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A reacceleration of inflation is still the biggest headwind to the Philippines’ economic outlook this year, which may pose a risk to the central bank’s easing cycle, a Moody’s Analytics economist said.

“The acceleration in inflation is the biggest risk for the Philippine economy and these are coming from both domestic and external factors,” Moody’s Analytics economist Sarah Tan said in an interview on Money Talks with Cathy Yang on One News on Wednesday.

“Domestically, I think the risk is that food inflation remains elevated due to frequent weather disruptions that could hurt domestic supply,” she said.

In January, inflation remained steady at 2.9% although food inflation alone accelerated to 4% from 3.5% in December.

Several storms hit the country late last year, which resulted in billions of pesos worth of agricultural damage.

“Externally, I think we worry that the tariffs imposed by the US could cause global inflation to rise due to the disruptions to supply-chain networks,” Ms. Tan said.

However, she said that the impact of the US President Donald J. Trump’s restrictive trade policies on the Philippines will likely be minimal.

“If we take a step back and look at the trade relationship between the Philippines and the US, it is quite clear that the Philippines’ trade deficit with the US is rather small, especially when you compare that with other economies, be it globally or with ASEAN (Association of Southeast Asian Nations) economies.”

“That really means that the Philippines is unlikely to be high on President Trump’s list,” she added.

Since taking office in January, Mr. Trump has already slapped a 10% tariff on Chinese goods as well as duties on all steel and aluminum imports beginning March.

On the other hand, Mr. Trump’s plan to impose reciprocal tariffs on all countries that charge duties on US imports may have a more significant impact on the Philippines.

“If there’s a universal reciprocal tariff that’s going to be imposed by the US, then that will hurt the Philippines because the duties that are levied on US imports into the Philippines is higher than the other way around,” she said.

“If there is a matching of tariffs, then that will make Philippine goods to the US more costly and less competitive, which will ultimately hurt our Filipino manufacturers and exporters.”

The US is typically the top destination for Philippine-made goods. In 2024, exports to the US were valued at USD 12.12 billion or 16.6% of total export sales.

“I believe the impact on the Philippines is rather small given the low trade exposure with the US. That said, there are indirect channels of impact on the Philippines,” Ms. Tan added.

Risks to easing

Inflationary pressures from these risks could prompt the Bangko Sentral ng Pilipinas (BSP) to be more cautious about further easing, Ms. Tan said.

“If we have inflation accelerating again beyond the BSP’s target, that could delay the timing and magnitude of a potential policy easing in the Philippines,” she said.

“If that is the case, then the combination of borrowing costs and inflation staying higher for longer will be a recipe for further weakening in private consumption which is not great for the economy, given how it’s the main driver of growth.”

The BSP surprised markets after it left the benchmark unchanged at 5.75% at its Feb. 13 meeting. This after the central bank cut rates at three straight meetings since it began its easing cycle in August.

Ms. Tan was the only economist in a BusinessWorld poll of 20 analysts that correctly predicted the hold.

“It is a balancing act that the BSP has played. They have to balance both inflationary risks as well as the strength of the peso.”

“But that said, we don’t expect the pause to be felt very long. In fact, the next rate cut could come as early as in April, which is the next time the Monetary Board will meet,” she added.

Despite the pause, BSP Governor Eli M. Remolona, Jr. has said that a rate cut is still on the table at the Monetary Board’s next rate-setting meeting on April 3.

He also said the central bank is still on an easing path, signaling the possibility of up to 50 basis points (bps) worth of cuts this year.

“With inflation now largely back on target, and GDP (gross domestic product) growth still slightly below the government’s expectations, these will prompt the next rate cut sooner rather than later,” Ms. Tan added.

The Philippines’ GDP expanded by a slower-than-anticipated 5.2% in the fourth quarter. This brought full-year 2024 growth to 5.6%, short of the government’s 6-6.5% target.

Meanwhile, Ms. Tan said the upcoming midterm elections in May could provide a boost to spending.

“In general, elections, whether it’s national or midterm, they have to give a boost to the economy, especially through the consumption channel.”

“So, we will see spending on campaign-related goods and services increase. But at the same time, you know, all that increase in demand could also signal bad news for inflation,” she added. — Luisa Maria Jacinta C. Jocson

The Department of Agriculture (DA) is finalizing the minimum access volume (MAV) quota for pork imports this month amid pressure from meat importers and traders.

