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Net inflows of foreign direct investment (FDI) into the Philippines slumped in November, preliminary data from the central bank showed.

FDI net inflows fell by 19.8% to USD 901 million in November from USD 1.12 billion in the same month in 2023, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Month on month, inflows slid by 11.8% from USD 1.02 billion in October.

This was also the lowest FDI net inflow in two months or since the USD 368 million posted in September.

Net investments in debt instruments dropped by 17.9% to USD 791 million in November from USD 964 million in the same month in 2023.

These consisted mainly of intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines, the central bank said.

“The remaining portion of net investments in debt instruments are investments made by nonresident subsidiaries/associates in their resident direct investors, i.e., reverse investment,” it added.

Meanwhile, net investments in equity capital other than the reinvestment of earnings plunged by 58.9% to USD 35 million in November from USD 85 million in the previous year.   

Equity capital placements fell by 37.8% year on year to USD 71 million. On the other hand, withdrawals rose by 24.3% to USD 36 million.

By source, the bulk of equity capital placements mostly came from Japan (49%), followed by the United States (24%) and Singapore (17%).

These were invested mainly in manufacturing (49%), real estate (25%), financial and insurance (9%), and administrative and support services (5%).

Central bank data showed investments in equity and investment fund shares slid by 31.2% to USD 110 million in November from USD 159 million in the same month in 2023.

“Nonresidents’ reinvestment of earnings remained broadly stable at USD 74 million,” it added.

11-month period

In the January-November period, FDI net inflows rose by 4.4% to USD 8.58 billion from USD 8.22 billion in the same period in 2023.

This accounted for 95.3% of the BSP’s full-year forecast of USD 9-billion FDI net inflows for 2024.

Investments in equity and investment fund shares jumped by 16.4% year on year to USD 2.6 billion from USD 2.2 billion in the same period in 2023.

Net foreign investments in equity capital climbed by 37.7% to USD 1.49 billion in the first 11 months from USD 1.08 billion in the year-ago period.

Placements increased by 23% to USD 1.98 billion, while withdrawals dipped by 7.1% to USD 493 million.

These placements mainly came from Japan (39%) and the United Kingdom (39%), followed by the United States (10%) and Singapore (5%).

Investments were mostly channeled into manufacturing (72%), real estate (12%) and wholesale and retail trade (4%) industries.

Meanwhile, net investments in debt instruments inched down by 0.1% to USD 5.98 billion. Reinvestment of earnings likewise slipped by 3.6% to USD 1.1 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the decline in FDI flows could be attributed to uncertainties over US President Donald J. Trump’s protectionist policies.

“President Trump, who won the US elections on Nov. 5, encourages more investments and jobs in the US rather than outside the US that could reduce foreign investments globally,” he said.

Oikonomia Advisory & Research, Inc. economist Reinielle Matt Erece said foreign investors were hesitant in making decisions in November when Mr. Trump won the elections.

“His suggested protectionist policies caused investors to hold capital and reposition their investments as higher inflation expectations, higher interest rates, and potential trade wars may occur as a result of these economic policies,” he added.

Mr. Ricafort noted foreign investors were also on a “wait-and-see” mode as the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act was signed into law in November.

“But this would now make foreign investors more decisive on whether or not to locate in the country, going forward,” he added.

CREATE MORE expands fiscal incentives and lowers corporate income tax on certain foreign enterprises.

“The series of storms and floods caused some economic disruptions in some areas of the country and also partly disrupted some FDIs into the country,” Mr. Ricafort added.

The Philippines faced several typhoons in the fourth quarter, which resulted in billions of infrastructure and agriculture damage.

“Nevertheless, net FDI close to USD 1 billion is still decent and among pre-pandemic highs that could create more jobs and other business opportunities and also still contribute to further economic growth and development,” Mr. Ricafort said.

Further monetary policy easing would also lower financing costs and attract more investments, he added.

In 2024, the BSP reduced interest rates by a total of 75 basis points (bps). It delivered three straight 25-bp rate cuts each in August, October and December.

A BusinessWorld poll conducted last week showed that 19 out of 20 analysts expect the Monetary Board to cut rates by another 25 bps at its first meeting of the year on Feb. 13.

The central bank expects to end 2025 with a USD 10-billion net FDI inflow.

The BSP noted that its FDI data are distinct from the investment data of other government sources as it covers actual investment flows.

