PSEi drops to 7,000 level on Trump win, GDP miss

The benchmark index plunged to the 7,000 level and hit a near two-month low on Thursday following slower-than-expected Philippine economic growth in the third quarter and as Republican Donald J. Trump won the US presidential election.

The Philippine Stock Exchange index (PSEi) dropped by 2.1% or 150.98 points to end at 7,014.44 on Thursday, while the broader all shares index went down by 1.97% or 78.33 points to 3,891.64.

This was the PSEi’s worst finish in nearly two months or since it ended at 6,944.88 on Sept. 11. The benchmark index also dropped below 7,000 intraday, hitting a low of 6,923.99.

“The local market plunged this Thursday. Investors priced in the negative implications of US protectionist policies on the global economic outlook as Mr. Trump wins the US presidential race,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Also weighing on investor sentiment was the slowdown in the Philippines’ third quarter gross domestic product (GDP) growth to 5.2%,” he added.

The Philippine economy expanded by 5.2% in the third quarter, slower than the revised 6.4% expansion in the second quarter and the 6% print in the same period last year. This was below the 5.7% median GDP growth forecast in a BusinessWorld poll of 12 analysts.

“Philippine shares slid anew as the third-quarter GDP figures came in much lower than expected at just 5.2%. Though private consumption continued to pick up, fixed investment and government consumption weakened as exports further declined,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Meanwhile, US stocks rallied sharply on Wednesday, with major benchmarks hitting record highs following Donald Trump’s victory in the 2024 presidential election. Mr. Trump is perceived as favoring lower corporate tax rates, deregulation, and pro-domestic industrial policies, all of which could stimulate the US economy and benefit risk assets.”

Almost all sectoral indices closed lower. Property went down by 3.93% or 108.90 points to 2,656.43; mining and oil declined by 2.59% or 219.83 points to 8,262.81; industrials retreated by 2.25% or 224.45 points to 9,712.17; financials dropped by 2.1% or 49.09 points to 2,282.48; and holding firms decreased by 1.9% or 116.86 points to 6,015.38.

Meanwhile, services inched up by 0.04% or 1.07 points to 2,163.43.

Value turnover increased to PHP 9.72 billion on Thursday with 1.11 billion shares traded from PHP 4.66 billion with 1.34 billion issues changing hands on Wednesday.

Decliners overwhelmed advancers, 167 versus 46, while 40 names were unchanged.

Net foreign selling ballooned to PHP 3.9 billion on Thursday from PHP 1.12 billion on Wednesday. — Revin Mikhael D. Ochave

Growth sharply slows to 5.2% in Q3

By Aubrey Rose A. Inosante, Reporter

THE PHILIPPINE economy expanded by a weaker-than-expected 5.2% in the third quarter, as bad weather hurt agricultural output and government spending, the statistics agency said on Thursday.

Preliminary data released by the Philippine Statistics Authority (PSA) showed Philippine gross domestic product (GDP) grew by an annual 5.2% in the July-to-September period, slowing from the revised 6.4% growth in the second quarter and 6% a year ago.

This was also the weakest growth in five quarters or since the 4.3% expansion in the second quarter of 2023.

It was also below the 5.7% median forecast in a BusinessWorld poll of 12 economists and analysts.

On a seasonally adjusted quarter-on-quarter basis, GDP expanded by 1.7%, compared to 0.7%.

Despite the slower growth, Mr. Balisacan said the Philippines’ third-quarter GDP print was still the second-fastest in the region after Vietnam (7.4%).

“Our economy continues to grow steadily; the latest GDP figures indicate continuous expansion,” National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said at a briefing on Thursday.

Philippine GDP growth in the July-to-September period was better than Indonesia (4.9%), China (4.6%), and Singapore (4.1%).

For the first nine months of the year, Philippine GDP growth averaged 5.8%, slower than the 6% print a year ago. This was slightly below the government goal of 6-7% growth this year.

“The economy needs to grow by at least 6.5% to meet the government’s target for the last quarter 2024. We remain optimistic that this growth target is attainable,” Mr. Balisacan said.

He attributed the weaker-than-expected third-quarter growth to the impact of a series of typhoons on the agriculture sector.

Agriculture, forestry and fishing shrank by 2.8% in the third quarter, a reversal of the 0.9% growth posted a year ago. The sector accounts for around a tenth of Philippine economic output.

“The crops subsector of the agriculture sector posted a year-on-year decline of 2.8%, reflecting the impacts of the El Niño phenomenon during the planting season and the effects of seven typhoons, in addition to the Habagat (monsoon), during the harvest season,” Mr. Balisacan said.

He noted the combined agricultural damage and losses from the six typhoons in the third quarter and the recent Severe Tropical Storm Kristine has reached P15.8 billion.

At the same time, the industry sector grew by 5% in the third quarter, slowing from 5.6% a year ago due to base effects. Construction growth slowed to 9% from 14.5% a year ago.

Services expanded by 6.3% in the July-to-September period, easing from 6.8% in the same period in 2023.

“The successive typhoons suspended classes and work in government and some private offices, resulting in administrative delays and supply-chain disruptions,” Mr. Balisacan said.

CONSUMPTION RISES
Meanwhile, household consumption, which accounts for over 70% of the economy, jumped by 5.1% year on year in the July-to-September period, improving from 4.7% in the second quarter but steady from a year ago.

“Household spending is particularly a bright spot, growing by 5.1%, faster than the last two quarters due to slower inflation. The recent policy rate cuts and reserve requirement reduction could help bring in more liquidity to the economy and increase our people’s purchasing power,” Finance Secretary Ralph G. Recto said in a statement.

