts to US tariff deadline

Philippine stocks slipped on Wednesday as market focus turned to the Trump administration’s July 9 tariff deadline.

The main Philippine Stock Exchange index (PSEi) edged down by 0.07% or 4.80 points to close at 6,419.05, while the broader all shares index slipped by 0.06% or 2.45 points to 3,796.91.

“The local market pulled back as global trade uncertainties weigh on sentiment. This comes as the deadline of trade negotiations with the United States draws near, with no deals established leading to the imposition of reciprocal tariffs,” Philstocks Financial Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

“Investors also digested the latest comments from the Federal Reserve stating that [US President Donald J.] Trump’s tariffs are a hindrance to their policy easing. On a positive note, losses were trimmed at the last minute, allowing the market to maintain its ground above 6,400,” he added.

Mr. Trump said he was not considering extending the deadline for countries to negotiate trade deals with the United States, and cast doubts again that an agreement could be reached with Japan, although he expects a deal with India, Reuters reported.

Fed Chair Jerome H. Powell, under fire from Mr. Trump to cut rates immediately, reiterated that the US central bank plans to “wait and learn more” about the impact of tariffs on inflation before lowering interest rates.

Traders are pricing in about 64 basis points of cuts this year from the Fed, with the odds of a move in July at 21%.

The US’ planned “reciprocal” tariffs have been paused for 90 days until July 9, but a 10% blanket rate remains in effect.

“Philippine shares stayed afloat above the 6,400 level as investors maintained a cautious stance, closely monitoring the market ahead of Friday’s inflation report for signals on future economic conditions,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan added in a Viber message.

Sectoral indices closed mixed on Wednesday. Mining and oil went down by 2.04% or 198.79 points to 9,513.42; financials decreased by 0.97% or 22 points to 2,246.86; and services fell by 0.21% or 4.65 points to 2,154.93.

On the other hand, property rose by 0.6% or 14.63 points to 2,454.67; industrials increased by 0.46% or 42.55 points to 9,107.31; and holding firms edged up by 0.26 point to 5,618.25.

“GT Capital Holdings, Inc. was the day’s index leader, climbing 4.53% to PHP 635. Puregold Price Club, Inc. was the main index laggard, falling 2.78% to PHP 34.95,” Mr. Tantiangco said.

Value turnover went up to PHP 7.77 billion on Wednesday with 792.46 million shares traded from the PHP 7.69 billion with 1.35 billion issues exchanged on Tuesday.

Decliners outnumbered advancers, 111 versus 76, while 67 names were unchanged.

Net foreign buying declined to PHP 258.04 million on Wednesday from PHP 969.71 million on Tuesday. — Revin Mikhael D. Ochave with Reuters

Manufacturing PMI expands in June

Philippine factory activity in June expanded at its fastest pace in two months as production rebounded and new orders rose, S&P Global said.

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) improved to 50.7 in June from 50.1 in May.

June also marked the third consecutive expansion since the 49.4 reading in March.

A PMI reading above 50 denotes better operating conditions than in the preceding month, while a reading below 50 shows deterioration.

“The overall performance of the Filipino manufacturing sector remained relatively subdued as the first half of the year concluded,” Maryam Baluch, economist at S&P Global Market Intelligence said.

“However, while new orders continue to rise, they do so at a historically muted pace, weighed down by a stalled exports picture,” she added.

Uncertainty over the Trump administration’s tariff policy has weighed on the Philippines and other Southeast Asian countries, which are reliant on exports to the US market.

S&P Global data on the Association of Southeast Asian Nations (ASEAN) showed only two countries reported an expansion in PMI in June, Thailand and the Philippines. Thailand had the highest PMI reading at 51.7, followed by the Philippines (50.7). Both were above the ASEAN average of 48.6.

On the other hand, Malaysia (49.3), Myanmar (49), Vietnam (48.9) and Indonesia (46.9) reported a contraction in manufacturing activity.