“By contrast, the approved foreign investments data that are published by the Philippine Statistics Authority, which are sourced from Investment Promotion Agencies, represent investment commitments, which may not necessarily be realized fully, in a given period.” — Luisa Maria Jacinta C. Jocson

The Department of Agriculture (DA) is looking at imposing a maximum suggested retail price (MSRP) for pork as prices remain elevated amid reports of profiteering.

The price of pork is almost double the farmgate price, suggesting a potential abuse of prices in markets, Agriculture Secretary Francisco P. Tiu Laurel, Jr. said at a Palace briefing, after discussing the issue with President Ferdinand R. Marcos, Jr.

He cited a gap of about P100 between the farmgate prices of PHP 240 and PHP 250 per kilo and the market prices of PHP 380 to PHP 420 per kilo.

“We’re currently studying that and digging deep into the whole value chain of pork, and finding out whether or not there is profiteering,” Mr. Laurel said.

“If we have identified that there’s profiteering, then definitely we will be doing an MSRP also for pork.”

The DA has resorted to the MSRP scheme for imported rice in a bid to curb prices. The MSRP was set at P55 per kilo of imported rice with broken grain content of 5%, which will take effect nationwide starting Feb. 15.

Mr. Laurel said pork prices above PHP 400 per kilo is “unreasonable.”

DA data last week showed that pork prices have risen to as much as PHP 480 per kilo. The price of pork belly ranges from PHP 380 to PHP 480 per kilo, while pork ham or kasim ranged from PHP 340 to PHP 420 per kilo.

“Farmgate price remains between P220 and P240 per kilo for the past weeks, which means retail prices should not exceed PHP 380 per kilo,” Samahang Industriya ng Agrikultura Executive Director Jayson H. Cainglet said.

“Selling beyond PHP 400 per kilo is not reflective of the actual pork prices,” he said in a Viber message.

Former Agriculture Secretary William D. Dar attributed the surge in pork prices to the spread of African Swine Fever (ASF), which has lowered supply.

“The government must step up efforts and vigorously put up biosafety measures to stem the spread of ASF,” he said in a Viber message.

As of Jan. 31, 15 provinces in nine regions have active ASF cases, according to the Bureau of Animal Industry.

“Where is the much-promoted vaccine against ASF as espoused by the DA and the private sector? If such a vaccine is really working, then why not a massive nationwide vaccination of pigs be done,” Mr. Dar added.

The government began the controlled rollout of Vietnam-made ASF vaccines in late August 2024, with a focus on hogs in Lobo, Batangas, one of the hotspots for the disease that has severely impacted the sector since 2019.

“The piggeries, both backyard and big one, have to elevate their biosafety interventions,” Mr. Dar said.

Mr. Dar said the DA should strengthen coordination with local government units (LGUs) to ensure that quarantine measures are properly followed. Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said higher pork prices indicate “further supply-side constraints” that are also faced by other food commodities such as rice and tomatoes.

“It therefore cannot be attributed to profiteering of individual traders but a systemic or aggregate failure in the country’s agricultural sector,” he said in a Facebook Messenger chat.

Meanwhile, Mr. Laurel said Mr. Marcos was briefed on the food situation in the country during Monday’s meeting attended by representatives from the National Economic and Development Authority and the Department of Labor and Employment.

The meeting was held just days after the DA declared a national rice emergency for rice amid an “extraordinary” spike in the prices of the staple grain despite lower tariffs for imports.

Mr. Laurel said the agency is set to release National Food Authority rice buffer stock by next week, with over 50 LGUs expressing interest in purchasing the rice stocks.

Meanwhile, Mr. Laurel said the DA has already blacklisted 16 companies as it combats illegal trade practices. The companies, four of which were already charged for illegal trade practices, were involved in importation of vegetables and fish. — K.A.T. Atienza

The Bangko Sentral ng Pilipinas (BSP) is expected to cut rates for a fourth straight meeting on Thursday, analysts said, amid within-target inflation and weaker-than-expected gross domestic product (GDP).   

A BusinessWorld poll conducted last week showed that 19 out of 20 analysts expect the Monetary Board to reduce the target reverse repurchase rate by 25 basis points (bps) at its policy review on Feb. 13.

If realized, this would bring the benchmark rate to 5.5% from the current 5.75%.

This would also mark the fourth straight meeting the BSP cut rates since it began its easing cycle in August.

In 2024, the central bank slashed borrowing costs by a total of 75 bps.