Mr. Balisacan noted there was a slowdown in tourism and leisure-related spending as typhoons caused the cancellation of 138 flights in the third quarter.

Gross capital formation, the investment component of the economy, expanded by 13.1% in the third quarter, a turnaround from the 0.3% dip a year ago.

“The turnaround in investments in durable equipment mainly drove capital formation growth. Private construction also sustained double-digit growth (11.9% from 10.3%), while public construction slowed down (3.7% from 21.7%) due to administrative delays and disruptions associated with adverse weather conditions,” Mr. Balisacan said.

Growth in government spending sharply slowed to 5% in the third quarter from 11.9% in the prior quarter.

‘The climate-related disruption and disturbances that happened in the last quarter have slowed down this (government) spending. And that’s even more so for those that are related to infrastructure,” Mr. Balisacan said.

Exports of goods and services contracted by 1% in the third quarter, a reversal from the 2.5% growth a year ago.

Imports of goods and services rose by 6.4% in the period ending September, an improvement from the 1.6% decline a year ago.

“This implied a deep contraction in net exports by 32.6%. Exports of goods were pulled down by the sharper decline in electronics products, particularly semiconductors, minus 17.9%,” Mr. Balisacan said.

He said the industry is “undergoing inventory corrections and has yet to meet the demands for new products in the global market.”

Economic managers are optimistic about faster growth in the fourth quarter as consumer spending is expected to pick up during the holiday season.

“We anticipate increases in holiday spending, more stable commodity prices (given low inflation), lower interest rates, and a robust labor market. In the areas affected by typhoons, recovery efforts will drive economic activity and, hopefully, build back better,” Mr. Balisacan said.

Mr. Recto said he expects private construction to rebound amid lower interest rates.

Since August, the Bangko Sentral ng Pilipinas (BSP) has lowered interest rates by 50 basis points (bps) this year, bringing the key rate to 6%.

‘HUGE DISAPPOINTMENT’
Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said the third-quarter GDP print was a “huge disappointment,” although it was better than its 4.8% forecast.

“For now, we’re sticking to our forecast that full-year GDP growth will slip to 5.4% this year from 5.5% in 2023, implying that headline growth will continue to slow in the fourth quarter to around 4.5%,” he said in a report.

Shivaan Tandon, Markets Economist at Capital Economics said the GDP growth is unlikely to be sustained as “slower growth in remittances, fiscal policy and weaker export demand weigh on activity.”

“While the worst is probably over for private consumption in the Philippines, we doubt this pace of consumption growth is sustainable. Admittedly, a continued boost from lower inflation and looser monetary policy should support consumption,” Mr. Tandon said.

Mr. Tandon said downside risks to domestic demand have gone up, as the US dollar is expected to strengthen.

“This raises the risk that the BSP, which has arguably been more focused on the Fed than other central banks in Asia (barring Bank Indonesia), opts for fewer rate cuts than may have otherwise been the case,” he said.

He noted exports will remain under pressure as global economy slows and the outlook remains clouded by possible tariffs to be imposed by US President-elect Donald Trump.

On the other hand, ANZ Research economists said private consumption will likely further improve, as the unemployment rate fell to 3.7% in September and real wages posted growth in the third quarter.

“The resilience in the Philippines’ labor market and steady growth in remittances will moderately buttress personal consumption going forward, in our view. We stress on ‘moderate’ as the steady labor market is partially offset by the need for households to rebuild savings as relayed in the household sentiment index,” ANZ Research’s economist Arindam Chakraborty and Chief Economist Sanjay Mathur said.

However, the ANZ Research economists said exports will likely remain muted in the near term, amid weak external demand.

“Overall, given the benign inflation outlook over the near term and the softer GDP growth in Q3 2024, we think the BSP will cut rates by another 25 bps in December 2024,” ANZ Research said.

BSP Governor Eli M. Remolona, Jr. has signaled a possible 25-bp rate cut in December. If realized, this would bring the benchmark to 5.75% by end-2024.

Agricultural output slumps in third quarter

The Philippines’ agricultural production plunged by 3.7% in the third quarter, the steepest decline in nearly four years, the statistics authority said on Wednesday.

Data from the Philippine Statistics Authority (PSA) showed the value of production in agriculture and fisheries at constant 2018 prices fell by 3.7% to PHP 397.43 billion in the July-to-September period. This was worse than the 0.2% decline in the same period a year ago.

This was also the biggest drop in farm output since the 3.8% contraction in the fourth quarter of 2020.

In the first nine months, agricultural output shrank by 2.2%, a reversal of the 0.2% growth a year prior.

“This was attributed to the reductions in the values of crops, livestock and fisheries production,” the PSA said.

The Department of Agriculture (DA) in a statement said the lower farm production was due to adverse weather and the lingering impact of African Swine Fever (ASF).

Broken down, crops production slid by 5.1% in the quarter ending-September, worsening from the 0.2% drop a year earlier. Crops accounted for more than half or 53.2% of the total farm output.

In the January-September period, the value of production in crops slid by 4.6%, reversing the 0.9% increase a year earlier.

“Undeniably, the combined effects of El Niño and La Niña weighed down palay production, a major contributor to the crop sector, which accounts for more than half of the value of agricultural and fisheries output,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. said.

Palay (unmilled rice) production primarily contributed to this decline, plunging by 12.3% in the third quarter.

PSA data showed sugarcane plummeted by 83.8% during the July-to-September period. Lower output was also seen in mango (-11.2%), ampalaya (-5.6%), rubber (-4.6%), cassava (-3.9%), banana (-1.1%), pineapple (-0.4%), and coconut (-0.1%).

“On the other hand, the value of corn production was 1.3% higher than last year’s same quarter level,” it added.