“The general direction for MAV will be 55,000 metric tons (MT), although not yet finalized,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. said on the sidelines of an event in Valenzuela City.

Of the 55,000 MT, Mr. Laurel said 30,000 MT will be allocated for meat processors and 10,000 MT will be “equally distributed” among traders.

The DA will be given an allocation of 15,000 MT to address any potential spike in pork prices.

Under Executive Order No. 50, pork tariffs are at 15% for shipments within the MAV and 25% for those exceeding the quota.

Meat traders have been calling on the DA to issue the MAV allocation for 2025 as soon as possible to avoid supply disruptions. They claimed that the MAV quotas should have been released in the first week of January.

In a Viber message to BusinessWorld, Meat Importers and Traders Association (MITA) President Jess C. Cham said the DA is tweaking the MAV guidelines to favor processors over traders, a move that the group called a “2-class distinction.”

“It is unfair and unjust to licensees who are not processors,” he said.

“They have acquired quota legally and fairly following the MAV guidelines. Other sectors will be deprived of affordable pork and rendered uncompetitive.”

In a letter addressed to Mr. Laurel, the MITA expressed concern that the quotas for the MAV have not been distributed. The group noted that last year, the full pork quota was only released in September.

“We do not think the outcome was good for the consumers or the economy,” it said.

MITA also opposed a proposed amendment to the guidelines that only processors would be eligible to file an application either as a regular licensee or entrant.

Under the amendment, public and private entities may also qualify to secure license for the purpose of participating in the government’s food security programs.

The existing guidelines state there are only “licensees” and new entrants, and the only way to retain and acquire quota is by the licensees’ utilization or performance.

“The reemergence of ‘class distinctions’ is obviously contrary to existing guidelines and very problematic — classifying the licensees only as trader or processor,” MITA said.

“What about the producers and commercial food service providers? What are they entitled to?”

MITA noted that a two-class distinction is “very shallow and superficial.”

“After nearly three decades of MAV, the licensees have developed and established their unique characteristics. They are no longer confined to the four classes of the initial year. We now see the emergence of licensees with meat shops, meat cutting plants, cold storage facilities and logistics, serving across different trade channels and not merely confined to any solitary one,” it added.

MITA said licensees have acquired and retained quota in accordance with the guidelines.

“Hence any reallocation not in accordance with current guidelines is in fact an ‘appropriation’ and that is unfair and unjust,” it said, adding that the move will affect small processors who are unable to import and will render them uncompetitive against the larger establishments that have access to MAV.

“Some meat processors have also engaged in meat trading, while others have established meat trading companies. While MDM (mechanically deboned meat) is the major poultry item, there are ‘processors’ that currently import chicken meat that are used in food service,” MITA said.

“Will these processors be deprived of quota as well? How about rice, corn, sugar, and coffee? Or will this rule apply only to pork, making it a ‘special’ commodity?”

MITA said taking away MAV quotas from all licensees except processors will deprive direct consumers of affordable pork and poultry meat.

“Currently MAV pork and poultry are sold in wet markets, supermarkets, meat shops, restaurants, and canteens. They can easily be sold in the Kadiwa stores too.”

National Federation of Hog Farmers, Inc. (NatFed) Vice-Chairman Alfred Ng said Mr. Laurel’s MAV pronouncement was discussed during a meeting with stakeholders on Tuesday.

“Giving more to the processors is a prudent move because they are directly involved in the manufacturing of our processed meats,” he said in a Viber message.

“Before, more was taken by the traders who enjoyed the much lower tariffs with not much risks unlike processors who have facility and machine investments,” he added.

British Chamber of Commerce of the Philippines Executive Director Chris Nelson welcomed the expected issuance of the MAV allocation.

“But what I would say is we want to see a smooth issuing. We would want that the MAV be issued as before, and that we have supply coming to the country,” he said in a Viber call.

He said the original system has benefited both the United Kingdom and the Philippines.

The Philippines is still the United Kingdom’s second-largest export market for pork.

Pork prices have surged in the country, prompting the DA to consider the imposition of a maximum suggested retail price (MSRP) for the commodity.

The DA has said the reasonable price for pork is P380 per kilo, given that the farmgate price is at P250 plus a profit margin of P100.

Mr. Laurel said the DA is eyeing to buy pork from producers and to sell the commodity directly to retailers to avoid any “layering.”

The government “will be forced to intervene” if pork prices remain high, he noted.

“I am skeptical about DA directly engaging in the sale of pork to lower prices,” Federation of Free Farmers National Director Raul Q. Montemayor said in a Viber message.