In April, US President Donald J. Trump announced a baseline 10% tariff on all its trading partners, as well as higher reciprocal tariffs on some countries. The Philippines was slapped with a 17% tariff, the second lowest among Southeast Asian countries.

While the reciprocal tariffs have been paused for 90 days until July 9, the baseline 10% tariff remains in place.

New orders

In June, S&P Global said Philippine manufacturers reported a further rise in new orders.

“The pace of growth was slightly stronger than that recorded in the previous month, although it remained below the long-run survey average. Anecdotal evidence attributed this latest uptick to successful customer acquisitions, improving underlying demand trends, and effective promotional efforts,” it added.

S&P Global noted that production levels returned to expansion territory, although “only fractionally.” This was a reversal of the marginal contraction seen in May.

“The rate of output growth lagged the increase in incoming new business,” it said.

Manufacturers ramped up purchasing activity in response to better demand.

However, Ms. Baluch noted that delayed delivery times for inputs and material shortages have affected production capacity.

“Delayed delivery times for inputs and material shortages also meant that goods-producing firms in the Philippines were unable to replenish their post-production inventories effectively, reflecting the challenges faced by manufacturers in effectively expanding production amid growing demand,” S&P Global said.

Meanwhile, Philippine manufacturers increased employment for the first time in four months, in response to the increased demand.

S&P Global said inflationary pressures remained historically subdued in June.

“Rates of both input price and output charge inflation were slightly slower than seen in May. Where input prices were raised, this was primarily linked by panelists to higher material costs,” it said.

S&P Global noted that business confidence strengthened compared with May but was still significantly below historical levels.

“The next couple of months will be important to gauge if the sector is able to return to growth rates seen in much of last year,” Ms. Baluch said.

“Lower inflationary pressures and sustained demand will in part help Filipino manufacturers to achieve this through scope for improved pricing power. However, historically muted business confidence suggests a more subdued path for the year ahead.” — A.R.A.Inosante

Infrastructure spending declines by 28% in April

State spending on infrastructure slumped in April due to the election ban on disbursements for public works projects, the Department of Budget and Management (DBM) said.

In its latest disbursement report on Tuesday, the DBM reported that spending on infrastructure and other capital outlays declined by 27.8% to PHP 85.8 billion in April from PHP 118.9 billion in the same month last year.

“This was due mostly to the muted infrastructure spending of the Department of Public Works and Highways (DPWH), resulting from election-related prohibition on public spending for specific activities, goods, or services, as well as lower volume of contractor billings,” the DBM said.

Government agencies likely frontloaded and accelerated the implementation of infrastructure projects earlier this year, the DBM said.

The Commission on Elections implemented a 45-day ban on the release, disbursement or expenditures of public funds from March 28 to May 11.

The elections were held on May 12.

The DBM also attributed the decline in infrastructure spending to lower direct payments for foreign-assisted rail projects of the Department of Transportation, as well as the releases for local counterpart funds.

These rail projects include the South Commuter Railway Project and the Metro Manila Subway Project.

For the first four months of the year, infrastructure spending rose by 3.6% to PHP 347.6 billion from PHP 335.7 billion in the same period in 2024.

The DBM attributed the increase in infrastructure spending to the “robust spending performance of the DPWH for the implementation of various infrastructure projects, right-of-way settlements, and payment of progress billings (i.e., partially completed works) and accounts payables.”

Meanwhile, overall infrastructure disbursements inched up by 2.4% to PHP 419.4 billion in the January-to-April period from PHP 409.7 billion a year ago.

This includes infrastructure components of subsidy/equity to government corporations and transfers to local government units.

Analysts said infrastructure spending will likely pick up in the next few months.

“We may expect infrastructure spending to continue ramping up to boost the economy both through higher spending and employment in the construction sector, but also better economic activity comes with better infrastructure,” Oikonomia Advisory & Research, Inc. economist Reinielle Matt M. Erece said.