On the other hand, one analyst expects the central bank to keep interest rates steady at the meeting.

“We are expecting the BSP to cut the policy rate by 25 bps to 5.5% at its Monetary Board meeting,” Security Bank Corp. Vice-President and Research Division Head Angelo B. Taningco said.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said monetary policy normalization is “far from over” amid elevated interest rates.

“I’m expecting the Monetary Board to cut further this week, by another 25 bps, especially with fourth-quarter GDP coming in softer than expectations and with inflation remaining firmly within the BSP’s target range,” he said.

Citi Economist for the Philippines Nalin Chutchotitham said the BSP is likely to deliver a 25-bp cut on Thursday after weaker-than-expected 2024 growth and a moderate inflation outlook.

BSP Governor Eli M. Remolona, Jr. earlier said a rate cut is still “on the table” for this week.

“The central bank might use the slower-than-expected growth last quarter as the primary justification for the cut, along with a stable inflation environment that allows the central bank to focus more on boosting the economy,” Bank of the Philippine Islands (BPI) Lead Economist Emilio S. Neri, Jr. said.

Chinabank Research said price pressures have remained “generally mild and manageable.”

“Headline inflation staying stable at 2.9% in January, and core inflation even easing slightly, will be a key input to the Monetary Board,” Nomura Global Markets Research analyst Euben Paracuelles said.

Headline inflation remained steady at 2.9% in January, within the central bank’s 2-4% target band.

HSBC economist for ASEAN Aris D. Dacanay said inflation is “not so much of a concern” as the latest consumer price index outturn was well-within target.

Weak growth

Meanwhile, analysts noted that the latest economic output data could prompt further policy easing.

“Having attained its inflation objective in 2024 alongside a target-consistent inflation outlook this year, the BSP has room to trim its policy rate following another disappointing GDP growth estimate,” Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said.

Patrick M. Ella, economist at Sun Life Investment Management and Trust Corp. said that weak GDP is a “more pressing issue” for now so the BSP “needs to support growth from the monetary side.”

“The country’s subdued economic performance for both the fourth quarter and full-year 2024 likewise supports the case for less restrictive monetary policy to help meet the government’s 6-8% target for this year,” Chinabank said.

The Philippines’ GDP grew 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.

“Softer GDP data for the second straight quarter and the slowest in 1.5 years or since the second quarter of 2023 would further support local policy rate cuts,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

The BSP chief earlier said the country is growing at a “little bit below capacity.” If the output gap widens further, this would call for more easing, Mr. Remolona added.

“The BSP’s sustained rate action contributes to lower costs of funding and doing business while sowing the seeds for investment-driven growth that can help create jobs and incomes,” Mr. Asuncion said.

Mr. Dacanay said loosening monetary policy will “help raise demand for credit and support growth.”

“This is an important market signal to boost business activity and spending after the disappointing GDP growth report for the last quarter of 2024,” Oikonomia Advisory & Research, Inc. economist Reinielle Matt Erece said.

Peso

Meanwhile, the peso’s recent appreciation could also allow the BSP to continue on its easing cycle.

“The recent stability of the peso could also provide the BSP with more room to consider a rate cut,” Mr. Neri said.

“The currency has strengthened in recent trading sessions following the US government’s decision to postpone its tariffs against Canada and Mexico. While a rate cut could exert pressure on the peso, improving market sentiment may mitigate this.”

The peso closed at PHP 58.03 per dollar on Friday, strengthening by 15 centavos from its PHP 58.18 finish on Thursday. This was its strongest close in more than a month or since its PHP 57.91-per-dollar finish on Jan. 2.

Week on week, the peso likewise rose by 33.5 centavos from its PHP 58.365 finish on Jan. 31.

“Moreover, the BSP might be open also to a higher exchange rate as long as inflation remains within target. A weaker peso could also benefit the economy by boosting the purchasing power of exporters and OFW households,” Mr. Neri added.

Meanwhile, Mr. Dacanay said there is also room for the BSP to narrow its interest rate differential with the US Federal Reserve.

“Currently at 125 bps, history has shown us that the spread between the BSP and the upper-end range of the Fed rate can be as narrow as 100 bps before stoking financial jitters,” he said.

Reuters reported Federal Reserve officials on Friday said the US job market is solid and noted the lack of clarity over how President Donald J. Trump’s policies will affect economic growth and still-elevated inflation, underscoring their no-rush approach to interest rate cuts.

