PSEi climbs to 4-month high after US-China truce

Philippine stocks on Tuesday hit their highest close in more than four months as investors cheered the 90-day tariff truce between the US and China.

The bellwether Philippine Stock Exchange Index (PSEi) went up 1.68% or 108.62 points to 6,566.82, while the broader all-share index gained 1.12% or 42.48 points to 3,805.33.

The stock advance came a day after general peaceful midterm elections.

“The PSEi surged above the key resistance around 6,500 on strong volume as investors bought into positive news of a 90-day detente in the US-China trade war, as well as the generally peaceful outcome of the Philippine midterm elections,” Juan Paolo E. Colet, managing director at China Bank Capital Corp., said in a Viber message.

“This is a good start to the shortened trading week but sustaining this will now depend on the market’s reaction to upcoming data flows, including first-quarter corporate earnings and the US April inflation print,” he added.

The US is cutting extra tariffs it slapped on China this year to 30% from 145%, while China is reducing duties on US goods to 10% from 125%.

Meanwhile, the Commission on Elections seeks to proclaim the 12 winning senators by May 17 as it started canvassing votes.

“The local market rose further upon the resumption of trading as investors took cues from Wall Street’s rally overnight,” Japhet Louis O. Tantiangco, a senior research analyst at Philstocks Financial, Inc., said in a Viber message.

“This came as the US and China agreed to temporarily cut tariffs while continuing trade negotiations, raising hopes of a trade deal between the two economic superpowers which would benefit the global economy,” he added.

Almost all the market’s sectoral indexes advanced. Services gained 2.47% or 51.43 points to 2,129.31, while holding companies rose 1.95% or 106.14 points to 5,534.23.

Industrials climbed 1.37% or 125.14 points to 9,238.14, while financials increased 1.35% or 33.65 points to 2,521.48. Property inched up 0.31% or 7.07 points to 2,264.13.

On the other hand, mining and oil declined 1.33% or 125.46 points to 9,255.33.

Value turnover expanded to P8.89 billion covering 1.16 billion shares, from PHP 7.95 billion covering 738.19 million stocks exchanged on Friday.

Winners beat losers 96 to 83, while 58 shares were unchanged. Net foreign buying sank to PHP 54.62 million from PHP 463.78 million on Friday. – Revin Mikhael D. Ochave, Reporter

FDI net inflows drop to USD 529M in Feb.

Net inflows of foreign direct investments (FDI) dropped sharply in February due to a high base, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Uncertainty due to the Trump administration’s shifting policies also affected sentiment, leading to lower inflows, analysts said.

Latest BSP data showed that FDI net inflows declined by 61.9% to USD 529 million in February from USD 1.388 billion in the same month a year ago.

“This decrease was primarily attributed to base effects,” the central bank said in a statement.

Month on month, net inflows likewise went down by 27.63% from the USD 731 million recorded in January.

The drop in FDI net inflows in February was largely driven by the 85.9% decrease in nonresidents’ net investments in equity capital, other than the reinvestment of earnings, to USD 108 million from USD 764 million.

Broken down, equity capital placements dropped by 82.96% to USD 146 million that month from USD 857 million a year prior, while withdrawals slid by 58.06% to USD 39 million from USD 93 million.

The BSP said the bulk of equity placements in February mostly came from Japan (56%), followed by the United States (11%), Ireland (10%) and Malaysia (5%).

“These investments were largely directed towards the manufacturing, financial and insurance, real estate, and information and communication industries,” the central bank said.

Reinvestment of earnings dropped by 13.1% year on year to USD 73 million from USD 84 million.

Overall, foreigners’ investments in equity and investment fund shares plunged by 78.77% to USD 180 million in February from USD 848 million a year prior.

Meanwhile, nonresidents’ net investments in debt instruments of local affiliates also fell by 35.4% to USD 348 million in February from USD 540 million in the same month in 2024.

January to February

During the first two months of 2025, total FDI net inflows likewise declined by 45.2% to USD 1.26 billion from USD 2.301 billion in the same period last year.

Foreigners’ investments in equity capital other than the reinvestment of earnings slumped by 74% to USD 196 million in the January-February period from USD 753 million a year prior.

Equity placements dropped by 74% year on year to USD 249 million, while withdrawals declined by 73.9% to USD 53 million.

These placements were mostly from Japan (53%), the US (16%), Singapore (8%), Malaysia (6%) and Ireland (6%) and mainly went to the manufacturing sector.

Meanwhile, nonresidents’ reinvestment of earnings increased by 12.6% year on year to USD 197 million in the first two months from USD 175 million.

Lastly, net investments in debt instruments went down by 36.8% to USD 867 million from USD 1.373 billion in the same period last year.

“The latest year-on-year and month-on-month decline in the latest FDI data… could be attributed to uncertainties on possible protectionist measures by US President Donald J. Trump,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message. “Trump’s trade wars could slow down exports, as well as FDIs that are export oriented.”

“The decline in FDIs may be seen as the waiting and hesitant behavior from investors as they wait for clearer directions on global trade,” said Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc.

Since returning to the White House in January, Mr. Trump has introduced a slew of protectionist measures, which he said meant to encourage investments in the United States to restore its dominance. These measures include various import tariffs, with some targeting specific products.