Meanwhile, livestock production, which accounted for 15.5% of the total, fell by 6.7% in the third quarter. This was a reversal of the 2.5% expansion a year ago.

The value of livestock output dropped by 3.5% in the first nine months from the 2.4% growth in the previous year.

This as hog production slumped by 8% in the third quarter, reversing the 3.3% expansion a year ago.

“There were also more livestock hit by the ASF this third quarter compared to the quarter a year ago,” Samahang Industriya ng Agrikultura Executive Director Jayson H. Cainglet said in mixed English and Filipino.

The latest bulletin from the Bureau of Animal Industry showed there are active ASF cases in 108 municipalities across 25 provinces as of Oct. 18.

There was also a drop in the value of production for goat (-4.1%) and carabao (0.5%). On the other hand, higher production was seen for dairy (6%) and cattle (0.9%).

Meanwhile, fisheries production declined by 5.5% in the third quarter, although improving from the 6.1% contraction in the same period in 2023.

Fisheries accounted for 14% of the agriculture sector’s total production in the quarter.

In the nine-month period, the value of fisheries output dipped by 0.9%, improving from the 7% contraction a year ago.

Double-digit declines were recorded for grouper or lapu-lapu (-31.9%), big-eyed scad or matangbaka (-23%), fimbriated sardines or tunsoy (-18.9%), Indian mackerel or alumahan (-18.8%); yellowfin tuna or tambakol (-18.6%), round scad or galunggong (-17.2%), tiger prawn or sugpo (-16.7%), mudcrab or alimango (-14.8%), slipmouth or sapsap (-14.7%); and squid or pusit (-11.9%).

Production likewise declined for frigate tuna or tulingan (-7.5%), milkfish or bangus (-6.9%), Bali Sardinella or tamban (-6.7%), cavalla or talakitok (-4.6%), tilapia (-4.2%), and seaweed (-1.5%).

“The fisheries subsector also suffered from the adverse weather,” the Agriculture department said.

Mr. Cainglet said there were more typhoons this year compared to last year.

A number of storms and typhoons struck the country in the third quarter, resulting in significant agricultural damage.

These include the combined effects of southwest monsoon and Typhoon Carina (PHP 4.73 billion), Severe Tropical Storm Enteng (PHP 3.77 billion), and the combined effects of the enhanced southwest monsoon and tropical cyclones Ferdie, Gener, and Helen (PHP 1.09 billion), according to DA estimates.

Lone bright spot

Meanwhile, poultry was the only sector to post gains in the third quarter. Poultry production grew by 5.8%, faster than the 2.9% in the same period a year ago.

Poultry output expanded by 6.8% in the January-September period from 2.5% a year earlier. It accounted for 17.3% of the total value of agricultural production.

Growth was seen for chicken eggs (6.6%) and chicken (6%), while declines were seen in duck eggs (-5.7%) and duck (-3.2%).

Federation of Free Farmers National Manager Raul Q. Montemayor said that the contraction in overall farm output was also due to the sector’s vulnerability to shocks.

“While we can point to weather disturbances and animal diseases for the decline in output, it also reflects the low level of resiliency and vulnerability of the sector to external forces,” he said.

“The output decline was due mainly to a reduction in the volume, which was not able to offset a general upswing in prices,” he added.

Mr. Cainglet said that farmgate prices of palay and hog have continued to be low due to over importation and reduced tariffs. “Even the farmgate price of chicken, despite the growth, is below cost of production. The farmgate price of chicken is at PHP 90 per kilo,” he added.

The executive order slashing tariffs on rice imports to 15% until 2028 took effect in July.

Mr. Tiu Laurel said the government is working on measures to support the sector, such as continuing to develop a vaccine for ASF.

“We’re implementing changes to the rice cropping calendar and building infrastructure like water impounding dams to mitigate the impact of climate change on the farming sector,” he added.

The DA is targeting 1-2% agricultural growth this year.

The agriculture sector typically accounts for about a tenth of the country’s gross domestic product (GDP). It also provides about a quarter of all jobs.

The PSA is scheduled to release third-quarter GDP data today (Nov. 7). – Luisa Maria Jacinta C. Jocson, Reporter

September trade deficit widest in 20 months

The Philippines’ trade-in-goods deficit ballooned to USD 5.09 billion in September, the biggest trade gap in 20 months, the Philippine Statistics Authority (PSA) said on Wednesday.

Preliminary data from the PSA showed the trade-in-goods balance — the difference between exports and imports — stood at a USD 5.09-billion deficit in September, up by 43.4% from USD 3.55-billion gap a year ago.

Month on month, the trade gap rose by 15.81% from USD 4.39 billion in August.

The country’s balance of trade in goods has been in the red for 112 straight months (over nine years) since the USD 64.95-million surplus recorded in May 2015.

In September, exports declined 7.6% to USD 6.26 billion from USD 6.77 billion a year ago. This was the biggest drop since June.

For the first nine months, exports rose by 1.1% to USD 55.67 billion.

The Development Budget Coordination Committee (DBCC) expects 5% growth in exports this year.

On the other hand, the value of imports went up by an annual 9.9% to USD 11.34 billion in September from USD 10.32 billion in the same period last year.

In the nine-month period, imports inched up by 0.6% to USD 95.07 billion. This is below the DBCC’s target of 2% growth in imports for the year.

Electronic exports

Among the major types of goods, exports of manufactured goods fell by 11.1% year on year to USD 4.95 billion in September, followed by mineral products (USD 645.24 million) and agro-based products (USD 492.62 million). Manufactured goods accounted for 79.2% of the total exports in September.

By commodity group, electronic products was still the country’s top exports in September with USD 3.15 billion, down 23.1% from USD 4.09 billion a year ago.