He noted DA’s role is to ensure that the market runs smoothly and is not distorted by profiteers and price manipulators.

“They have powers under the Price Act and the Anti-Economic Sabotage Law to run after these criminals,” he said. “If there is excessive layering, why not find a way to reduce these layers without having to buy and sell pork directly?” — K.A.T. Atienza

Expectations of below-target growth and manageable inflation should support further rate cuts by the Bangko Sentral ng Pilipinas (BSP) this year, DBS Bank said in a report.

At the same time, a Nomura Global Markets Research analyst said the BSP could have delivered a rate cut instead of a pause at last week’s meeting amid “persistent” uncertainty.

“The growth-inflation dynamic backs further rate cuts, with the real rate buffer considerably wide at 2.5%-2.75%, providing room for monetary policy to be growth supportive,” DBS Senior Economist Radhika Rao said.

DBS expects gross domestic product (GDP) to grow below 6% this year after a weaker-than-expected 5.6% growth in 2024. The government is targeting 6-8% growth this year.

Inflation has been “buoyant” in the past few months, DBS said. Headline inflation remained steady at 2.9% in January, within the central bank’s 2-4% target.

“Food supply disruptions due to a lagged impact of typhoons, utility costs and a weaker peso were behind this spurt, though are likely to be viewed as temporary and will not deter the central bank from a dovish path,” it added.

DBS expects the central bank to deliver up to 50 basis points (bps) worth of rate cuts this year.

“After a 75-bp rate reduction in 2024, the BSP is likely to bide time to monitor risk of further tariffs and the consequent inflation/US dollar path, before resuming further easing,” Ms. Rao said.

The BSP left the benchmark rate unchanged at 5.75% on Feb. 13, with BSP Governor Eli M. Remolona, Jr. citing global uncertainties due to US trade policies.

Nomura Global Markets Research analyst Euben Paracuelles said central banks, including the BSP, might struggle to consider the implications of US President Donald J. Trump’s tariff policies.

“I think this is going to be a sort of a persistent type of uncertainty. We will never really get a good handle of it. And I think sometimes it’s better to be just reactive than proactive just because of the extent of the uncertainty,” he said in an interview on Money Talks with Cathy Yang on One News on Tuesday.

Mr. Remolona last week said the BSP is recalibrating their models to better account for these uncertainties and other “unusual” phenomena.

“The uncertainty in itself is the one that’s going to create some downside pressure and growth, whether it’s weighing on business sentiment and other indirect channels,” Mr. Paracuelles said.

“And more importantly, we’ve already seen this in the first Trump administration. So, it’s not that difficult to think about the risks and how they play out when we get some of these tariffs announced by President Trump.”

Mr. Trump is planning to impose reciprocal tariffs on every country that charges duties on US imports, a move that has raised fears of a wider global trade war.

“So, to me, it’s a downside risk to growth. And therefore, it’s not a reason for us (to hold rates). It’s actually a reason to keep cutting,” Mr. Paracuelles said.

He said the Philippine economy “still needs a little bit of support from all policy fronts.”

“So, after they paused, I think there’s a little bit of a change in the sequencing. There might be a little bit of a preference to inject liquidity via the RRR (reserve requirement ratio) cuts, which they’ve already done in October,” he said.

“I think they’re doing more. What that does really is it improves the policy transmission of later policy rate cuts, which I still expect for the rest of the year, given a very benign inflation outlook. So, the BSP can actually focus a little bit more on supporting the economy with all of these tools.”

The central bank is looking to bring down the RRR to 5% from 7% this year.

“The RRR could be front-loaded a little bit. I think April is a good window because, obviously, we have the elections coming in early May, and that means the critical conditions could tighten,” Mr. Paracuelles added.

The BSP reduced the RRR for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% from 9.5%, which took effect in October. — Luisa Maria Jacinta C. Jocson

Cash remittances from overseas Filipino workers (OFWs) hit an all-time high of USD 34.49 billion in 2024, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Money sent home by OFWs through banks rose by 3% to USD 3.38 billion in December from USD 3.28 billion in the same month in 2023. This was the highest-ever monthly level for cash remittances.

This brought the full-year remittance level to a record-high USD 34.49 billion, up by 3% from USD 33.49 billion posted in 2023.

This was in line with the BSP’s 3% remittance growth forecast and its full-year projection of USD 34.5 billion.