In April, he announced “reciprocal” tariff rates to be imposed on America’s largest trading partners, including the Philippines. These higher duties have been suspended until July, with most countries now negotiating with the US.

Mr. Ricafort added that foreign investors were on wait-and-see mode prior to the release of the implementing rules and regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, which was signed into law in December.

The CREATE MORE Act further reduces the corporate income tax to 20% from 25% for registered business enterprises.

The IRR for the law released in mid-February now gives investors more clarity, Mr. Ricafort said.

In the coming months, Mr. Erece said investment growth may slow with the global economic outlook expected to take a hit due to the Trump administration’s trade policies.

“Easing monetary policy, better business environment, and a resilient domestic economy may be ways to still attract investments in the country,” he added.

BSP Governor Eli M. Remolona, Jr. told Bloomberg last week that they are open to cutting rates by a further 75 basis points (bps) this year amid cooling inflation.

Last month, the central bank slashed benchmark borrowing costs by 25 bps, bringing the policy rate to 5.5%. It has now reduced benchmark rates by a total of 100 bps since it kicked off its rate-cut cycle in August last year. – Aubrey Rose A. Inosante, Reporter

Demand for domestic debt issuances likely to rise

The National Government’s (NG) domestic debt offerings could see higher demand in the coming months after the Bureau of the Treasury (BTr) said it is unlikely to make foreign or large bond issuances this year.

“The BTr’s signal to skip foreign or retail bond issuances for the rest of 2025 reflects comfortable cash buffers and likely confidence in meeting financing needs through regular domestic auctions. This could also be a strategy to reduce foreign exchange risk and avoid locking in foreign debt at potentially high global rates,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

“For the secondary market, this supply restraint could lead to stronger demand and firmer pricing for existing government securities, especially in the medium to long end of the curve,” he said.

Last week, National Treasurer Sharon P. Almanza said that the government is unlikely to issue another global bond this year as it has almost completed its program for foreign borrowings.

The government is also not looking at any more large offerings like a Sukuk or a retail Treasury bond issuance, she said, adding that the BTr will add benchmark fixed-rate Treasury notes (FXTN) to its issue lineup.

The BTr last month raised P300 billion from its offering of new 10-year FXTN, 10 times the initial P30-billion program. It borrowed an initial P135 billion via the papers at the rate-setting auction and held a public offer.

The notes fetched a coupon rate of 6.375%. Accepted bid yields ranged from 6% to 6.4%, resulting in an average rate of 6.286%.

The FXTN offer was held under a new issuance format meant to establish a new benchmark bond and targeting institutional investors like corporates, cooperatives, trust funds, retirement funds, and provident funds.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the FXTN issue format would give the BTr “more wholesale funding sources with bigger amounts and rates.”

This would help diversify and better hedge the government’s borrowing requirements, he added.

“Borrowing more from domestic sources amid lower rates and the benefit of being shielded from foreign exchange risk may be a good strategy to better manage the country’s debt,” Reinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc., said in a Viber message.

In January, the government raised $3.29 billion from its sale of US dollar and euro bonds, its first global bond offer for the year.

The NG’s commercial borrowing program is pegged at $3.5 billion this year.

This year’s overall financing program is set at PHP 2.55 trillion, of which about 20% or PHP 507.408 billion will come from foreign sources and about 80% or PHP 2.04 trillion will come from domestic sources.

The government borrows from local and external sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year.

Lower rates

Meanwhile, domestic bond yields may continue to go down this year with the Bangko Sentral ng Pilipinas (BSP) expected to cut rates further, Mr. Ricafort said.

This would help bring down the government’s borrowing costs, he added.

“Yields may soften slightly, especially with the BSP adopting a more dovish tone and first-quarter gross domestic product (GDP) growth coming below target, both pointing to potential rate cuts in the second half of the year,” Mr. Rivera likewise said.

Analysts have said that benign inflation and weak GDP growth in the first quarter give the Philippine central bank ample room to cut benchmark rates further.

Headline inflation sharply slowed to 1.4% in April from 1.8% in March and 3.8% a year prior. This brought average inflation in the first four months to 2%, at the low end of the BSP’s 2-4% annual target.

Meanwhile, the Philippine economy expanded by 5.4% in the first quarter, a tad faster than the revised 5.3% in the previous quarter but sharply slower from the 5.9% growth in the same period in 2024.

This was also well below the government’s 6-8% GDP growth target for the year.

BSP Governor Eli M. Remolona, Jr. told Bloomberg last week before the GDP report that they are open to cutting rates by a further 75 basis points (bps) this year amid cooling inflation.

Last month, the Monetary Board resumed its easing cycle after an unexpected pause in February, cutting benchmark rates by 25 bps to bring the policy rate to 5.5%. Its next meeting is on June 19. — Aaron Michael C. Sy

Hitting GDP goal may be ‘challenging’

Achieving abover-6% gross domestic product (GDP) growth for the rest of the year to meet the government’s target may be “challenging” with the global trade picture still uncertain due to the Trump administration’s evolving tariff policies, analysts said.