Semiconductor exports, which accounted for the majority of electronic goods, dropped by 30.6% to USD 2.31 billion in September.

Exports of other manufactured goods increased by 73.7% to USD 506.69 million, while other mineral products rose by 16.2% to USD 330.23 million in September.

The United States remained the top destination of Philippine-made goods, with exports valued at USD 1.08 billion. This accounted for 17.3% of total exports in June.

Hong Kong was the second-biggest market with an export value of USD 867.42 million (13.9% share), followed by Japan with USD 847.47 million (13.5%), China with USD 830.36 million (13.3%), and South Korea with USD 318.50 million (5.1%).

Other top export destinations include Thailand, the Netherlands, Germany, Singapore, and Taiwan.

Imports

By type of goods, imports of raw materials and intermediate goods increased by 19.5% to USD 4.33 billion in September, while capital goods inched up by 1.4% to USD 3.03 billion and consumer goods rose by 20.6% to USD 2.56 billion.

In terms of value, electronic products had the highest import value at USD 2.4 billion in September, up by 8.9% from last year. It made up 21.2% of the total imports in September.

Imports of mineral fuels, lubricants, and related materials slipped 11.4% year on year to USD 1.36 billion in September, while transport equipment also fell by an annual 3.1% to USD 1.12 billion.

In September, China was the biggest source of imports valued at USD 2.84 billion, which made up 25% of the total import bill.

This was followed by Indonesia with USD 1.09 billion (9.6%), Japan with USD 837.75 million (7.4%), South Korea with USD 784.65 million (6.9%), Thailand with USD 735.58 million (6.5%) and the United States with USD 6.298 million (6.7%).

GlobalSource Country Analysts Diwa C. Guinigundo said that the widening trade deficit was due to sluggish exports.

“We are strong in imports, but our exports are not doing very well precisely because the global economy was also not doing very well,” he said in a phone call interview.

“Exports declined because the global economy is not exactly robust, while our imports were driven by the demand for imports of capital goods, raw materials and intermediate products, as well as consumer imports like oil, cars,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the increase in imports was also due to a stronger peso.

The peso closed at PHP 56.03 per dollar at end-September, strengthening from the PHP 56.111 finish at end-August.

For the coming months, Mr. Ricafort said that the weakening peso would “make imports more expensive from the point of view of local buyers, but would make exports more price competitive from the point of view of foreign buyers.”

“Increased demand other economic activities during the Christmas holiday season would help spur more imports/production activities and export sales,” Mr. Ricafort said. – Aubrey Rose A. Inosante, Reporter

Unemployment rate falls to 3.7% in September

The Philippines’ unemployment rate fell to 3.7% in September, driven in part by a growing number of female workers joining the labor force ahead of the holiday season, the statistics agency said on Wednesday.

Preliminary data from the Philippine Statistics Authority’s (PSA) Labor Force Survey showed the jobless rate dropped to 3.7% in September from 4% in August and 4.5% in September last year.

This translated to 1.89 million unemployed Filipinos in September, down by 177,000 from August and by 370,000 from a year earlier.

Despite the lower jobless rate, underemployment rose to 11.9% in September from 11.2% in August and 10.7% in September last year.

The number of underemployed Filipinos — those who want longer work hours or an additional job — increased by 831,000 to 5.94 million in September from 5.11 million a year ago.

In the first nine months of the year, the unemployment rate averaged 4%, lower than the 4.6% average a year ago.

PSA data showed the employment rate went up to 96.3% in September from 95.5% a year ago. This is equivalent to 49.87 million employed Filipinos, up by 2.2 million from 47.67 million in September 2023.

In September, the labor force participation rate (LFPR) increased to 65.7% in September, from 64.1% a year ago. This translates to a labor force of 51.77 million in September, up 1.84 million from 49.93 million a year ago.

Undersecretary and National Statistician Claire Dennis S. Mapa said 1.34 million of these new workers were women.

“In [the number of] employed persons year on year, the majority here are actually female workers,” he told a news briefing in mixed English and Filipino.

He noted there has been a steady increase in female workers for the past three months.

The LFPR among female Filipino workers rose to 55.7% in September from 53.4% a year ago. For male workers, the rate also rose to 75.6% from 74.7% a year ago.

“By and large, more and more women and youth are entering the labor force. This bodes well for our economic outlook as more Filipinos see increasing job opportunities. As the holiday season approaches, we expect more employment available in retail trade as well as accommodation and food services,” Finance Secretary Ralph G. Recto said in a statement.

Of the 883,000 new employees seen in September, the bulk or 802,000 were youth, bringing the youth employment rate to 90%.

National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said the government will continue to implement supply-side and demand-side interventions to ensure the government will hit quality employment targets.

“The government is urgently addressing the constraints to high-quality job creation and collaborating with the private sector to capacitate our workers with the right skills and competencies simultaneously,” he added.

Mr. Balisacan said the NEDA is also working to finalize the Trabaho Para sa Bayan Plan, a 10-year roadmap to encourage investments in priority sectors, improve the employability of the current and future workforce, and enhance labor market governance for the next decade.

Declining jobs

By industry, the services sector continued to employ the largest number of Filipinos with 31.31 million workers in September.

This was followed by the agriculture sector, which employed 9.48 million, and the industry sector with 8.56 million workers.

Meanwhile, the administrative and support service activities industry gained the biggest number of new employees year on year with 735,000.

Service activities added 559,000 workers year on year, followed by wholesale and retail trade; repair of motor vehicles and motorcycles with 486,000 and public administration and defense with 333,000.

The manufacturing sector added 200,000 jobs year on year in the third quarter.