Budget Secretary Amenah F. Pangandaman earlier said infrastructure-related disbursements would likely increase after the election ban ended.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said government spending, particularly on infrastructure, would be a major contributor to overall economic growth.

“Infrastructure spending has been prioritized and increased in recent years to 5%-6% of GDP (gross domestic product), much higher vs. below 2% of GDP about 20-30 years ago,” he said in a Viber message.

For this year, the government’s infrastructure program is set at PHP 1.538 trillion, equivalent to 5.4% of total output.

The Development Budget Coordination Committee earlier said infrastructure spending will be sustained at 5-6% of GDP annually. — Aubrey Rose A. Inosante, Reporter

More domestic borrowings eyed to fund wider deficit

The government is still planning to source additional borrowings from the domestic market to fund the ballooning budget deficit.

“We’re still finalizing the details of our borrowing program, but we’re still targeting the 80-20 [local to foreign] funding split,” National Treasurer Sharon P. Almanza said in a Viber message.

The government is looking to hike its borrowing program to PHP 2.6 trillion this year from PHP 2.55 trillion previously, to fund the ballooning budget deficit.

The Development Budget Coordination Committee (DBCC) last week raised the budget deficit ceiling for 2025 to P1.561 trillion or 5.5% of gross domestic product (GDP) from 5.3% previously.

The DBCC had lowered this year’s revenue collection target to PHP 4.52 trillion from PHP 4.64 trillion previously. It trimmed the expenditure program for this year to PHP 6.08 trillion from PHP 6.18 trillion previously.

Asked where the government will source the additional borrowing requirements for this year, Finance Secretary Ralph G. Recto said in a text message: “Domestically.”

Gross borrowings by the National Government fell by 6.67% to PHP 1.33 trillion in the first five months of the year as both domestic and external borrowings declined.

External borrowings slumped by 21.54% to PHP 305.94 billion during the period, while domestic borrowings fell by 12.74% to PHP 1.02 trillion.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said the move to raise this year’s borrowing plan reflects the government’s need to fund its wider budget deficit.

“There’s definitely room for large issuances, especially retail Treasury bonds, which have historically been effective in tapping domestic liquidity and broadening investor participation. However, market volatility — driven by global uncertainties and shifting interest rate expectations — could affect pricing and demand,” Mr. Ravelas said.

A trader said in a text message that yields for the coming auctions of government securities are not expected to drop drastically as the increase in the government’s borrowing program is expected.

The trader added the government will have to issue a large volume, possibly through retail bonds, to meet the higher borrowing target.

“There is still space for large retail bond offerings, especially with strong demand from local investors seeking safe returns in a moderating interest rate environment,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera likewise said in a Viber message.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message that there was still space for large retail issuances amid “ample” liquidity, but market volatility could push yields higher.

Mr. Rivera also said market volatility stemming from global rate uncertainty, geopolitical tensions, and inflation risks could affect pricing and dampen investor appetite.

“The BTr (Bureau of the Treasury)will need to be strategic with timing, tenor, and incentives to manage costs and ensure successful take-up,” he said.

Mr. Rivera added the BTr could still tap into the foreign bond market as a “mix of strategies” could be used to meet the borrowing requirement.

BTr’s Ms. Almanza previously said the government is unlikely to issue another global bond this year as its foreign borrowing program is almost completed.

In January, the government raised USD 3.29 billion from its sale of US dollar and euro bonds.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that “large” maturing Treasury bonds from August 2025-September 2025 will also drive the government to increase borrowings.

The government is looking to raise PHP 690 billion from the domestic market in the third quarter or PHP 325 billion via Treasury bills and PHP 365 billion through Treasury bonds. — Aaron Michael C. Sy

Marcos directs SEC to reduce transaction costs

President Ferdinand R. Marcos, Jr. directed the Securities and Exchange Commission (SEC) to streamline its processes and slash transaction costs to support the implementation of the Capital Markets Efficiency Promotion Act (CMEPA) that took effect on Tuesday.