“It will certainly be challenging to achieve a 6.2% growth rate for the rest of the year, but it is still possible,” Ateneo School of Government Dean and Economics Professor Philip Arnold P. Tuaño said in an e-mail over the weekend. “Some of the downside risks for the Philippine economy remain the continued high levels of US tariffs, global political and security uncertainties especially in Europe and the Middle East which affect global demand for goods, and climate related shocks.”

“US President Donald J. Trump’s reciprocal tariffs, trade wars, and other protectionist policies could still slow down global trade, investments, employment, and overall world economic growth that could slow down, indirectly, Philippine GDP growth,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message, but likewise added that the growth goal remains achievable.

The Philippine economy expanded by 5.4% in the first quarter, slightly faster than the 5.3% growth in the prior three-month period but slower than the 5.9% pace in the same quarter last year, the government reported last week.

This was well below the government’s 6-8% growth target band for the year.

The weak growth came as gross capital formation growth was dampened by businesses’ anticipation of global trade uncertainties.

Since Mr. Trump was inaugurated in January, he has launched a series of protectionist policies, with one of them hiking import tariffs imposed on its major trading partners, including the Philippines. Countries are now negotiating with the US regarding the higher “reciprocal” tariffs, which have been suspended until July.

Department of Economy, Planning, and Development Undersecretary Rosemarie G. Edillon said that GDP needs to expand by at least 6.2% in the remaining three quarters to reach 6% growth — the low end of the government’s target — by yearend.

Mr. Tuaño said Philippine economic growth could be lifted by stronger government spending in the coming months as the lifting of the election ban on public works would allow for the resumption of suspended state infrastructure projects.

In the first quarter, government spending jumped by 18.7% as agencies front-loaded public projects ahead of the ban that started on March 28.

An expected rebound in exports once the Trump administration concludes its tariff negotiations with its trading partners could also provide a boost as this could lead to a recovery in electronics demand, he said.

Both Mr. Tuaño and Mr. Ricafort said that easing inflation may help drive consumption to support the economy.

“While consumption growth in the first quarter of 2025 was at 5.3%, there are certain factors that are necessary to happen to ensure higher consumption growth in the coming quarters, including the sustained decline in inflation rates, lower interest rates and the continued growth in remittances,” Mr. Tuaño said.

“Government can support this by strengthening social protection and also increasing investments especially in the rural areas in order to ensure food supply and countryside incomes,” he said.

Mr. Ricafort added that the soft GDP growth in the first quarter and benign inflation would allow the Bangko Sentral ng Pilipinas (BSP) to cut benchmark rates further, which would support the economy.

The Monetary Board resumed its easing cycle last month with a 25-basis-point (bp) cut, bringing the policy rate to 5.5%.

BSP Governor Eli M. Remolona, Jr. told Bloomberg last week that they are open to cutting rates by 75 bps more this year amid cooling inflation.

Budget Secretary and Development Budget Coordination Committee Chairperson Amenah F. Pangandaman on Friday said they remain hopeful that GDP growth could meet the 6-8% target this year.

“We still expect GDP to accelerate throughout the year as domestic demand strengthens, and public investments are sustained. This is even amidst global uncertainty, as domestic growth prospects supported by improving private consumption, including government infrastructure spending, provide a buffer against external headwinds,” Ms. Pangandaman said.

“We remain optimistic that the Philippines will meet its growth target for 2025 of 6-8%, especially as the government remains strongly committed to achieving our medium-term plans and long-term vision. Given the substantial 8.2% growth registered by the capital spending of the government — a testament to the successful implementation of public infrastructure projects — we are certain we can sustain our high-growth trajectory.”

‘Lower growth path’

Meanwhile, IBON Foundation Executive Director Jose Enrique “Sonny” A. Africa was less positive.

“Hoping for a 6.2% growth rate in the remaining quarters of the year is overly optimistic and structurally blind to global and domestic realities,” Mr. Africa said in a Viber message over the weekend.

“The government mostly fails to achieve even the low end of its growth targets and has only been able to squeeze into its target ranges of GDP growth twice in the last decade. The government is still refusing to accept that the economy has shifted to a lower growth path from the average 6.4% growth in the 2010-2019 decade before the pandemic to just 5.6% in 2023-2024, considering the 2020-2022 years of lockdown and rebound as an aberration,” he added.

Mr. Africa warned that growth will continue to shift lower amid global disruptions and “persistent domestic structural economic weaknesses,” noting that both household and investment spending have remained low compared to pre-pandemic levels.

“Achieving 6.2% growth in the next quarters is not impossible but will require bold policies and structural transformation, not just optimism from mere statistical computations. Economic policies have to be redirected toward boosting domestic demand such as with real wage and income growth, more equity and redistribution, and expanded public services. Over the long term, stronger agricultural and Filipino industrial capacity is needed so that the growth achieved is not fragile, exclusionary and unsustainable,” he said. – Aubrey Rose A. Inosante, Reporter

Dollar reserves fall to USD 104.6B at end-April

The Philippines’ dollar reserves declined by 1.9% as of end-April, as the National Government (NG) repaid more foreign debt, the central bank said.

Data from the Bangko Sentral ng Pilipinas (BSP) showed gross international reserves (GIR) dropped to USD 104.6 billion as of end-April from USD 106.7 billion as of end-March.