On the other hand, accommodation and food service activities had the biggest annual decrease in jobs with 242,000, followed by agriculture and forestry (210,000), fishing and aquaculture (136,000) and construction (87,000).

On average, employed Filipinos worked 40.3 hours a week, slightly lower than the 40.7 hours in August and 40.8 hours in September 2023.

University of the Philippines School of Labor and Industrial Relations Assistant Professor Benjamin B. Velasco said the September unemployment and underemployment data implies that “more people entered the labor force but found part-time or temporary jobs only.”

“This is revealed in the rise in LFPR but lower average hours of work per week along with an increase in people wanting more hours of work,” he said in a Facebook Messenger chat.

“This can mean a greater number of young people employed in freelance work like virtual assistants, internet-based tasks, or delivery riders as shown in the comparative increases in sub-sectors like admin and support services and other service activities,” he added.

University of the Philippines Baguio economics instructor Edgar Antonio C. Suguitan said the underemployment trend reflects the precarious nature of employment in the country.

“It is a sign of a weakness of the economy because the economy does not have the capacity to accommodate a growing labor force,” he told BusinessWorld in a Facebook Messenger chat.

“Rampant in the labor market is this employment ‘flexibility’ as many workers are given temporary contracts,” he added.

Federation of Free Workers (FFW) President Jose Sonny G. Matula sounded the alarm over the rise in underemployment, which he said suggested workers’ incomes are insufficient to meet basic needs, driving them to seek more jobs to survive.

“This financial strain has potential health consequences for workers who are compelled to work longer hours or multiple jobs simply to make ends meet,” he told BusinessWorld in a Viber chat.

He said the decline of employment in the wholesale and retail, construction, human health, and social work activities sectors was concerning.

“While the rise in overall employment indicates resilience in certain areas of the economy, the downturn in these key sectors highlights underlying vulnerabilities,” he said.

PSA data showed wholesale and retail trade lost 597,000 workers month on month. Followed by 284,000 in construction and 177,000 in human health and social work activities.

The labor group leader said wholesale and retail are “traditionally a cornerstone for job creation.” Its decline in workers could potentially impact small businesses and consumer activity, he added. – Chloe Mari A. Hufana, Reporter

Philippines seeks USD 150-million World Bank loan for education

The Philippines is seeking a USD 150-million loan from the World Bank (WB) to improve the quality of public education amid a learning crisis.

The proposed loan will fund the Project for Learning Upgrade Support, which includes programs aimed at accelerating and recovering learning for 21.1 million learners of Grade K to 10, according to a loan document uploaded on the World Bank website on Nov. 4.

The project will also seek to improve the measurement of education quality, as well as strengthen education system capacity.

The Department of Education (DepEd) will implement the project over a five-year period starting in 2025.

The World Bank is expected to appraise the loan proposal on April 1, 2025 and give its approval on May 30, 2025.

“The most critical challenge facing the Philippines’ education system is on the current low learning outcomes. Around 91% of 10-year-olds in the Philippines cannot read and understand an age-appropriate text, which is a phenomenon known as learning poverty,” the World Bank said, noting this is much higher than Indonesia (53%) and Thailand (23%).

The Programme for International Student Assessment (PISA) in 2022 showed Filipino students were among the world’s weakest in math, reading and science, ranking 77^th out of 81 countries and performing worse than the global average in all categories.

Results from the National Achievement Test also showed 85-99% of Grade 10 students do not reach proficient levels in core subjects such as math, English, Filipino, science and social studies.

“The low learning outcomes can be traced to inadequate learning conditions, as measured by teacher’s capacity, classroom environment, and availability of learning materials,” the World Bank said.

It cited overcrowded classrooms, poor teacher quality and low textbook availability.

“Additional support is needed to address the clear learning crisis that faces the Philippines’ education system nationwide,” it said.

The proposed project is aligned with DepEd’s 5-Point Agenda, which prioritizes investing in teacher quality, building classrooms, and raising education quality.

Under the project, the DepEd will implement revised learning recovery programs, review policies for teachers, and provide technical assistance to teachers for the implementation of the so-called Matatag curriculum.

The Matatag curriculum covers kindergarten, grades 1, 4 and 7 and adds subjects to improve reading, math and life skills. It was rolled out this school year, with full implementation by the school year 2026-2027.

Another subcomponent of the project includes the promotion of inclusive learning and teaching, by establishing an online teaching and learning hub and developing accessible resources for learners with disabilities.

The project will also support a review of national assessments of learning outcomes for grades 3 and 5 to ensure these are aligned with the Matatag curriculum and international standardized tests. It will also implement standardized computer-based reading assessments for grades K to 3 learners.

“It would support the development and implementation of an assessment of socioemotional skills of lower secondary education learners, as well as the administration of PISA for Schools in a small number of selected public schools,” it said.

The project will also support activities to “strengthen the education system capacity and promote decentralization,” such as the review of regulatory frameworks, improvement of accountability and enhancement of DepEd’s service delivery capacity.

The proposed project is aligned with the World Bank Group’s Country Partnership Framework (CPF) for the Philippines for July 2019 to December 2023, which was extended by a year to 2024, it said.

The Washington-based multilateral lender recently approved USD 1.25 billion in loans to support projects in the Philippines that aim to create a safer and more resilient school infrastructure, while also strengthening economic recovery. — Aubrey Rose A. Inosante

Philippine-US alliance to remain stable, analysts say

Philippine-US economic and defense ties are not expected to change abruptly regardless of who wins the US presidential race, with both ex-President Donald Trump and Vice-President Kamala Harris likely to keep the trend of rising trade restrictions and strategic competition with China, analysts said.