“The increase was observed in remittances from both land-based and sea-based workers,” the BSP said.

In December alone, remittances from land-based workers jumped by 3.7% year on year to USD 2.71 billion from USD 2.61 billion.

For the full year, remittances from land-based workers increased by 3.4% to USD 27.55 billion from USD 26.64 billion in 2023.

Meanwhile, money sent by sea-based workers inched up by 0.6% to USD 669.28 million in December and rose by 1.3% to USD 6.94 billion for the full year.

Personal remittances, which include inflows in kind, rose by 3% to USD 3.73 billion in December from USD 3.62 billion in December 2023.

As of end-2024, personal remittances increased by 3% to USD 38.34 billion from USD 37.21 billion in the year prior. This also marked an all-time high for personal remittances.

The remittances accounted for 8.3% and 7.4% of the country’s gross domestic product (GDP) and gross national income (GNI), respectively.

“The growth in cash remittances from the United States, Saudi Arabia, Singapore, and the United Arab Emirates, mainly contributed to the increase in remittances in 2024,” the central bank said.

The US was the top source of cash remittances last year, accounting for 40.6% of the total.

This was followed by Singapore (7.2%), Saudi Arabia (6.4%), Japan (4.9%) and the United Kingdom (4.7%).

Other sources of remittances include the United Arab Emirates (4.4%), Canada (3.6%), Qatar (2.8%), Taiwan (2.7%), and South Korea (2.5%).

“The growth in cash remittances in 2024 reflects the continued resilience of OFWs in supporting the Philippine economy,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said.

“Sustained economic recovery in the US, Middle East, and Asia-Pacific led to higher wages and employment opportunities for OFWs, boosting remittances,” he added.

Mr. Rivera said the weaker peso in the last few months of the year also increased the value of remittances sent home.

At end-2024, the peso closed at P57.845 against the dollar, depreciating by 4.28% from its end-2023 finish of P55.37. It also fell to the record-low P59-per-dollar level thrice last year.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the surge in remittances was also due to seasonal factors amid the holidays.

“December saw a seasonal uptick in remittances as OFWs sent additional funds for holiday-related expenses and family support. The adoption of digital remittance platforms made transfers faster and cheaper, encouraging higher remittance flows,” Mr. Rivera added.

For this year, Mr. Rivera said remittances are likely to remain a stable growth driver.

“Continued overseas labor demand, particularly in healthcare, tech, and skilled trades. More favorable exchange rates could encourage higher remittance volumes. Government agreements and labor deployment policies could open new job markets.”

Mr. Ricafort said remittances have been “growing consistently around 3% year on year in recent months and years and still expected to similarly grow, going forward, being demographic based.”

However, global uncertainties stemming from US President Donald J. Trump’s trade policies could weigh on remittances, Mr. Ricafort said.

“Mr. Trump’s threats of higher tariffs and America-first policies could also slow down global trade, investments, employment including OFW jobs, and overall world economic growth,” he said.

Mr. Trump is eyeing to impose reciprocal tariffs across all US imports. This after slapping a 10% tariff on all Chinese imports into the US, which took effect earlier this month.

Mr. Rivera likewise noted that geopolitical tensions and a possible global economic downturn could dampen the growth in remittances.

“Overall, remittances are expected to maintain modest growth in 2025, barring major economic disruptions. The steady inflows will continue to support household spending, helping drive consumption-led growth,” Mr. Rivera added.

The central bank expects cash remittances to grow by 3% this year. – Luisa Maria Jacinta C. Jocson, Reporter

The World Bank  is committed to extending around USD 2.75 billion in loans to the Philippines for fiscal year 2026.

In an e-mail interview, World Bank Country Director for the Philippines, Malaysia, and Brunei Zafer Mustafaoğlu said the amount is 3.7% lower than the USD 2.857-billion lending program for the country for fiscal year 2025, which started in July 2024 and ends in June.

Mr. Mustafaoğlu last December said that the World Bank is finalizing the new country partnership framework for the Philippines, which will cover 2025-2028.

World Bank data showed the USD 4-million Roads to Development project is scheduled to be approved on Feb. 28. The project aims to improve rural road access in six formally acknowledged Moro Islamic Liberation Front camp communities.

Also up for approval on March 5 are the USD 454.94-million Mindanao Transport Connectivity Improvement Project (MTCIP) and the USD 495.6-million Health System Resilience Project.

The MTCIP focuses on local road improvements, climate resiliency, and road safety in the Cagayan de Oro, Davao, and General Santos corridor.