Year on year, the dollar reserves rose by 1.9% from USD 102.65 billion.

“This latest GIR level provides a robust external liquidity buffer,” the BSP said.

The dollar reserves in April were the lowest since the USD 103.27 billion seen in January.

“The month-on-month decrease in the GIR level reflected mainly the (1) NG’s drawdowns on its foreign currency deposits with the BSP to meet its external debt obligations and pay for its various expenditures, and (2) BSP’s net foreign exchange operations,” the central bank said in a statement.

International reserves are foreign assets of the BSP held mostly as investments in foreign-issued securities, monetary gold, and foreign exchange. These are supplemented by claims to the International Monetary Fund (IMF) in the form of reserve position in the fund and special drawing rights (SDRs).

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

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

It is also equivalent to 7.2 months’ worth of imports of goods and payments of services and primary income.

BSP data showed foreign investments fell 3.19% to USD 86.09 billion at end-April from USD 88.9 billion as of end-March. Year on year, foreign investments inched up 1.19% from USD 87.13 billion.

The country’s reserve position in the IMF rose by 13.57% to USD 741.6 million as of end-April from USD 653 million a month earlier. It also went up by 0.75% from USD 736.1 million a year ago.

SDRs — or the amount which the Philippines can tap from the IMF’s reserve currency basket — was unchanged month on month at USD 3.8 billion. Year on year, it dropped by 1.7% from USD 3.74 billion.

The value of the central bank’s gold holdings went up by 4.51% to USD 13.34 billion at end-April from USD 12.76 billion a month ago. Year on year, it jumped by 30.06% from USD 10.26 billion.

The BSP’s foreign exchange holdings increased by 23.52% to USD 648.6 million at end-April, from USD 525.1 million at end-March. Year on year, it decreased by 17.84% from USD 789.4 million.

Meanwhile, net international reserves slipped by 1.88% to USD 104.6 billion at end-April from USD 106.6 billion as of end-March.

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

“The decline in GIR in April was mainly due to debt payments, foreign exchange operations, and lower gold valuations,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the BSP’s possible interventions to defend the peso could have also led to the lower GIR in April.

The peso closed at P55.84 a dollar on April 30, strengthening by PHP 1.37 from its PHP 57.21 finish on March 31. Year to date, the local unit gained by PHP 2.005 from its PHP 57.845 close on Dec. 27, 2024.

“Moving forward, GIR is expected to stay stable, supported by remittances, BPOs (business process outsourcing), tourism, and government borrowings, though risks like global volatility and a widening current account deficit could weigh on it,” Mr. Rivera said. — AMCS

ADB eyes additional funding for major Philippine infrastructure

MILAN, Italy — The Asian Development Bank (ADB) is eyeing to extend about $4 billion in financing for the Philippines this year, which will fund key infrastructure projects like the Bataan-Cavite Interlink Bridge and Laguna Lakeshore project.

“We’re looking at about $4 billion in lending for 2025. That’s more or less what we’re seeing as an average volume for lending over the next few years,” ADB Country Director for the Philippines Pavit Ramachandran told BusinessWorld in an interview on the sidelines of the 58^th ADB Annual Meeting here.

In 2024, the multilateral bank extended a little over $6 billion to the Philippines, the second-biggest recipient of financial assistance.

The ADB earlier said it is allocating about $24 billion in lending to the Philippines from 2024 to 2029.

“We’re continuing to support these infrastructure projects. Some of these have additional tranches. We’ve got these large-scale (projects). The Malolos-Clark (railway) is one,” Mr. Ramachandran said.

Last month, the ADB approved a $1.45-billion loan for the Malolos-Clark component of the 163-kilometer (km) North-South Commuter Railway, which will connect Malolos, Bulacan with the Clark International Airport.

Aside from this, there are also upcoming additional tranches for the Bataan-Cavite Interlink Bridge and Laguna Lakeshore Road Network project, he said.

The 32-km interlink bridge will connect the provinces of Bataan and Cavite across Manila Bay, with construction expected to start this year.

The Laguna Lakeshore project is a 37.5-kilometer expressway that will shorten travel time between Taguig City and Calamba, Laguna.

“These are programmatic investments over the course of the Country Partnership Strategy (CPS) period,” Mr. Ramachandran said.

The CPS, which covers the years 2024 to 2029, is focused on human development, infrastructure, disaster resilience, and economic competitiveness, among others.

Mr. Ramachandran said there are agriculture and energy investments in the pipeline.

“We are in the process of also very advanced stages of looking at the food voucher program,” he said.

The food stamp program last month was approved by the National Economic and Development Authority Board, which is now known as the Department of Economic, Planning and Development Board.

“We are targeting July for board consideration within ADB. That’s a priority project for us this year,” he added.

The program seeks to feed food-poor families with a monthly voucher worth P3,000.

Mr. Ramachandran said the ADB also has ongoing work around tax mobilization.

The bank also has an initiative aimed at further improving the ease of doing business in the country.

“That is basically about reducing red tape, streamlining business processes, using digital technology,” he added.

Food security

ADB President Masato Kanda earlier this week announced that the lender is raising its commitment to food security projects in the region to $40 billion up to 2030.

