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The Philippines fell to near bottom in an annual global ranking of countries’ ability to attract and retain a skilled workforce, amid a decline in the quality of life, the Institute for Management Development (IMD) World Competitiveness Center said.

In the IMD’s World Talent Ranking (WTR) 2025, the Philippines slipped a spot to 64^th out of 69 countries. Last year, it ranked 63^rd out of 67 economies.

This was the Philippines’ worst showing in 20 years or since 2005.

The Philippines’ talent competitiveness also continued to lag behind Asia-Pacific neighbors. It ranked 13^th out of 14 Asia-Pacific countries, better only than Mongolia (69^th overall).

Hong Kong (4^th) was the highest-ranking economy in the Asia-Pacific. It was followed by Singapore (7^th), Taiwan (17^th), Australia (19^th), Malaysia (25^th), New Zealand (33^rd), South Korea (37^th), China (38^th), Japan (40^th), Thailand (43^rd), Indonesia (53rd), and India (63^rd).

The global talent index was again dominated by European economies led by Switzerland (1^st overall), Luxembourg (2^nd), and Iceland (3^rd).

The WTR rankings are based on three factors: “appeal,” or the ability of the economy to attract foreign talent and retain local talent; “investment and development,” which refers to the measurement of resources allotted to develop a homegrown workforce; and “readiness,” or the quality of the skills in a country’s talent pool.

The Philippines saw a decline in all factors, dropping two places to 66^th in investment and development. It slipped two spots to 56^th in appeal and fell six places to 58^th in readiness.

“Generally speaking, the Philippines is a net exporter of talent. And it means that it will always find it difficult to retain the homegrown talent in the country,” Arturo Bris, director of the World Competitiveness Center and professor of finance at IMD, said at a hybrid press briefing on Monday.

“At the same time, interestingly, if you look at our indicators, the Philippines ranks 13^th in the availability of skilled labor in the country. So, it seems that executives and leaders in the country do not feel that they don’t find the talent that they would need,” he added.

Low quality life

Mr. Bris noted the country has steadily declined in the rankings over the last few years and lagged in competitiveness mainly due to low quality of life in the Philippines versus its regional peers.

“I think the main driver is a declining quality of life. And again, remember that quality of life encompasses many different factors,” Mr. Bris said.

“The quality of life in the country, especially compared to other neighbors, like Thailand, Singapore, or Indonesia, is lower,” he added.

In particular, he said that the quality of life in the Philippines ranked 60^th out of 69 economies. It ranked 49^th in exposure to pollution, and 31^st in management remuneration.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said that the country’s low ranking in the talent index “reflects chronic underinvestment in education, weak training systems, and poor talent retention.”

“Compared with Asia-Pacific peers like Malaysia or Singapore, we lag behind in both talent readiness and quality of life. To catch up, we must improve public spending on education, build industry-relevant skills, and make our economy more attractive to high-value talent,” he said in a Viber message.

Misiek Piskorski, dean of executive education and professor of digital strategy, analytics, and innovation at IMD, said that much of the Philippines’ success is mainly due to its cheap labor.

While many multinational companies set up back-office operations in the Philippines, this is now under threat due to increasing adoption of artificial intelligence (AI) in the business process outsourcing sector.

“One of the big worries that I have for Manila… is to what extent, again, AI will substitute many of these jobs,” Mr. Piskorski said.

“Will the Philippines be ready with enough workforce and enough skilled workforce to provide the next generation of services? That is my big concern,” he added.

To address these concerns, he said that there is a need for more focused investments.

“To me, the Philippines is always Manila, and the rest of the country is very, very different. And so, we also have to start thinking about what we do in Manila and what we do across other islands that might be far away from Manila and upskill people there to get things going,” he said.

Management Association of the Philippines (MAP) President Alfredo S. Panlilio said the quality of the workforce can be addressed by improving curricula across schools.

“I think an important aspect is how do you fix the curricula of the schools, from public to private, to make it relevant to the demands of the current workforce,” he told reporters on the sidelines of the 23^rd MAP International CEO Conference on Tuesday.