“To ensure the successful implementation of this reform, I direct the SEC to streamline its procedures, remove bureaucratic bottlenecks, (and) reduce transaction costs within its control,” Mr. Marcos said at the Philippine Stock Exchange (PSE) in Bonifacio Global City.

“Undertake the necessary changes to fulfill your responsibilities in these changing times,” he added.

The President on Tuesday attended the special bell-ringing ceremony at the PSE to mark the effectivity of Republic Act No. 12214 or CMEPA.

Signed by Mr. Marcos on May 29, one of the law’s provisions is the reduction of the stock transaction tax (STT) to 0.1% from the previous 0.6%, a move that is expected to boost stock market activity.

“For a first-time investor buying a PHP 10,000 worth of stock, this means paying PHP 10 in tax instead of PHP 60. This will encourage more Filipinos to invest in our capital market,” Mr. Marcos said.

“Before this law, investing in stocks meant paying a tax of 0.6%, six times higher than our neighbors in Singapore and Malaysia, and certainly the highest in ASEAN (Association of Southeast Asian Nations),” he added.

Aside from the lower STT, CMEPA removed the documentary stamp tax on mutual funds and unit investment trust funds and introduced a 20% uniform final tax rate on interest income.

The law also allowed employers to claim an additional 50% tax deduction for Personal Equity and Retirement Account contributions as long as they match or exceed the employee’s contribution and removed certain tax exemptions, with government-owned or -controlled corporations now generally subject to the same passive income taxes as other institutions.

“This law enhances our competitiveness in the ASEAN region and strengthens the foundations of a capital market that can thrive on the global stage,” Mr. Marcos said.

Mr. Marcos said CMEPA is expected to generate over PHP 25 billion in net revenue for the government until 2030, which could be used to fund the construction of roads, bridges, hospitals, schools, and other social safety net programs.

“But beyond revenue, CMEPA reinforces confidence. It shows that our financial system is becoming more equitable and structured for long-term stability,” he said.

Mr. Marcos also urged market participants and stakeholders “to uphold transparency, fairness, and good governance.”

“By working together in good faith, we can build an industry that earns the market’s trust both here and abroad,” he said.

Meanwhile, PSE President and Chief Executive Officer Ramon S. Monzon said the lower STT will improve the local bourse’s regional competitiveness.

However, he said the lower stock tax should be complemented with other initiatives to grow the number of listed companies in the country and expand the PSE’s products and services.

“A few of the upcoming initiatives which we hope will support more trading activity include the amendment of the board lot table to make investing more affordable and accessible to Filipinos, regulations for global Philippine depositary receipts, streamlined requirements for securities borrowing and lending, and introduction of derivative products such as index futures,” he said.

Mr. Monzon said the PSE will also coordinate with the SEC and other stakeholders to undertake reforms that will help make the local capital market more competitive, efficient, and investor friendly.

“We must also continue to find more ways to get more people to invest in the stock market instead of spending for nonessentials or throwing their hard-earned money on online gambling,” he said.

On Tuesday, the bellwether PSE index rose 0.92% or 58.91 points to 6,423.85, while the broader all shares index climbed 0.46% or 17.69 points to 3,799.36. — Revin Mikhael D. Ochave

PSEi jumps to over one-month high on PMI data

Philippine shares rose on Tuesday, with the benchmark returning above the 6,400 line to log a one-month high, on better manufacturing data and as a law that aims to boost market participation took effect.

The bellwether Philippine Stock Exchange index (PSEi) jumped by 0.92% or 58.91 points to close at 6,423.85, while the all shares index rose by 0.46% or 17.69 points to 3,799.36.

This was the PSEi’s best finish in over a month or since it closed at 6,425.80 on May 28.

“Philippine shares edged higher as the S&P Global Philippines manufacturing purchasing managers’ index (PMI) rose to 50.7 in June, signaling slight improvement in factory activity,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. “Sentiment was also buoyed by the start of Capital Markets Efficiency Promotion Act (CMEPA) implementation, which reduced the STT (stock transaction tax) to 0.1%.”