The Fed kept its policy rate steady last month, citing economic uncertainties.

“We think the BSP could still proceed with a 25-bp cut as the resulting interest rate differential, at 100 bps, remains at a comfortable level and would likely not risk a significant depreciation of the peso against the US dollar,” Chinabank Research added.

On the other hand, Moody’s Analytics economist Sarah Tan said the BSP could keep rates on hold on Thursday, noting it seems “too soon” to cut rates amid trade war jitters.

“The BSP will be prudent in monitoring global developments that could reinflate inflation and weaken the strength of the peso,” she added.

Cautious easing

Moving forward, analysts said the central bank will likely remain cautious and could deliver fewer than expected rate cuts this year.

“The BSP will likely maintain its cautious messaging, given persisting inflation risks and increased global uncertainties,” Chinabank Research said.

The central bank earlier warned that the risks to the inflation outlook remain tilted to the upside for this year and 2026.

“Across 2025, we expect monetary policy easing to continue but at a more moderate pace,” Ms. Tan said.

Mr. Remolona had signaled the possibility of cutting by a total of 50 bps this year, saying that 75 bps or 100 bps may be a bit “too much.”

“Although a rate cut remains on the table, we believe the extent of easing this year will be limited,” Mr. Neri said.

“The sizable current account deficit of the economy makes it more vulnerable to external shocks such as global trade tensions. A narrower interest rate differential could also drive portfolio outflows as investors seek higher returns elsewhere,” he added.

Mr. Neri expects a total of 50 bps worth of rate reductions this year.

“Front-loading Mr. Remolona’s preference for a 50-bp rate cut this year with the Fed on hold would be macro-appropriate although this would be at the price of a weaker peso,” Mr. Asuncion said.

On the other hand, Mr. Ella expects the central bank to deliver two rate cuts totaling 50 bps in the first half, keep rates steady in the third quarter before delivering another 25-bp cut in the fourth quarter. – Luisa Maria Jacinta C. Jocson, Reporter

The Philippines’ dollar reserves dipped in January, according to preliminary data by the Bangko Sentral ng Pilipinas (BSP).

Data from the central bank showed gross international reserves (GIR) declined by 3% to USD 103.02 billion at the end of January from USD 106.26 billion at the end of December 2024.

Year on year, dollar reserves inched down by 0.2% from USD 103.27 billion.

“The month-on-month decrease in the GIR level reflected mainly the BSP’s net foreign exchange operations, and drawdown on the National Government’s (NG) deposits with the BSP to pay off its foreign currency debt obligations,” the BSP said.

As of end-January, the level of dollar reserves was enough to cover about 3.6 times the country’s short-term external debt based on residual maturity.

It was also equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income.

“By convention, GIR is viewed to be adequate if it can finance at least three-months’ worth of the country’s imports of goods and payments of services and primary income,” the BSP said.

Ample foreign exchange buffers protect an economy from market volatility and ensure the country can pay its debts in the event of an economic downturn.

BSP data showed foreign currency deposits plunged by 46.3% to USD 733.5 million from USD 1.37 billion a month ago. It also fell by 36.9% from USD 1.16 billion in January last year.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the lower foreign exchange holdings was due to the peso volatility in the past months.

The peso closed at P58.365 versus the greenback at end-January, depreciating by 52 centavos from P57.845 at end-December.

“GIR as of end-January declined for the fourth straight month after some net payment of the National Government’s foreign debt maturities and other obligations denominated in US dollars or other foreign currencies,” Mr. Ricafort added.

Meanwhile, the central bank’s foreign investments dropped by 3.7% to USD 86.13 billion as of January from USD 89.48 billion in the previous month. Year on year, investments inched lower by 1.3% from USD 87.28 billion.

Net international reserves went down by 3% to USD 103 billion as of end-January from USD 106.2 billion as of end-December 2024.

Net international reserves are the difference between the BSP’s reserve assets or GIR and reserve liabilities, such as short-term foreign debt and credit and loans from the International Monetary Fund (IMF).

The country’s reserve position in the IMF declined to USD 671.3 million at end-January from USD 675.6 million in the prior month and from USD 753.9 million a year ago.

Special drawing rights — the amount the country can tap from the IMF — was unchanged at USD 3.73 billion for the second straight month.

On the other hand, reserves in the form of gold were valued at USD 11.75 billion. This was up by 6.8% from USD 11 billion as of end-December, and higher by 14% from USD 10.3 billion a year earlier.