Heightened geopolitical tension and de-risking trends will prevail especially in Asia, where the implications will be significant regardless of who wins, they added.

Growing bipartisan focus on the Indo-Pacific region amid the United States’ efforts to catch up with China’s manufacturing might — and against the backdrop of growing concern with the Asian superpower’s expansionist ambition — helps cement its ties with the Philippines on the economic front, said Joshua Bernard B. Espeña, vice-president at the international Development and Security Cooperation.

“The bipartisan consensus puts a steady trend that the alliance will continually be relevant,” he said in an e-mail. “The relationship between the two will remain stable after all pressures at the global security and economic levels.”

Millions of Americans on Tuesday began voting in what is considered to be one of the most important presidential elections in decades. Mr. Trump and Ms. Harris are almost tied in opinion polls, with experts saying the winner will likely be determined by voters in swing states.

Mr. Trump has pushed protectionist policies and pledged to turn the US into a manufacturing superpower. He is seeking 60% or higher tariffs on all Chinese goods and a 10% universal tariff.

Ms. Harris, who became the Democratic Party’s candidate after President Joseph R. Biden withdrew from the race, has pushed abortion rights and vowed to help working and middle-class families by restoring child tax credits and earned income tax credits, and pledged to increase taxes on corporations and long-term capital gains.

Ms. Harris has also vowed to make the US a leader in the “industries of the future” such as semiconductors, clean energy and artificial intelligence.

“It is unlikely that the US will back off from its economic and national security commitments to the Philippines, given the strategic importance of this alliance,” said Victor Andres C. Manhit, president of think tank Stratbase ADR.

“The US has consistently emphasized its commitment to supporting the Philippines, especially in the context of shared democratic values and regional stability in the Indo-Pacific.”

It was Mr. Trump who promoted the concept of a “free and open Indo-Pacific,” mentioning it during the Asia-Pacific Economic Forum in the Philippines in 2017.

Mr. Biden has widely supported the concept, launching an Indo-Pacific Economic Framework (IPEF) in 2022 with a dozen initial partners.

Manila joined the informal economic grouping in the same year and signed a supply-chain agreement along with other members in 2023.

Under IPEF’s Partnership Global Infrastructure and Investment (PGI), the US and its biggest ally in the region, Japan, will support connectivity between Subic Bay, Clark, Manila and Batangas.

Called the Luzon Economic Corridor, the project seeks to focus on “high-impact” infrastructure such as rails and ports and strategic investments involving semiconductors, clean energy, and supply chains.

“The Philippines has a trade surplus with the US in 2023. However, unlike China, the Philippine’s trade surplus does not appear to be a big threat to US interests,” said George N. Manzano, who teaches trade at the University of Asia and the Pacific.

“The Philippines is deemed to be an important ally of the US, and this would weigh in the context of security issues in the West Philippine Sea,” he said in an e-mail.

The US has consistently cited its “ironclad commitment” to the Philippines amid China’s intrusions into Manila’s exclusive economic zone in the South China Sea, which has become one of the major geopolitical hotspots in recent years.

China is the Philippines’ largest source of imports and second-biggest export market. The US, meanwhile, is the largest market for Philippine exports, and the fourth-largest source of imports last year.

While Philippine-US ties on the economic front will likely remain stable whoever wins in the race, Manila should keep a close eye on the potential impact of a Trump presidency on the Philippine business processing outsourcing (BPO) sector, said public investment analyst and InfraWatch PH convenor Terry L. Ridon.

“We should monitor the impact of a second Trump presidency on the country’s BPO sector, which is a major pillar of our economic growth, given that he is proposing an America First policy on jobs,” he said in a Facebook Messenger chat.

Defense and security concerns will be the most stable aspects of Philippine-US ties whoever wins in the US presidential race, Mr. Espeña said.

“However, both candidates do not demonstrate signals regarding the Philippines’ opportunity to acquire cheaper defense packages, say the Multirole Fighter (MRF) Acquisition Project,” he noted. “So, they need to step up on this one.”

Philip Arnold Tuaño, dean of the Ateneo School of Government, said a Trump victory could lead to a gradual withdrawal of American leadership from geopolitical issues, which may include the South China Sea.

“Foreign assistance and defense cooperation will be more constrained under a Trump administration, and the cooperation in forwarding democratic norms and human rights will take a backseat in our relationships,” he said in an e-mail.

“It is also possible that we will also see an increase in tariffs of American imports from the Philippines given candidate Trump’s announcements of greater trade barriers with other countries,” he added.

Still, Philippines-US relations would not change substantially immediately after the US elections “given that American and Philippine bureaucracies have had good relationships and have strengthened communication ties, especially after a couple of years of resetting of the ties by the Marcos administration.”

One thing is for sure, said Mr. Tuaño, and that is whoever wins, “the Marcos government will still continue to press for an expansion of US-Philippine relationships given that the US is our traditional security and economic ally in the face of geopolitical tensions.”

Hansley A. Juliano, who teaches politics at the Ateneo, said the Democratic Party is inclined to continue the “pivot to Asia” and persist in playing its part in global governance amid China’s increasing aggression.

“The Republican Party is clearly a machinery of patronage that intends to contract American commitments to global governance in the name of white supremacy and support for authoritarian regimes,” he added.

Mr. Manhit said the Marcos administration has made efforts to cement US-Philippine ties, citing the expansion of the 2015 Enhanced Defense Cooperation Agreement and high-level visits by US officials to Manila.

“Over the past year, the Philippines has shown a clear commitment to strengthening ties with the US through various strategic moves and agreements, particularly in defense and economic collaboration,” he said. – Kyle Aristophere T. Atienza, Reporter

Stocks back above 7,200 after within-target inflation

Philippine shares rebounded to the 7,200 level on Tuesday as October inflation remained within the central bank’s annual target.