The Philippines’ manufacturing PMI improved from 50.1 in May as production rebounded, S&P Global said.

“The local market bounced back amid expectations that inflation last June had remained well under control despite certain upside risks, giving the Bangko Sentral ng Pilipinas (BSP) room to continue their policy easing,” Philstocks Financial Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message. “Investors also cheered the appreciation of the local currency against the dollar.”

A BusinessWorld poll of 17 analysts yielded a median estimate of 1.5% for the June consumer price index (CPI), up from the 1.3% in May but still below the BSP’s 2-4% annual target.

If realized, this would be the fastest clip in three months or since 1.8% in March.

Still, this would be slower than the 3.7% print in June 2024 and is well within the BSP’s June forecast of 1.1% to 1.9%.

Majority of sectoral indices closed higher on Tuesday. Holding firms climbed by 2.20% or 121.44 points to 5,617.99; mining and oil went up by 2.18% or 207.62 points to 9,712.21; property jumped by 1.89% or 45.31 points to 2,440.04; and industrials increased by 0.24% or 22.11 points to 9,064.76.

Meanwhile, financials dropped by 0.42% or 9.76 points to 2,268.86 and services slipped by 0.13% or 3 points to 2,159.58.

“GT Capital Holdings, Inc. was the day’s index leader, jumping 5.84% to P607.50. Converge ICT Solutions, Inc. was the main index laggard, falling 3.39% to PHP 18.80,” Mr. Tantiangco said.

Value turnover declined to PHP 7.69 billion on Tuesday with 1.35 billion shares exchanged from the PHP 7.89 billion with 1.05 billion stocks traded on Monday.

Advancers outnumbered decliners, 115 versus 79, while 65 names were unchanged.

Net foreign buying increased to PHP 969.71 million on Tuesday from PHP 114.09 million on Monday. — Revin Mikhael D. Ochave

Metro Manila workers get PHP 50 daily wage hike

Minimum wage earners in Metro Manila are getting a PHP 50 daily wage increase — the highest pay hike ever granted by the National Wages and Productivity Commission — starting July 18, the labor department said on Monday.

The raise would benefit about 1.2 million workers in the Philippine capital and nearby cities and provinces, the Department of Labor and Employment (DoLE) said in a statement.

The new daily minimum wage in the National Capital Region (NCR) is expected to increase to PHP 695 from PHP 645 for the non-agriculture sector.

For workers in the agriculture sector, and service and retail establishments employing 15 or less workers, daily wages will be raised to PHP 658 from PHP 608.

Laborers working in manufacturing establishments employing less than 10 workers will also receive a daily wage of PHP 658.

The daily pay hike is equivalent to a PHP 1,100 per month increase for a five-day work week or a PHP 1,300 increase for those working six days a week, DoLE said.

It will take effect on July 18, a year after the last daily wage hike was implemented on July 17, 2024.

The DoLE added that the NCR wage board had considered the country’s latest gross domestic product (GDP), inflation rate, and unemployment rate in approving the wage increase.

In the first quarter, GDP grew by a weaker-than-expected 5.4%, sharply slowing from the 5.9% expansion in the same quarter last year but faster than 5.3% in the fourth quarter.

Inflation averaged 1.9% in the January-to-May period, slightly below the central bank’s 2-4% target range.

The unemployment rate averaged 4% in the January-to-April period, unchanged from the same period in 2024.

The DoLE said about 1.7 million full-time wage and salary workers that earn above minimum wage “may also indirectly benefit as a result of upward adjustments at the enterprise level arising from the correction of wage distortion.”

It added that retail and service establishments with not more than 10 workers and enterprises affected by natural calamities or disasters can apply for exemption from the wage increase.

On the other hand, barangay micro business enterprises in NCR are not covered by the latest wage order.