“In the Philippines, we are now seeing real interest from the government to do big transformative work around food systems,” Mr. Ramachandran said.

He said the bank is working on designing a project preparatory facility that will help prepare big-ticket initiatives in the agriculture, food, and natural resource space.

“First, we have plans around port development. I think the Department of Agriculture has ambitious plans for ports. These are roll-on, roll-off ports, fishing ports, ports for exports,” he said.

These will also cover aquaculture, large-scale irrigation, and flood disaster resilience, among others.

“We are in the process of now preparing for delivery this year a program on blue economy. This is a policy-based loan with very strong linkages to food security, just given the dependence of the coastal communities on fisheries and the aquatic environment… This will also have a biodiversity link which is also directly related to food security,” he added.

Mr. Ramachandran noted that the country has recently faced challenges with food price inflation.

“It has to be a holistic solution. It can’t only be a demand side. There’s also supply-side issues around making sure farmers have access to credit, information, insurance, technology, supporting them with irrigation systems, something that we are looking to also engage with,” Mr. Ramachandran said.

Energy is also a crucial area to alleviate many food system-related challenges.

“In the Philippines, the other challenge really is around energy and looking at the energy food nexus… We have also work that we’re doing in the energy sector to essentially help with reducing the cost of energy, ensuring stability of the grid and energy access, which will also have synergistic positive impacts on food security and the food sector.”

Growth corridors

Mr. Ramachandran also noted the significance of expanding growth corridors in the country.

About half of the country’s gross domestic product (GDP) is concentrated in Metro Manila and surrounding regions, he said.

“What we would like is more balanced development. I think the government is also keen on that to ensure that there’s more broad-based, inclusive development.”

“The benefits actually trickle to communities in other parts of the country. Mindanao and Visayas obviously are still lagging in terms of the poverty benefits. So, we are trying to look at what some of those future growth corridors.”

The ADB has been in discussion with the government and other stakeholders to explore what areas could “catalyze growth in terms of potential opportunities,” such as human capital.

“At the end of the day, skills and ensuring that you have the human capital base to drive growth is crucial. And, ensuring that development can be solidified in these corridors is important, particularly for these future-oriented industries,” Mr. Ramachandran said.

“These industries include semiconductors, critical minerals, the pharmaceutical sector, and renewables.”

“This will require a real ramping up in terms of skills. There’s an ambitious enterprise development plan that the government has, which we’re also engaging with to support some of these new areas and private sector-led growth in these areas.”

“Service development, or what we’re calling ‘servicification,’ around these areas is important. Because, currently, the services sector delivers a big proportion of the growth. But we’d like to also see more transition to high-value services.”

Meanwhile, Mr. Ramachandran said that the 58^th Annual Meeting has been productive for the Philippines.

“I think this solidifies some of the partnership between Europe and Asia as well. This whole conference is actually, in a way, a bridge.”

He noted the development priorities raised during the meeting resonates very strongly with its efforts in the Philippines.

On the sidelines of the meeting, the country’s economic team also held the Philippine Economic Dialogue to attract investors.

“I think it’s a good opportunity for Philippines to showcase what they’ve been doing on the reform front to highlight some of their macroeconomic fundamentals. Milan is obviously a very attractive venue for investors,” Mr. Ramachandran said. – Luisa Maria Jacinta C. Jocson, Senior Reporter

Lending growth slows in March

Bank lending expanded at its slowest pace in four months in March as loan growth for both production activities and consumers eased, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Outstanding loans of universal and commercial banks, net of reverse repurchase (RRP) placements with the central bank, rose by 11.8% year on year to PHP 13.19 trillion from PHP 11.795 trillion.

This eased from the 12.2% expansion in February and was the slowest since the 11.1% growth seen in November 2024. Still, this was faster than the 9.44% annual increase logged in March 2024.

On a seasonally adjusted basis, big banks’ outstanding loans inched up by 0.9% month on month.

Outstanding loans to residents increased by 12.3% year on year to PHP 12.87 trillion in March, slower than the 12.6% growth in February. Meanwhile, loans to nonresidents decreased by 5.6% to PHP 324.82 billion in March from the 3.2% decline seen in the previous month.

Loans for production activities expanded by 10.9% to PHP 11.23 trillion in March, slower than the 11.2% growth in February.

“Loan growth eased due to the slower expansion in lending to key industries such as real estate activities (9.6 %); wholesale and retail trade, repair of motor vehicles and motorcycles (11.6%); information and communication (8.9%); construction (1.8%); arts, entertainment and recreation (12.6%); water supply, sewerage, waste management and remediation activities (12.9%); and accommodation and food service activities (19.3%),” the central bank said.

Consumer loans to residents rose by 23.6% in March to PHP 1.64 trillion, also slower than the 24.1% increase seen in the previous month.

Credit card loans rose by 28.8% year on year to PHP 959.43 billion, BSP data showed, while loans for motor vehicles grew by 18.8% to PHP 477.79 billion in March. Salary-based general purpose consumption loans also increased by 8.9% to P158.71 billion.