The benchmark Philippine Stock Exchange index (PSEi) rose by 1.7% or 121.84 points to close at 7,257.94 on Tuesday, while the broader all shares index increased by 1.05% or 41.85 points to end at 3,993.51.

“The local market bounced back this Tuesday as inflation remained near the lower end of the government’s 2-4% target,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Philippine shares made a huge comeback as the October consumer price index came in within expectations as at 2.3%,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Headline inflation picked up to 2.3% in October from 1.9% in September, the Philippine Statistics Authority reported on Tuesday.

Still, this was slower than the 4.9% print in the same month last year. This was also within the Bangko Sentral ng Pilipinas’ (BSP) 2%-2.8% forecast for the month and a tad below the 2.4% median estimate in a BusinessWorld poll of 11 analysts.

For the first 10 months, the consumer price index averaged 3.3%, well within the BSP’s 2-4% target for the year but above its 3.1% baseline forecast.

“Wall Street slipped Monday as investors eyed the upcoming US presidential election and a potential US Federal Reserve rate cut. The 10-year Treasury yield fell to 4.3%, signaling a shift to safe assets ahead of election day,” Mr. Limlingan added.

US stock indexes were trading flat to lower on Monday, as investors braced for a pivotal week for global markets in which Americans will elect a new president and the Federal Reserve is likely to cut its benchmark policy rate, Reuters reported.

Choppy trading is likely in the wait for the election outcome and due to a lack of clarity on the policy implications. Investors, meanwhile, remained largely sure of a 25-basis-point rate cut by the Fed in its November meeting, whose decision is expected on Thursday.

Back home, all sectoral indices closed higher on Tuesday. Property gained by 3.37% or 93.03 points to end at 2,849; financials climbed by 1.73% or 40.04 points to 2,351.13; industrials surged by 1.44% or 142.33 points to 9,970.31; services went up by 0.64% or 14.22 points to 2,204.98; holding firms increased by 0.63% or 38.42 points to 6,135.48; and mining and oil rose by 0.01% or 1.57 points to 8,488.76.

Value turnover increased to PHP 4.97 billion on Tuesday with 1.03 billion shares changing hands from the PHP 4.65 billion with 588.45 million issues traded on Monday.

Advancers outnumbered decliners, 115 versus 89, while 52 names were unchanged.

Net foreign selling dropped to PHP 58.2 million on Tuesday from PHP 777.98 million on Monday. — R.M.D. Ochave with Reuters

Manufacturing growth slows in October

Philippines manufacturing expanded for a 14^th month in a row in October, but the pace of growth slowed month on month amid a softer rise in new orders and output, S&P Global said on Monday.

At the same time, manufacturing firms ramped up hiring, with job creation hitting an 88-month high.

The S&P Global Philippine Manufacturing Purchasing Managers’ Index (PMI) stood at 52.9 in October, slowing from the 27-month high of 53.7 in September. This was the second-fastest reading since January 2023.

An above 50 PMI reading signals an improvement in operating conditions, while a reading below 50 indicates a deterioration.

“October PMI data indicated a slight easing in — but still solid — growth across the Filipino manufacturing sector. The expansion in new orders was again robust, allowing goods producers to raise their output again,” Maryam Baluch, economist at S&P Global Market Intelligence said in a report.

The Philippines’ PMI — a composite single-figure indicator of manufacturing performance — has posted an above 50 reading every month since September 2023.

The Philippines logged the highest PMI reading among the five Association of Southeast Asian Nations (ASEAN) countries in October, followed by Vietnam (51.2) and Thailand (50).

Meanwhile, Malaysia (49.5), Indonesia (49.2), and Myanmar (48.4) recorded contractions in October.

Philippine PMI was also above the region’s average reading of 50.5, which was unchanged from September, S&P Global said.

The headline PMI measures manufacturing conditions based on the weighted average of five indices. It includes new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%).

S&P Global said Philippines PMI data reflected a “sustained and solid” improvement in manufacturing operating conditions in October.

Despite a slowdown, new orders grew for the 15^th consecutive month, while output expanded for a seventh straight month.

“The recent increases outpaced their series averages, driven by a growing customer base that strengthened underlying demand trends,” it said.

Stronger demand allowed manufacturing firms to significantly raise staffing levels in October.

“Filipino goods producers ramped up hiring, with the recent wave of job creation marking the most significant increase since mid-2017,” it said.

With more workers, manufacturing firms managed to address the slight buildup of backlogs and keep up with current production requirements.

At the same time, the improvement in demand allowed companies to boost purchasing activity, but at a weaker pace than the previous month.

“Firms stated that higher prices of raw materials often dissuaded firms from purchasing inputs,” S&P Global said.

This prompted firms to use their existing inventory for orders, with pre-production inventories falling for the first time since February. Stocks of finished goods were depleted for a third month in a row, and at the sharpest rate since January 2022.

Supply chains continued to be stretched in October, with shortages of raw materials due to port congestion.

“Firms revealed supply-side challenges, with material shortages resulting in longer delivery times, and cooling buying activity. It was also one of the key factors for rising input prices, which was further exacerbated by the depreciation of the peso against the dollar,” Ms. Baluch said.

S&P Global noted the rate of input price inflation rose to an eight-month high in October.

The peso closed at P58.10 per dollar on Oct. 31, weakening from the P56.03 close on Sept. 30.

Manufacturing firms are positive that current demand trends will continue in the next 12 months.

“Nonetheless, firms remain optimistic with more than half of respondents anticipating expansion in the year ahead,” Ms. Baluch said.