For the coming months, Mr. Ricafort said dollar reserves could be supported by growth in overseas Filipino worker remittance, business process outsourcing revenues, exports and tourism revenues.

The government’s global bond offer in January could also be reflected in the February GIR level, he said.

In January, the NG raised USD 3.3 billion from its triple-tranche offering of US dollar and euro bonds. This was its first global bond issuance for the year.

The central bank expects the country’s GIR to hit USD 110 billion by end-2025. — Luisa Maria Jacinta C. Jocson

The Asian Development Bank (ADB) is eyeing to approve loans related to the Philippine government’s transport, infrastructure and social sector projects as part of its lending program this year.

“I think there will be more programs further down. We continue to support the ‘Build Better More’ agenda of the government,” ADB Country Director for the Philippines Pavit Ramachandran told reporters on the sidelines of an event last week.

“These are continuing projects which we want to make sure are seen to completion and fruition,” he added.

Mr. Ramachandran said one of the loans lined up this year is another package for the North-South Commuter Railway.

“The North-South Commuter Railway is an important investment, something we are committed to support. That will be one of the projects. It’s an ongoing investment but the next tranche of investment has to be approved,” he said.

The North-South Commuter Railway is among the Marcos administration’s 16 flagship infrastructure projects.

The 147-kilometer railway will connect Clark Airport to Calamba, Laguna. The government is targeting its partial operation by the end of 2028. The project has a total funding of around PHP 873 billion and is co-financed by ADB and the Japan International Cooperation Agency (JICA). 

Mr. Ramachandran said the next tranche of financing for the railway would be a “sizable loan.”

“It will be upwards of a billion (dollars) because it’s the Malolos-Clark component of it. These are all contracted sections but it’s about making sure the financing is done.”

Meanwhile, the ADB is also aiming to provide funding for social development projects.

“We are also looking at some social sector projects including support for the food voucher program,” Mr. Ramachandran said.

The amount is yet to be finalized, but the financing for the food voucher program will likely range from USD 300 million to USD 400 million, he added.

In 2023, the Department of Social Welfare and Development (DSWD) launched the pilot of the food stamp program. Under the program, beneficiaries receive electronic transfer cards that are loaded with food credits. The DSWD scaled up the implementation of the program last year.

The multilateral lender also has investments planned for the health sector and infrastructure, Mr. Ramachandran added.

Meanwhile, Mr. Ramachandran said they are still finalizing the full lending program for 2025.

“We haven’t locked in the details of the lending program because we haven’t done what we call our programming mission,” he said.

“That will happen perhaps towards the end of March-April where we’ll sit down with the government and other stakeholders and discuss the details of individual projects, the total. At this stage, we don’t have the full scope of that fully laid out yet.”

The ADB earlier said it is allocating USD 24 billion in lending to the Philippines for 2024 to 2029. — Luisa Maria Jacinta C. Jocson

Philippine unemployment eased to 3.1% in December amid a surge in hiring in the transport and storage sector, bringing the full-year average to a record-low of 3.8%, according to the statistics agency.

Preliminary data from the Philippine Statistics Authority’s (PSA) Labor Force Survey showed the jobless rate in December was unchanged from the same month in 2023, but slightly lower than 3.2% in November.

The number of unemployed Filipinos increased to 1.63 million in December, up from 1.6 million in the prior year but slightly lower than 1.66 million in November.

December also saw the lowest unemployment rate since April 2005, when the statistics agency revised its definition of unemployed to Filipinos aged 15 years and older without a job, available for work and actively seeking one.

For 2024, National Statistician Claire Dennis S. Mapa said the jobless rate averaged 3.8% which is equivalent to 1.94 million jobless Filipinos. This was lower than the 4.4% jobless rate, representing 2.19 million jobless Filipinos, in 2023.

The full-year unemployment rate in 2024 was also the lowest since 2005.

The modest drop in unemployment in December 2024 was attributed to a surge in hiring for transport and storage workers during the holiday season, Mr. Mapa said, noting the sector recorded an additional 184,000 workers month on month.

Year on year, the sector gained 555,000 workers.

“Most of this is from passenger transport by road, and this is an effect of our holiday season,” Mr. Mapa said in mixed English and Filipino at a news briefing in Quezon City.