“Lending remains robust but could benefit from additional rounds of easing. First-quarter GDP (gross domestic product) showed capital formation up a modest 4%,” Metropolitan Bank & Trust Co. Chief Economist Nicholas Antonio T. Mapa said in a Viber message.

“Further BSP cuts could support lending activity and overall GDP amidst the Trump tariffs,” Mr. Mapa added.

The Philippine economy expanded by 5.4% year on year in the first quarter, faster than the 5.3% growth seen in the fourth quarter but below the government’s 6-8% target for the year.

This was also well below the 5.8% median forecast of 15 economists in a BusinessWorld poll and the revised 5.9% GDP growth recorded in the same quarter last year.

On Wednesday, BSP Governor Eli M. Remolona, Jr. told Bloomberg that the central bank is open to cutting key rates by 75 basis points (bps) more this year following as inflation continues to ease.

The Monetary Board last month resumed its easing cycle after an unexpected pause in February, cutting benchmark rates by 25 bps to bring the policy rate to 5.5%. Its next meeting is on June 19.

Money supply

Meanwhile, domestic liquidity grew by 6.1% year on year in March, slightly slower than the 6.3% expansion in February, the BSP reported separately.

M3 — which is considered as the broadest measure of liquidity in an economy — increased to P18.24 trillion in March from P17.199 trillion a year earlier. Month on month on a seasonally adjusted basis, M3 inched up by 0.7%.

“Liquidity growth remained positive as economic growth stayed robust. The slowdown may be traced to the moderating in bank lending activity, but we expect a rebound in the coming months as BSP is likely to provide monetary support,” Mr. Mapa said.

Domestic claims increased by 10.4% in March, slightly faster than the 10.1% increase in February, the central bank said.

“Claims on the private sector grew by 11.5% in March from 12.3% in the previous month with the sustained expansion in bank lending to nonfinancial private corporations and households,” the BSP said.

Net claims on the central government grew by a faster 8% in March from 5.9% in the previous month amid higher National Government borrowings.

Meanwhile, the growth in net foreign assets (NFA) in peso terms slowed to 2.5% in March from 5.8% in February.

“The BSP’s NFA expanded by 4.5%, reflecting the increase in gross international reserves relative to a year ago. Meanwhile, the NFA of banks declined largely on account of higher foreign currency-denominated bills payable,” the central bank said.

“The BSP will continue to ensure that domestic liquidity conditions remain consistent with the prevailing stance of monetary policy, in line with its price and financial stability objectives.” — A.M.C. Sy

Shares drop on weaker-than-expected GDP data

Stocks dropped on Thursday due to weaker-than-expected Philippine gross domestic product (GDP) growth last quarter and after the Federal Reserve warned of potential risks to the US economic outlook amid the Trump administration’s shifting policies.

The Philippine Stock Exchange index (PSEi) fell by 1.17% or 75.96 points to 6,389.49, while the broader all shares index went down by 0.74% or 28.03 points to 3,740.35.

“The local market went down as investors digested the Fed’s decision to keep policy rates unchanged and its gloomy outlook for the US economy amid President Donald J. Trump’s tariff policies,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Investors also dealt with the Philippines’ first quarter 2025 GDP data, which posted a growth of 5.4%, below the government’s full-year target of 6% to 8%.”

“Philippine investors sold on profit as the first quarter GDP came out at 5.4%, while other investors digested the implications of the latest Federal Open Market Committee meeting,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The Federal Reserve held interest rates steady on Wednesday but said the risks of higher inflation and unemployment had risen, further clouding the US economic outlook as its policymakers grapple with the impact of Mr. Trump’s tariffs, Reuters reported.

At this point, Fed Chair Jerome H. Powell said it isn’t clear if the economy will continue its steady pace of growth, or wilt under mounting uncertainty and a possible coming spike in inflation.

The Fed’s policy statement, which held the benchmark overnight rate steady in the 4.25%-4.5% range, noted that since the central bank’s last meeting in March “uncertainty about the economic outlook has increased further,” and that risks were increasing that both inflation and unemployment could increase.

Meanwhile, the Philippine economy expanded by 5.4% year on year in the first quarter, faster than the 5.3% GDP growth seen in the fourth quarter. This was slower than the 5.8% median forecast of 15 economists in a BusinessWorld poll and the 5.9% growth posted in the same quarter last year.

All sectoral indices closed in the red on Thursday. Holding firms declined by 2.01% or 108.86 points to 5,282.78; mining and oil sank by 1.98% or 192.52 points to 9,528.96; property went down by 1.64% or 37.64 points to 2,255.17; financials retreated by 0.82% or 20.44 points to 2,465.78; industrials decreased by 0.64% or 58.93 points to 9,053.09; and services shed 0.07% or 1.58 points to end at 2,070.80.

Value turnover dropped to PHP 6.01 billion on Thursday with 733.54 million shares traded from the PHP 8.27 billion with 958.47 million issues that changed hands on Wednesday.

Decliners outnumbered advancers, 113 versus 75, while 54 names were unchanged.

Net foreign selling was at PHP 18.84 million on Thursday versus the PHP 671.55 million in net buying seen on Wednesday. — Revin Mikhael D. Ochave with Reuters

Farm output rises 1.9% in Q1

Agricultural output grew by an annual 1.9% in the first quarter, as good weather helped boost crops, fisheries and poultry production, the Philippine Statistics Authority (PSA) said.