“Because although there are a lot of available positions, the companies cannot hire or don’t hire because they can’t find the talent that they’re looking for. So, it’s really about human capital,” he added.

During his stint with the Private Sector Advisory Council, Mr. Panlilio said he recommended focusing more on science, technology, engineering, and mathematics programs.

“Because AI is technology, we have to have the skill sets for our youth to develop those kinds of skills,” he said, adding that it is still uncertain what jobs will be created in the future,” he said.

He said the MAP taps academics to join committees within the organization, especially when doing research and in understanding data.

“So, we’re trying to bridge that, making sure that there’s a link or alignment between the educational system and what the corporates, and even the public sector, need down the road,” he added. — Justine Irish D. Tabile, Reporter

Manufacturing output fell to a five-month low in July amid uncertainty over US tariff policies and bad weather, analysts said.

Preliminary results of the Philippine Statistics Authority’s (PSA) latest Monthly Integrated Survey of Selected Industries showed that factory output, as measured by the volume of production index (VoPI), shrank by 1.1% year on year in July.

This was a reversal of the 7% growth a year ago and 1.6% expansion in June.

It was also the lowest in five months since the 1.9% decline in February.

On a monthly basis, July’s output picked up by 3.4%, a reversal from the 4.3% decline in June. Stripping out seasonality factors, it inched up by 2.6%.

In the seven months to July, manufacturing output growth averaged 0.4%, significantly slower than the 2.7% a year ago.

The PSA attributed the contraction in July factory output to the slowdown in production of food (16.5% in July from 22.4% in June); computer, electronic, and optical products (5% from 7.3%); and transportation equipment (9.3% from 13%).

Ten other divisions saw a slowdown, while nine posted annual increments.

PSA data showed the three largest contributors to the year-on-year decline in the VoPI were the faster contraction seen in the divisions of basic metals (-25.4% from -24.9%), coke and refined petroleum products (-15.7% from -15.2%), and chemicals and chemical products (-22.2% from -14.9%).

Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., said in a Viber message the annual contraction in July may be due to weather disturbances that may have slowed factory activity across sectors.

Data from the Philippine Atmospheric, Geophysical Astronomical Services Administration’s (PAGASA) Climate Impact Assessment for July showed that several weather systems caused excessive rainfall that month.

University of Asia and the Pacific economist Cid L. Terosa said the demand for computer products in July was affected by external headwinds.

“The slowdown in computer products reflected the slowdown and fragile conditions faced by the global electronics and computer industry due to US reciprocal tariffs,” Mr. Terosa said in an e-mail.

US President Donald J. Trump’s seesaw tariff policies caused confusion and market instability since April. The US initially slapped a 17% reciprocal tariff on goods from the Philippines, then raised it to 20%, before eventually setting a 19% tariff rate that was implemented in August.

Sergio R. Ortiz-Luis, Jr., president of Philippine Exporters Confederation, Inc., said the flip-flopping US trade policy dampened overall demand for computer and electronic products.

Separate data from the PSA showed electronic products had the highest share of exported goods by value in July, accounting for 53.5% or USD 3.92 billion of the USD 7.34-billion total.

“Weaker demand in major global economies also contributed to the slowdown in electronics and computer production,” Mr. Terosa said.

July’s capacity utilization averaged 77.1%, higher than the 76.6% logged in June and 75.8% a year earlier.

All industry divisions reported capacity utilization rates of more than 60% during the month.

The top three industry divisions with the highest capacity utilization rates were tobacco products (85.1%), other manufacturing and repair and installation of machinery and equipment (83.4%), and leather and related products, including footwear (83%).

For the rest of the year, Mr. Terosa said manufacturing production may get a lift from “improving market conditions, reinvigorated domestic demand, a low inflation environment, and positive business sentiment.”

However, the implementation of higher US tariffs, which began in August, will likely hurt demand for Philippine exports.

Mr. Ortiz-Luis said output may remain sluggish due to weak export demand. “Lower exports mean lower production,” he added.