“We can observe growth in airport shuttle services, taxi operations, and passenger land transportation overall. This indicates positive movement in the sector. Additionally, we’ve seen an increase in the use of buses for public transport,” he added.

Meanwhile, job quality worsened year on year as the underemployment rate slipped to 10.9% (5.48 million), from 11.9% (6.01 million) in December 2023. Month on month, the underemployment rate went up from 10.8% (5.35 million) in November.

This was also the lowest underemployment rate since April 2005 when the PSA redefined underemployment as individuals who are employed but seek additional jobs or work hours.

For 2024, the average underemployment rate fell to 11.9% from 12.3% in 2023. This translated to 5.83 million underemployed Filipinos last year, lower than 5.94 million in 2023, Mr. Mapa said.

Labor Secretary Bienvenido E. Laguesma said the December 2024 Labor Force Survey showed the government’s efforts, with the support of the private sector, are paying off and gaining ground.

“We will continue to work in collaboration with the private sector towards job creation to ensure a more permanent source of income and decent living conditions for our workforce,” he told BusinessWorld in a Viber chat. “If there are more jobs, access to these opportunities will be open to and available for workers, even to those in the informal sector.”

National Economic and Development Authority  Secretary Arsenio M. Balisacan said in a statement that strategies to strengthen the labor market are “crucial to sustaining our economic momentum and providing higher earning opportunities for Filipinos.”

“The government remains committed to advancing both supply- and demand-side measures that will foster a more dynamic labor environment and meet the targets set in the Philippine Development Plan 2023-2028,” he said.

Finance Secretary Ralph G. Recto said the government will continue to push for initiatives that create quality jobs for Filipinos.

“We are focusing heavily on improving education, infrastructure, and human development to ensure that we build a Filipino workforce equipped with the tools and opportunities they need to compete on the global stage,” Mr. Recto said in a statement, emphasizing workforce upskilling.

Employment rate

Meanwhile, the PSA also reported that the employment rate slightly improved to 96.9%, equivalent to 50.19 million employed Filipinos in December from 96.8% in November when there were 49.54 million employed Filipinos.

The employment rate was unchanged from December 2023. However, there were slightly more employed Filipinos at 50.52 million in December 2023.

For 2024, the average employment rate rose to 96.2%, from the 95.6% logged in 2023. This is equivalent to 48.85 million employed Filipinos in 2024, higher than the 2023 average of 48.18 million.

Meanwhile, the labor force participation rate (LFPR) fell to 65.1% in December from 66.6% in December 2023. This represented a labor force of 51.81 million, lower than 52.13 million in December 2023.

University of the Philippines School of Labor and Industrial Relations Assistant Professor Benjamin B. Velasco said the modest decline in LFPR showed persistent challenges in job creation.

“Population will always be increasing, so that is a given. Population growth drives consumption and also production, so it is not a negative factor itself though large increases in population do present a challenge to policy making, including labor market governance,” he said in a Facebook Messenger chat.

“The problem of job creation is also bared in the significant decrease in youth LFPR.”

The youth LFPR declined to 31.9% in December from 34.5% in December 2023. The youth employment rate also dropped to 90.9% in December from 91.8% in the year prior.

Sectoral gains and losses

PSA data also showed agriculture and forestry lost 1.56 million workers year on year in December.

Mr. Mapa attributed the losses to the series of typhoons that hit the country in the fourth quarter, noting that about 557,000 of them were paddy rice farmers.

Workers engaged in planting, transplanting and other related activities lost 424,000 workers year on year in December. Hog farming lost 236,000 jobs as African Swine Fever (ASF) continued to affect production.

Month on month, the agriculture and forestry sector saw the highest increase as an additional 735,000 workers were hired.

At the same time, the sector covering wholesale and retail trade, and repair of motor vehicles and motorcycles, recorded the greatest number of job losses at 391,000 month on month in December.

Mr. Mapa said 294,000 of those job losses came from the retail sales sector that includes stalls, markets, food and beverages, and tobacco products.

About 219,000 workers involved in accommodation and food service activities also lost their jobs in December 2024, despite the surge in holiday activities.

The services sector had the most number of employees, contributing 60.5% to the total workforce.

The agriculture and industry sectors followed, representing 21.3% and 18.3% of the total number of employed individuals, respectively.

WORKERS Wage and salary workers

Wage and salary laborers continued to account for the bulk or 63.1% of employed Filipinos in December 2024, followed by self-employed individuals without any paid employees (28.5%), unpaid family workers (6.8%) and employers in their own family-operated farm or business (1.6%).