Data from the PSA showed the value of agriculture and fisheries production rose by 1.9% in the January-to-March period to PHP 437.74 billion, faster than 0.2% in the first quarter of 2024.

This was a turnaround from the revised 2% contraction in the fourth quarter and ended three quarters of decline.

“The value of crops, poultry, and fisheries production recorded improvements, while livestock continued to decline during the quarter,” the PSA said in a report, citing constant 2018 prices.

At current prices, the value of production in agriculture and fisheries rose by 2.3% in the first quarter to PHP 623.66 billion.

“We are optimistic that the recovery in the first quarter signals momentum for the latter half of the year — especially as we bring new infrastructure online such as cold storage facilities and rice processing systems,” Agriculture Secretary Francisco Tiu Laurel, Jr. said in a statement.

However, former Agriculture Undersecretary Fermin D. Adriano said the first-quarter agricultural output results were “expected.”

“(This follows the) normal pattern of agri performance for first quarter of the year given the absence of typhoons and extreme weather occurrences… The harvest season extends in the first quarter of the year. Wait till the second quarter, which is planting (lean supply) season for rice and intense heat affects water supply for irrigation,” he said in a Viber message.

Crop production, which accounted for 57% of the total, increased by 1% to PHP 249.61 billion in the January-to-March period. This was a turnaround from the 0.3% decline in the same period last year.

Palay or unmilled rice production inched up by 0.3%, an improvement from the 2% contraction a year ago.

The volume of palay production went up to 4.7 million metric tons (MMT) in the period ending March from 4.69 million MMT in the same period last year.

The Department of Agriculture (DA) said that yield reached a record high of 4.09 MT per hectare, offsetting the decline in rice-planted areas. It targets a record palay output of 20.46 MMT this year.

PSA data showed corn production declined by 5.1% in the first quarter, a reversal of the 0.5% growth last year.

Coconut output slipped by 0.3%, slower than the 3.3% decline in the same quarter in 2024.

Crops that saw a double-digit increase in the value of output include tobacco (80.4%), cacao (23.6%), sugarcane (19%), rubber (13.6%), coffee (10.7%) and mongo (10.1%).

On the other hand, the value of production contracted for abaca (15.4%), sweet potato (9.4%), mango (7.5%), cabbage (6.4%) and calamansi (0.8%).

PSA data showed the poultry sector grew by 9.4% to PHP 75.22 billion, contributing 17.2% to total farm production.

The value of chicken egg production rose by 12.1%, while chicken output increased by 8.7% and duck by 1.5%.

On the other hand, duck egg production declined by 2.2% in the first quarter.

“We can see a little shift in the consumption pattern of consumers to the poultry sector as a source of food protein due to higher prices of meat, especially of hogs,” Philippine Chamber of Agriculture and Food, Inc. President Danilo V. Fausto said in a Viber message.

“This can be seen in the good performance of chicken and egg production and decrease in growth of the hog sector,” he added.

However, Mr. Fausto warned the local poultry industry may face challenges if there are increased imports from the US.

“The poultry sector will experience headwinds, however, if the US will require the entry of more chicken to the country as a bargaining chip to reconsider the tariff imposed by Trump for Philippine exports to the US,” he said.

Slump in livestock

Meanwhile, the value of livestock production continued to decline in the first quarter.

PSA data showed livestock output slipped by 2.8% to PHP 57.82 billion in the period ending March, although the pace of decline was slower than 3.5% in the same quarter last year. This accounted for 13.2% of the total farm output.

Hog production slumped by 3.7% in the first quarter, while carabao output dipped by 0.2%.

However, an increase in production was seen in dairy (10.5%), cattle (1.3%), and goat (1.2%).

“Livestock contraction is expected as the much-vaunted ASF (African Swine Fever) vaccine of the DA is ineffective with little adoption by hog raisers,” Mr. Adriano said.

The DA in March said it was expecting the approval of the Food and Drug Administration by April for the commercial rollout of ASF vaccines from Vietnam.

“Hopefully, we could also begin later this year the commercial roll out of the long-awaited vaccine for ASF, which will help kickstart the DA’s a large-scale hog repopulation effort,” Mr. Laurel said.

Bureau of Animal Industry data as of April 11 showed ASF had been detected in 54 villages, up from 39 as of March 14.

Meanwhile, fishery production rose by 1.5% to PHP 55.1 billion in the first quarter, accounting for 12.6% of the total output. This was an improvement from the 0.2% drop in the same period in 2024.

Milkfish (bangus) production rose by 7.8%, while tilapia inched up by 2.2%.

Double-digit growth was seen for slipmouth or sapsap (21%), mudcrab or alimango (20%), Indian mackerel or alumahan (14.5%) and blue crab or alimasag (12.1%).

However, declines were seen for fimbriated sardines or tunsoy (34.5%), roundscad or galunggong (14.7%), cavalla or talakitok (12.7%) and bigeye tuna or tambakol (11.2%).

Raul Q. Montemayor of the Federation of Free Farmers said the agriculture sector still has a lot of catching up to do, especially since output declined last year.