“The issuance of the new wage order is in line with the standing directive of President Ferdinand R. Marcos, Jr. for the timely and regular review of regional minimum wage rates to reduce uncertainty, enhance fairness for all stakeholders, and foster a stronger link between productivity and wages,” Labor Secretary Bienvenido E. Laguesma said.

Mr. Laguesma said that the DoLE will conduct an information campaign to ensure public awareness and closely monitor compliance by enterprises.

The NCR wage board was the first to issue a wage order this year. Public consultations on a new wage order for Regions I, II, III, IV-A and VII will be conducted between July and August.

Sought for comment, Employers Confederation of the Philippines (ECoP) President Sergio Ortiz-Luis, Jr. said that micro and small businesses in the capital region may struggle to implement the pay increase.

“Most of the employees (in the NCR) come from microbusinesses. Micro establishments will have a hard time with this. At the present rate, they are having trouble paying their employees, especially during Christmas when there is 13^th month pay,” Mr. Ortiz-Luis said in a phone call.

Philippine Chamber of Commerce and Industry (PCCI) Chairman George T. Barcelon said that the wage hike is expected to raise operating expenses for businesses and may be passed on to consumers.

“The costs of doing business will be higher and it will be passed on to consumers. For (businesses affected by) weak markets, their profit will be lower, and for companies already facing difficulties, they will incur more losses,” Mr. Barcelon said in a Viber message.

For her part, PCCI President Enunina V. Mangio said local businesses will comply but will have to find ways to lessen the impact of the approved minimum wage hike.

Leonardo A. Lanzona, Jr., economics professor at Ateneo de Manila University, said that the mandated wage increase may affect smaller firms and stoke inflation.

“The issue, however, is that this can cause inflation as aggregate demand is raised without increasing aggregate supply. Inflation may now be low, but any upward pressure can cause a spiraling effect on wages and prices,” Mr. Lanzona said via Messenger chat.

He said that any increase in wages should be an incentive for workers to be more productive.

“The government should mandate firms to create mechanisms that share their gains or savings with the workers in the form of bonuses, merit increases, and productivity payments. Wages, in effect, can be allowed to increase only if the workers are contributing to productivity,” Mr. Lanzona said.

Benjamin B. Velasco, assistant professor at the UP Diliman School of Labor and Industrial Relations, said the wage hike order will be a “welcome relief” for workers.

“It will nudge employers paying below the minimum to add something to the wages they pay. Workers receiving above the minimum can file for wage distortion,” he said via Facebook chat.

Federation of Free Workers President Jose Sonny G. Matula said in Filipino that the P50 wage hike is “not enough,” adding that workers would prefer a legislated wage hike.

Congress adjourned last month without approving the bill seeking to hike the minimum daily wage by P100-P200. Economic managers had warned that the proposed legislated wage hike may have “dangerous repercussions” on the Philippine economy.

“Estimates show that the across-the-board wage hike will exert substantial downward pressure on GDP by 1.6 ppts (percentage points) for a PHP 200 hike and 0.5 ppt for a hike of PHP 100. Both scenarios are predicted to result in the economy missing the lower end of the GDP growth target range,” the economic managers said last month. — Adrian H. Halili

BSP: June inflation could range 1.1%-1.9%

Headline inflation likely settled below the 2-4% target band in June, as rising prices of fuel and some food items may have been tempered by lower cost of rice and electricity, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

In a statement, the central bank said inflation may have settled within the 1.1%-1.9% range in June.

If realized, the BSP’s forecast would be much slower than the 3.7% inflation print in June 2024.

At the upper end of the BSP forecast, inflation likely picked up from 1.3% in May.

On the other hand, the low end of the forecast showed June inflation may have been the slowest in 57 months or since the 0.6% seen in October 2019.

A BusinessWorld poll of 17 analysts conducted last week yielded a median estimate of 1.5% for the June consumer price index (CPI).

June inflation data will be released on Friday (July 4).