“Tariff projections may impact demand for Philippine exports and eventually volume of production but so far exports have managed to grow. We expect moderate expansion across sectors possibly on better weather and as the Philippines seeks to find other markets outside the US for exports,” Mr. Mapa said.

Mr. Terosa said the impact of US tariffs on the electronics and semiconductor sectors should be monitored.

“US reciprocal tariffs, however, can disrupt the groundwork for gradual and sustainable recovery in the manufacturing sector… Overall, however, I think the impact of US reciprocal tariffs on manufacturing will be subdued,” he said. — Matthew Miguel L. Castillo, Researcher

The Bangko Sentral ng Pilipinas (BSP) may hold off further monetary easing in October after inflation rose to a five-month high in August, with analysts expecting the central bank to deliver its last interest rate cut for the year in December.

Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion said it would be difficult for the BSP to justify another reduction in borrowing costs next month given the rebound in price pressures.

“Given the upside surprise in headline and core inflation, a rate cut in October looks unlikely,” Mr. Asuncion said in an e-mailed reply to questions. “It is difficult to justify a BSP rate cut as both cyclical and structural inflation measures tilt upward.”

Security Bank Chief Economist Angelo B. Taningco said the Monetary Board would likely pause in October “in light of the rising inflationary pressures.” “However, we still maintain our view for the BSP to conduct its fourth 25-basis-point (bp) rate cut for the year in December,” he said in an e-mail.

Headline inflation quickened to 1.5% in August from 0.9% in July, mainly due to typhoon-driven spikes in vegetable and fish prices. It was faster than market expectations but slower than 3.3% a year earlier.

The August rate fell within the BSP’s 1-1.8% forecast but exceeded the 1.3% median estimate in a BusinessWorld poll of 16 analysts. It also marked the sixth straight month that inflation remained below the BSP’s 2-4% target.

For the first eight months, inflation averaged 1.7%, matching the central bank’s 2025 forecast.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said the August outcome would weigh heavily on the BSP’s next policy move.

“While inflation from the previous months went below analysts’ expectations, the August reading went beyond,” he said in a Viber message. “Thus, we may see a more cautious and calibrated approach from the central bank with regard to the timing of the next rate cut.”

In a report, Deutsche Bank also noted that inflation risks in the coming months could prompt a pause in October, though it still expects easing to resume in December.

The BSP lowered the benchmark interest rate by 25 bps to 5% on Aug. 28, its third straight cut since August 2024. In total, it has reduced rates by 150 bps this cycle.

BSP Governor Eli M. Remolona, Jr. earlier signaled that there could be room for one more adjustment before yearend but stressed that the easing cycle is nearly complete.

Emilio S. Neri, Jr., chief economist at Bank of the Philippine Islands, said the central bank’s stance reflects concerns about inflationary risks next year.

“(Mr. Remolona) is probably foreseeing the changes in inflation next year,” he told Money Talks with Cathy Yang on One News. “We will be on an uptick that could lead to a breach.”

“And if we aren’t able to control inflation expectations, that could lead the BSP to actually hike instead of cut,” he added.

Still, he said a cut later in the year remains possible, particularly if global developments support looser policy.

Fed cue

Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., said the Philippine central bank would likely align its decision with the US Federal Reserve’s next policy move and domestic growth data.

“We expect BSP to await more data points on inflation, see whether the Fed cuts in November and look to third-quarter GDP (gross domestic product) numbers for guidance,” he said in a Viber message.

If the Fed resumes easing, domestic growth stays modest and inflation trends align with the target, the BSP may consider another rate cut before yearend, he added.

Mr. Erece said labor market and growth conditions could justify another adjustment.

The Monetary Board will meet on Oct. 9 and Dec. 11 for its final two policy reviews this year.

Meanwhile, analysts flagged the increase in core inflation, which strips out volatile food and fuel items, as a key concern. Core inflation climbed to 2.7% in August, the highest in eight months, from 2.3% in July.