‘Bright spot’

“The Philippines is the only real lone bright spot in terms of recent momentum, though its September pop to 53.7 cooled to 52.9 last month and the impact of this still-sturdy gain won’t really be felt regionally due to the country’s relatively small manufacturing sector,” Pantheon Macroeconomics said in an e-mailed statement.

For the ASEAN region, Pantheon said the result was “softer than we expected” as the manufacturing sector recovered from typhoons.

“The generally improved PMI rates in the last two months can be attributed to pent-up demand which had been released by lower inflation rates as the easing of interest rates,” Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University told BusinessWorld via Facebook Messenger.

He noted that companies typically boost production in the months ahead of the holidays in anticipation of stronger demand.

“As the country’s manufacturing base increases and the Christmas season completes by the end of the year, expect the growth rate of PMI to be much lower,” Mr. Lanzona said.

However, he noted supply-side issues, including the lack of skills and the poor adaptation of new technologies, continue to weigh on the manufacturing sector.

“Manufacturing may continue to grow given increased local demand during the holidays and foreign demand as trade liberalization takes further effect,” John Paolo R. Rivera, president, and chief economist at Oikonomia Advisory & Research, Inc. told BusinessWorld via Viber Message.

Meanwhile, Ma. Teresita Jocson-Agoncillo, executive director at the Confederation of Wearable Exporters of the Philippines, said wearables manufacturing remains slow as of end-September.

“We are at an average — 3% to 5% growth vis-a-vis at the same period last year. The recent wage hike increase across major regions — Regions 3, 4A and B, Region 7, and NCR — had an impact on Spring-Summer 2025 orders. These orders were directed to more competitive ASEAN countries,” she told BusinessWorld in a Viber message. – Aubrey Rose A. Inosante, Reporter

Rice inflation seen to further ease

The continued decline in rice prices, which typically accounts for nearly half of overall inflation, is set to pave the way for further monetary easing, analysts said.

“With the price of the biggest staple in the Filipino consumer basket set to ease further, we think the door for the central bank to continue its measured easing cycle remains wide open,” Aris D. Dacanay, economist for ASEAN (Association of Southeast Asian Nations) at HSBC Global Research said.

“With low tariffs and the harvest season, rice prices in Metro Manila appear to be on a downtrend,” Metrobank Research said in a report.

The executive order slashing tariffs on rice imports, which took effect in July, has led to a decline in rice prices on a monthly basis.

President Ferdinand R. Marcos, Jr. ordered rice tariffs to be cut to 15% from 35% previously, until 2028.

At end-October, the average price of well-milled rice ranged from PHP 43 to PHP 54 per kilogram, lower than the PHP 47-to-PHP 55 range at end-September, data from the Agriculture department showed.

Meanwhile, regular milled rice cost PHP 40 to PHP 50 per kilogram from PHP 45 to PHP 50 per kilogram a month ago.

“Still, costs of the grain remain above their October 2023 levels. We expect annual rice inflation to be positive in October, though it should remain in the single digits due to a high base from a year ago,” Metrobank Research said.

Rice inflation sharply slowed to 5.7% in September from 14.7% in August and 17.9% a year ago. This also marked the lowest rice inflation since the 4.2% print in July 2023.

Headline inflation likely quickened to 2.4% in October from 1.9% in September, according to a BusinessWorld poll of 11 analysts conducted last week.

“We believe inflation quickened to 2.3% in October from 1.9% in September. We expect that the recent typhoons resulted in higher prices for key food items such as vegetables, fruits, and fish,” Philippine National Bank economist Alvin Joseph A. Arogo said in an e-mail.

Mr. Dacanay said that while base effects caused inflation to reaccelerate in October, overall, the headline print is seen to “have remained benign.”

“The biggest deflationary pressure was rice as global rice prices finally eased,” he added.

Chinabank Research said that inflation will likely continue to stay below 3% amid the lower rice tariffs and base effects.

“Looking ahead, we expect inflation to remain within target, barring any unexpected shocks… This favorable inflation outlook, combined with anticipated further rate cuts from the Fed, boosts the case for another rate cut by the BSP at its next policy meeting in December,” it added.

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. has said that the Monetary Board could possibly cut rates by another 25 basis points (bps) at its last meeting this year on Dec. 19.

The central bank has so far cut borrowing costs by a total of 50 bps since it began its easing cycle in August.

Mr. Remolona has also signaled further rate cuts next year, possibly by a total of 100 bps.

Metrobank Research also expects inflation to continue to settle within the 2-4% target band.

“Should price risks — from oil and other commodities amid geopolitical tensions and extreme weather disturbances — not materialize, Metrobank Research maintains that full-year headline inflation should remain within the BSP’s target,” it added.

On the other hand, Federation of Free Farmers National Manager Raul Q. Montemayor said that rice prices have not fallen fast enough even with the tariff cut.

“The reduction in prices for both regular and well-milled rice are far off initial expectations of a PHP 6 to PHP 7 fall in prices per kilo arising from the tariff cut,” he said in a Viber message.

“Clearly, the tariff reduction has not worked in reducing retail prices. In the meantime, tariff revenues have fallen together with palay prices.”

Mr. Montemayor said that retail prices normally fall during harvest months due to the added supply.

“But the recent typhoons could temper the reduction in retail prices because of their impact on supply,” he said.

“Imports continue to come in, but it seems that the importers and traders are keeping most of the tariff savings for themselves instead of passing it on to consumers,” he added.

The Department of Agriculture earlier said that palay (unmilled rice) production will likely decline by 3.24% this year amid crop losses due to adverse weather conditions. – Luisa Maria Jacinta C. Jocson, Reporter

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