“Upward price pressures for (June) are likely to be driven by higher meat and vegetable prices, elevated oil prices, and the depreciation of the peso,” the BSP said in a statement.

In June, pump price adjustments stood at a net increase of PHP 6.30 a liter for gasoline, PHP 8.25 a liter for diesel and PHP 6.50 a liter for kerosene.

The peso closed at PHP 56.33 per dollar at the end of June, depreciating by 58.5 centavos from the PHP 55.745 finish at end-May.

“These pressures, however, could be partially offset by lower prices of rice, fish, and fruits, as well as lower electricity rates,” the central bank said.

Manila Electric Co. (Meralco) cut the overall rate by PHP 0.1076 per kilowatt-hour (kWh) to PHP 12.1552 per kWh in June from PHP 12.2628 per kWh in May.

The BSP noted the drop in rice prices in June, which marked the fourth straight month of decline this year.

The Philippine Statistics Authority said prices of rice declined further with regular milled rice averaging PHP 42.77 per kilo in June from the PHP 43.32 per kilo in mid-May.

“Going forward, the BSP remains committed to safeguarding price stability by ensuring that monetary policy settings are conducive to sustainable economic growth and employment,” it said.

At its June 19 meeting, the central bank delivered a second straight 25-basis-point (bp) cut, bringing its policy rate to 5.25% amid a benign inflation outlook and slowing economic growth.

BSP Governor Eli M. Remolona, Jr. also signaled they could deliver one more 25-bp cut this year.

Meanwhile, analysts said non-rice food commodities likely contributed to slightly faster June inflation.

“I forecast inflation to be at 1.5% this June. Driven by higher oil prices as well as some food items such as livestock, fish, and some vegetable items. However, this was partly offset by lower electricity prices,”Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said.

Meanwhile, Security Bank Corp. Vice-President and Research Division Head Angelo B. Taningco said prices of meat, fish, fruits, housing rentals, and electricity costs are some of the factors that drove up consumer prices in June.

The PSA reported that retail price of dressed chicken further rose to PHP 214.49 per kilogram in the first half of June from PHP 212.52 in the second half of May.

“[This] was somewhat offset by deflationary pressures from rice,” Mr. Taningco said.

The BSP last month lowered its baseline forecast for inflation to 1.6% for this year from 2.4%. It also expects inflation to settle at 3.4% for 2026 and 3.3% for 2027. — Aubrey Rose A. Inosante, Reporter

Central bank revises BoP forecasts for 2025, 2026

The Bangko Sentral ng Pilipinas (BSP) revised its balance of payments (BoP) forecasts for this year and 2026 amid heightened global uncertainty.

In a statement, the BSP said the overall BoP position is projected to end 2025 at a USD 6.3-billion deficit or -1.3% of gross domestic product (GDP), wider than the previous forecast of a USD 4-billion deficit or -0.8% of GDP.

For 2026, the central bank expects the BoP deficit to shrink to USD 2.8 billion or -0.5% of GDP from the previous projection of USD 4.3 billion or -0.8% of GDP.

“This outlook reflects a continued current account shortfall and moderating financial flows. While the domestic economy benefits from steady growth, low inflation, and ongoing structural reforms, these are offset by global trade uncertainty, heightened geopolitical risks, and weakened investor confidence,” the BSP said.

Latest BSP data showed the country’s BoP stood at a USD 5.8-billion deficit in the January-to-May period, a reversal from a USD 1.6-billion surplus in January to May 2024.

Meanwhile, the BSP also adjusted the forecasts for the country’s current account for this year and 2026.

This year’s current account deficit is now expected to narrow to USD 16.3 billion or -3.3% of GDP, a downgrade from the previous projection of a USD 19.8-billion deficit or -3.9% of GDP.

For 2026, the current account deficit is projected to further shrink to USD 13.6 billion or -2.5% of GDP, smaller than the previously projected USD 21.2 billion or -3.9% of GDP.