Among wage and salary workers, those employed in private establishments accounted for 78.9%, while those employed in government or government-controlled corporations represented 14.4%.

Wage and salary workers are people who are paid for their work in private establishments, government, or their own family-run business, the PSA said on its website.

Federation of Free Workers President Jose Sonny G. Matula urged the government to raise wages to boost workers’ purchasing power and increase demand for local goods and services.

“Contrary to employers’ contention, wage hikes support our farmers, fisherfolk, and informal sector workers because workers buy their products due to increased purchasing power,” he said in a Viber chat.

While the record-low unemployment rate for December 2024 is a good thing, Mr. Matula said it is not surprising.

“Employment almost always goes up because of the increased purchasing power of workers who are consumers, too. Workers doubled or tripled their incomes due to 13^th month and Christmas or year-end bonuses,” he said.

“But before we break out the confetti, let’s not forget: the quality of these jobs still leaves a lot to be desired. Jobs generated were temps.”

On Monday, the House of Representatives approved on second reading a bill granting a P200 hike for minimum wage earners. The Senate approved a counterpart bill for P100 in February last year. – Chloe Mari A. Hufana, Reporter

The Bangko Sentral ng Pilipinas’ (BSP) rate-cutting cycle will be supported by expectations of inflation settling well within target this year, analysts said.

“The low inflation print for January indicated that price pressures were still generally benign and manageable, which supports expectations for inflation to remain within the BSP’s 2-4% target going forward,” Chinabank Research said in a report.

“This should provide room for further interest rate cuts by the BSP,” it added.

The Philippine Statistics Authority on Wednesday reported headline inflation remained steady at 2.9% in January, within the central bank’s 2-4% target band.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco expects inflation to average 2.7% this year amid “increasingly clear bottoming-out in official core inflation.” 

“Our revised yearly forecast implies that headline inflation should remain relatively steady from here on out, ranging between 2.5% and 3% for the remainder of this year, comfortably within the BSP’s target range,” he added.

The BSP projects inflation to settle at 3.3% this year. It earlier said inflation will likely “remain anchored to the target range over the policy horizon.”

However, risks to the inflation outlook continue to lean towards the upside, it said. Accounting for risks, inflation could average 3.4% this year.

“Looking ahead, while inflation for 2025 is expected to remain within the BSP target range, potential risks such as local weather disturbances and geopolitical tensions must be closely monitored,” Manulife Investment Management Head of Fixed Income Jean O. de Castro said.

Chinabank Research likewise said upside risks to the inflation outlook include adverse weather and geopolitical conflicts, which would “continue to support a cautious approach to policy easing.”

Despite this, analysts expect the BSP to deliver another rate cut at its first policy review for the year next week (Feb. 13).

“This favorable inflation outlook, along with the Philippine economy’s weaker-than-expected performance in both the fourth quarter and full-year 2024, reinforces our view that the BSP will likely cut interest rates by 25 basis points (bps) at its policy meeting next week,” Chinabank said.

The Philippines’ gross domestic product (GDP) grew by a weaker-than-expected 5.2% in the fourth quarter.

This brought full-year 2024 growth to 5.6%, short of the government’s 6-6.5% target.

BofA Securities economist for the Philippines Jojo Gonzales said they expect the central bank to cut rates by 25 bps next week.

“However, if inflation remains stubbornly high in February or March, our expectation for an April cut in policy rates could be at risk,” Mr. Gonzales said.

“Our expectation is for a 25-bp rate cut in February and another 25-bp cut in April, while the US Fed stays on hold,” he added.

BSP Governor Eli M. Remolona, Jr. has said a rate cut is still on the table for its meeting next week.

For 2025, Mr. Remolona said the central bank could cut by a total of 50 bps this year, as 75 bps or 100 bps may be “too much.”

The Monetary Board began its easing cycle in August last year, reducing borrowing costs by a total of 75 bps by end-2024.

Ms. De Castro said that the start of monetary easing will help support economic growth.

“Furthermore, the delayed effects of the BSP’s 75-bp monetary easing in the previous year, alongside expected further rate cuts in 2025, are likely to support economic expansion,” she said.

“By fostering a conducive investment environment and maintaining prudent fiscal and monetary policies, the Philippine economy can work toward achieving its growth objectives.” – Luisa Maria Jacinta C. Jocson, Reporter