In 2024, farm output shrank by 2.2%, due in large part to the El Niño weather pattern, which is estimated to have caused about P15-billion in damage to local agriculture. — K.A.T.Atienza

Govt debt hits record PHP 16.7T at end-March

The national government’s (NG) outstanding debt edged up to a fresh high of PHP 16.68 trillion as of end-March, the Bureau of the Treasury (BTr) said on Wednesday, adding that this debt “remains manageable.”

Latest data from the Treasury showed that the debt rose by 0.31% from PHP 16.63 trillion at the end of February.

Year on year, outstanding debt went up by 11.78% from PHP 14.93 trillion at end-March 2024.

“The NG’s robust revenue performance in the first quarter of 2025 has enabled the government to finance key priority programs without imposing new taxes, keeping debt growth well within sustainable levels,” the BTr said in a statement.

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

The bulk or 68.2% of the total debt stock came from domestic sources, while the rest were external borrowings.

“This financing mix reflects a prudent approach to debt management to help mitigate exposure to external risks while taking advantage of the country’s liquid domestic market,” BTr said.

Domestic debt, which was composed of government securities, rose up by 1.39% to PHP 11.38 trillion at end-March from PHP 11.22 trillion at end-February.

Year on year, it jumped by 10.72% from PHP 10.28 trillion in the same period.

“This was mainly due to the net issuance of domestic securities worth PHP 157.86 billion, demonstrating strong investor confidence in government instruments,” the BTr said.

However, the increase in domestic debt was partially offset by the peso appreciation against the US dollar, which reduced the overall valuation by PHP 2.03 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the higher debt in March partly reflected the widening budget deficit, which required additional borrowings by the government.

Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said the rise in domestic debt reflected the high demand for government bonds, which continues to be oversubscribed.

“This is an indication of confidence in this asset and the risk-averse sentiment while waiting for major market catalysts,” he added.

Meanwhile, external debt dropped by 1.92% to PHP 5.3 trillion as of end-March from PHP 5.41 trillion at end-February.

However, it jumped by 14.12% from PHP 4.65 trillion in March 2024.

“The (year-on-year) reduction was primarily due to the P66.22-billion decrease in the peso equivalent of US dollar-denominated debt behind local currency appreciation, as well as the net repayment of external loans, which further trimmed the external debt total by P60.84 billion,” the Treasury said.

“These more than offset the PHP 23.19-billion upward revaluation effect of third-currency movements against the US dollar,” it added.

The peso closed at PHP 57.21 against the dollar at end-March, appreciating by 78.5 centavos from its PHP 57.995-per-dollar finish at end-February.

External debt was composed of PHP 2.77 trillion in global bonds and P2.53 trillion in loans.

The NG’s guaranteed obligations slipped by 0.37% to PHP 339.86 billion as of end-March from PHP 341.11 billion in the previous month.

The Treasury attributed the monthly decline to the net repayment of external guarantees amounting to PHP 1.29 billion and the PHP 1.13-billion downward revaluation amid the continued appreciation of the peso versus the greenback.

“These more than offset the PHP 0.77 billion in additional domestic guarantees and the PHP 0.4- billion impact of third-currency exchange rate movements on external guarantees, reflecting the government’s continued efforts to prudently manage contingent liabilities while supporting key development initiatives,” it added.

Year on year, guaranteed obligations declined by 1.79% from PHP 346.04 billion.

The BTr said that 91.5% of the debt stock had fixed interest rates, shielding the Philippines from abrupt shifts in global interest rates and currency movements.

It also noted that 81.3% of the obligations are long term, “giving the government ample fiscal space and time to support growth-enhancing investments.”

Mr. Ricafort said in the following months, the debt stock could hit a new fresh high due to the need to hedge both local and foreign borrowings because of the “Trump factor.”

This year’s financing program is set at PHP 2.545 trillion, with 80% coming from local lenders and 20% from foreign sources.

The NG’s outstanding debt is projected to reach PHP 17.35 trillion by end-2025.

“With the economy continuing to grow faster than its obligations, the country remains firmly on track to achieve fiscal consolidation and reduce the debt-to-GDP (gross domestic product) ratio to below 60% by 2028,” the BTr said.

Under the Medium-Term Fiscal Framework, the government seeks to bring the ratio down to 60.4% by the end of 2025, and to 56.9% by 2028.

“The Marcos administration has inherited a large debt due to the pandemic, amounting to approximately PHP 12.79 trillion, but it has already made improvements to the country’s debt statistics by reducing the NG debt-to-GDP ratio to 60.7% in 2024, below the 70% international threshold,” the BTr said.

First-quarter GDP and debt-to-GDP ratio data will be released on May 8.

“Moreover, the country’s recent credit rating upgrades and reaffirmations underscore strong investor confidence in the country’s economic fundamentals, translating to greater demand for Philippine bonds, thereby preserving government access to reasonable borrowing costs, crucial for sustaining the country’s inclusive growth momentum,” the BTr said.

In late April, Fitch Ratings affirmed its “BBB” investment grade rating and “stable” outlook amid the country’s strong growth prospects and minimal exposure to trade tensions. – Aubrey Rose A. Inosante, Reporter

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