“The current account is expected to remain in deficit at around 3% of GDP, indicating a gap in savings over investment amid global uncertainties. As a result, external financing remains necessary to support the country’s infrastructure-led, investment-driven growth strategy,” the BSP said.

The BSP now expects goods exports to contract by 1% this year from the previous forecast of 1% growth. Goods exports are projected to grow by 2% in 2026.

“Goods exports continue to face headwinds from global trade uncertainty, lagging competitiveness, and constraints in the semiconductor industry,” the central bank said.

The BSP also trimmed the goods imports forecast to 1% this year from 4% previously. For 2026, goods imports are projected to grow by 2% from 4% previously.

“Meanwhile, stable domestic demand and infrastructure spending support the growth in imports, but import value is tempered by declining global commodity prices, particularly, for oil,” it said.

Services trade “remains broadly resilient” but the central bank warned that downside risks persist.

The BSP trimmed the growth forecast for services exports to 6% this year from 8% previously. It retained the 8% services exports growth projection for 2026.

The 5% growth forecast for business process outsourcing (BPO) receipts was retained for this year and for 2026.

“Outsourcing revenues are supported by stable demand for contact center services, yet they confront uncertainties due to US job reshoring initiatives and local talent shortages,” the BSP said.

Tourism receipts are projected to grow by 10% this year from 11% previously. For 2026, tourism receipts are expected to expand by 11% from 12% previously.

On the other hand, the BSP also trimmed its services imports growth forecast to 6% this year from 14% previously. It also lowered the growth projection for next year to 7% from 12% previously.

The central bank kept its cash remittance growth projection to 2.8% this year and 3% for 2026.

“Steady remittance flows continue to provide a buffer against trade deficit, supported by strong labor demand for Filipino workers in key sectors as well as by the aging populations in host countries,” the BSP said.

However, emerging protectionist policies in some host countries present emerging risks, it added.

Meanwhile, the BSP said foreign investment inflows are expected to “remain positive but subdued as policy uncertainty and the global slowdown weigh on investor sentiment.”

Financial account outflows could reach USD 13 billion this year, lower than the earlier forecast of USD 16.2 billion. For 2026, the outflows are seen to reach USD 13.2 billion, smaller than the previous projection of USD 17.8 billion.

The BSP now expects foreign direct investments (FDI) to end the year at a net inflow of USD 7.5 billion, smaller than the USD 9-billion projection in March. For 2026, FDI net inflows are expected to hit USD 8 billion, lower than the previous projection of USD 9 billion.

Meanwhile, foreign portfolio investments (FPI) are expected to end at a USD 6.8-billion net inflow this year, higher than the USD 3.9-billion earlier forecast.

For 2026, net inflows of foreign portfolio investments are expected to reach USD 5 billion, lower than the USD 4.1-billion previous projection.

“The moderation in trade and investment flows limits the country’s scope to build up foreign exchange reserves. Nonetheless, reserves are expected to remain ample, providing sufficient liquidity to cushion the economy against external headwinds,” the BSP said.

The central bank also lowered its 2025 gross international reserves (GIR) forecast to USD 104 billion from USD 105 billion previously. It kept the GIR forecast at USD 105 billion for 2026.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the weaker BoP outlook can be attributed to a global economic slowdown due to the US tariff policy and geopolitical risks.

“These external risk factors could also slow down the growth in the country’s structural US dollar inflows such as OFW (overseas Filipino worker) remittances, BPO revenues, foreign tourism receipts,” he said in a Viber message.

Mr. Ricafort said these external challenges may result in slower global investments, exports, employment, increased volatility in global crude oil and other global commodity prices. — Aubrey Rose A. Inosante

2024 Mid-Year Economic Briefing: Navigating the Easing Cycle

Investing with Love: A Mother’s Guide to Putting Money to Work

Investor Series: An Introduction to Estate Planning

Philippines Trade Update: Exports momentum continues

Quarterly Economic Growth Release: More BSP cuts to come