“The main surprise from our standpoint in the latest release is the jump in core inflation to an eight-month high,” Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said in a note last week. “It’s worth remembering, though, that in the Philippines, core inflation still includes some elements of food and energy prices.”

Mr. Mapa said the uptick was driven by select food items outside the core basket that were affected by storm damage. “These food items, such as other vegetables, appear to have been impacted by the recent spate of storms and thus constitute a supply-side shock inflation episode,” he said.

Despite the August rise, core inflation averaged 2.4% in January to August, slower than 3.2% a year ago.

This shows companies are passing on more costs and demand remains firm, which the BSP is watching closely, Mr. Asuncion said.

The central bank expects full-year inflation to stay below target in 2025 before returning to within 2-4% by 2026 and 2027. Its forecast for 2026 is now 3.3%, while its projection for 2027 is 3.4%.

Pantheon Macroeconomics forecasts inflation at 1.8% this year and 3% in 2026, higher than its earlier 2.6% projection. “We continue to believe that the BSP will cut at least one more time before the end of 2025, by 25 bps, though it is unlikely to pull the trigger again until December,” Mr. Chanco said.

UnionBank likewise revised its forecast to 1.8% from 1.6%. — Katherine K. Chan

The Philippines’ gross international reserves (GIR) inched up in August as the value of the central bank’s gold holdings hit a record high.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that dollar reserves went up by 0.46% to USD 105.9 billion as of end-August from USD 105.4 billion at end-July.

Year on year, dollar reserves dipped by 1.8% from USD 107.857 billion in August 2024.

“The Philippines’ gross international reserves rose in August 2025 due to higher global gold prices and income from Bangko Sentral ng Pilipinas’ investments,” the central bank said in a statement.

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

BSP data showed the level of dollar reserves as of end-August is enough to cover about 3.4 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, more than double the three-month standard.

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

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

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

Central bank data showed the BSP’s foreign investments stood at USD 85.852 billion as of end-August, down 0.4% from USD 86.187 billion at end-July. Year on year, it fell by 7%.

The value of the central bank’s gold holdings climbed by 5.4% to a record USD 14.523 billion at end-August from USD 13.783 billion at end-July. It jumped by 42.1% from USD 10.221 billion as of August last year. Gold tends to perform well during economic uncertainty.

Foreign exchange holdings rose by 8.3% to USD 897.8 million as of August from USD 828.9 million in the previous month. Year on year, it went up by 13.7%.

The country’s reserve position in the IMF likewise edged up by 1% to USD 736.4 million as of end-August from USD 729 million in the previous month. Year on year, it rose by 1.4%.

SDRs — or the amount which the Philippines can tap from the IMF’s reserve currency basket — inched up by 0.2% month on month to USD 3.895 billion as of August from USD 3.889 billion. Year on year, it went up by 1.3% from USD 3.847 billion.

Meanwhile, net international reserves grew by 0.46% to USD 105.9 billion from USD 105.4 billion as of end-July. These refer to the difference between the BSP’s reserve assets and reserve liabilities, including short-term foreign debt, and credit and loans from the IMF.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the month-on-month increase in gold holdings was due to rising gold prices in the world market.

“(This was) largely due to the latest month-on-month increase in gold holdings by USD 740 million or 5.4% to a new record high of USD 14.5 billion as world gold prices gained by 4.8% month on month in August 2025 to new record highs to USD 3,600 per ounce on Sept. 5, 2025,” he said.

However, Mr. Ricafort noted this was offset by the USD 335-million month-on-month decline in foreign investments amid market volatility and the higher US tariffs that took effect on Aug. 7.

“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from OFW (overseas Filipino worker) remittances, BPO (business process outsourcing) revenues, and exports (though offset by imports),” he said.

Mr. Ricafort said the government’s plan to reduce foreign borrowings may also affect the GIR level in the coming months.

“Still relatively high GIR at USD 105.9 billion… among three-year highs [and] could still strengthen the country’s external position,” he said.

The BSP expects dollar reserves to reach USD 104 billion this year and USD 105 billion in 2026. — K.K.Chan