The health system project aims to strengthen provincial health systems, as well as improve the prevention, preparedness and response to health emergencies, including climate-driven adverse events.

The USD 67.34-million Civil Service Modernization Project, which is set to be approved on March 10, seeks to improve human resource management in National Government agencies.

The USD 800-million First Energy Transition and Climate Resilience development policy loan is also up for approval on March 31. It involves ramping up the adoption of clean energy technologies; boosting the security and competition of electricity markets; and improving water management.

The Department of Agriculture’s USD 1-billion Sustainable Agriculture Transformation Program is also up for approval on June 5. It aims to promote climate-resilient agri-food systems for increased productivity, enhanced diversification, and efficient use of public resources in the Philippines.

The USD 240.6-million Accelerated Water and Sanitation Project in selected areas is scheduled for approval on June 27. It aims to boost access to safe water and sanitation services, as well as strengthen the efficiency of local government-run water service providers.

The Department of Education’s USD 600-million Project for Learning Upgrade Support and Decentralization seeks to “improve the foundational literacy and numeracy of kindergarten and primary education learners, as well as the learning outcomes in reading and mathematics of lower secondary education learners in public schools nationwide.” It is up for approval on July 16.

The USD 700-million Community Resilience Project, scheduled for July 28, aims to “enable participatory community-driven resilience planning and investments in vulnerable areas.”

In its annual report for fiscal year 2024, the World Bank said the Philippines was the fifth-biggest borrower with USD 2.35 billion in approved loans from the International Bank for Reconstruction and Development.

Ukraine was the World Bank’s biggest borrower with USD 4.086 billion in loans, followed by Turkey with USD 3.191 billion, Indonesia with USD 3.028 billion, and India with USD 2.943 billion.

The total amount of loans secured by the Philippines in 2024 was 0.6% higher than USD 2.336-billion loans in 2023. – Aubrey Rose A. Inosante, Reporter

The Philippines is ready to face the uncertainties brought by US President Donald J. Trump’s trade policies as it implements the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, Finance Secretary Ralph G. Recto said.

Mr. Recto and Trade Secretary Ma. Cristina Aldeguer-Roque on Monday signed the implementing rules and regulations (IRR) of the CREATE MORE law.

“With the signing of this IRR, we now send a clear message to the world: the Philippines means business. We are ready to compete. We are a dependable economic ally. We offer stability amid uncertainty. And yes — we are Trump 2.0-ready,” he said in a speech at the signing ceremony.

President Ferdinand R. Marcos, Jr. last November signed into law the CREATE MORE Act, which seeks to make the country more competitive and attractive to investors.

“On the part of the government, we are committed to making CREATE MORE not just a tool to attract more investments — but a magnet to keep them here, grow them here, and give every reason for investors to place their trust in the Philippines. Again and again,” Mr. Recto said.

Last month, Mr. Recto said the CREATE MORE will convince companies operating in China and Taiwan to move operations to the Philippines amid Mr. Trump’s aggressive tariffs.

Mr. Trump has already announced tariffs on all steel and aluminum imports beginning on March 12 and imposed 10% tariffs on goods from China.

The US president is also seeking to impose reciprocal tariffs across all countries that tax US imports, raising fears of a broader trade war.

The Department of Finance (DoF) said in a statement that the IRR provides clearer guidelines on the transitory rules for pre-CREATE registered business enterprises (RBEs) to continue receiving their previously granted tax incentives. The RBEs may also avail of additional incentives or measures under CREATE MORE.

“It also directly addresses investor concerns regarding the issuance of the value-added tax zero-rating certificate by providing detailed guidelines on eligibility and compliance criteria and clarifying the certificate’s covered period,” the DoF said.

One of the features of the IRR is prohibiting double registration of projects to deter redundant incentives and ensure responsible fiscal management.

Meanwhile, the Philippines is targeting to conduct a series of roadshows to promote CREATE MORE starting March this year.

“It is useless to have a law and to have IRR that nobody knows about. So, our job now is to announce it to the world,” Office of the Special Assistant to the President for Investment and Economic Affairs Secretary Frederick D. Go told a press briefing on Monday.

“We have scheduled trips to Korea, to the United States, to Japan, to Europe, to the Middle East, and to China,” he added.

Mr. Go also said the CREATE MORE’s rules “stayed true and consistent” with the intent of the law. — Aubrey Rose A. Inosante and Justine Irish D. Tabile