Return to growth expected in 2027

Monetary authorities expect economic growth to return to target in 2027 with the Philippines again expected to underperform this year and the next, highlights of last month’s policy meeting showed.

Gross domestic product (GDP) growth will likely “fall slightly below the government’s growth targets for 2025 and 2026,” mainly due to the impact of recent storms on agriculture, weaker construction activity and reduced demand for services, “before rising to within target by 2027.”

Policymakers also tagged an ongoing corruption scandal as possibly dampening investment sentiment and infrastructure project implementation, and said that continued uncertainties over US tariffs “also warrants continued monitoring.”

An effort to reduce fiscal leakages, they said, could help alleviate downside risks to growth from slower government spending by boosting budget efficiency and the economy’s prospects over the longer term.

GDP growth slumped to 4.0 percent in the third quarter from 5.5 percent in April-June, well below the 2025 goal of 5.5-6.0 percent and all but cementing a third straight year of below-target results.

Growth was higher last year at 5.7 percent but missed the objective of 6.0-6.5 percent. A year earlier it was 5.5 percent, also below the 6.0-7.0 percent goal. The economy last outperformed in 2022 when it topped the 6.5- to 7.5-percent target by growing 7.6 percent.

Economic managers will be reviewing their assumptions next week and the 2025 GDP goal is expected to be revised downwards. The 6.0- to 7.0-percent target for 2026 to 2028, meanwhile, could also be changed.

The Bangko Sentral ng Pilipinas’ policymaking Monetary Board lowered key interest rates for a fourth straight meeting last Oct. 9, citing softer GDP growth prospects and a benign inflation outlook.

With price growth expected to remain within expectations and following the third-quarter GDP slowdown, another cut is widely expected to be announced on Dec. 6.

Average inflation is expected to settle below the 2.0- to 4.0-percent target range at 1.7 percent this year. The forecasts for 2026 and 2027 were also lowered to 3.1 percent and 2.8 percent, respectively, last month from 3.3 percent and 3.4 percent in August.

The projected rise will be due to changes in the country’s rice policies and base effects, the highlights of last month’s meeting stated. Lower global oil prices are expected to offset higher power prices and the “risks to inflation are seen to be limited as price pressures continue to ease.”

“On balance, the favorable inflation outlook and moderating domestic demand provided scope for a more accommodative monetary policy stance to support economic activity,” the highlights state.

“Future monetary policy adjustments will continue to be guided by evolving risks to inflation and growth.”

The BSP’s policy rate currently stands at 4.75 percent following last month’s 25-basis point reduction.

Source: Manila Times

Remittances growth hit 5-mo high of 3.7% in Sept

Money sent home by overseas Filipino workers (OFWs) jumped by an annual 3.7% in September, the fastest pace in five months, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Data from the central bank showed cash remittances rose to $3.12 billion in September from $3.01 billion in the same month in 2024.

This was the fastest growth since the 4% logged in April.

Month on month, cash remittances increased by 4.84% from $2.977 billion in August.

For the first nine months of the year, cash remittances sent through banks increased by 3.2% to $26.03 billion from $25.23 billion a year ago.

“The United States remained the top source of remittances to the Philippines during January-September 2025, followed by Singapore, and Saudi Arabia,” the BSP said in a statement.

Cash remittances from the US accounted for 40.4% of the total in the nine-month period.

This was followed by Singapore (7.1%), Saudi Arabia (6.4%), Japan (4.9%) the United Kingdom (4.8%), the United Arab Emirates (4.5%), Canada (3.5%), Qatar (2.9%), Taiwan (2.8%) and South Korea (2.5%).

Meanwhile, personal remittances went up by 3.8% to $3.46 billion in September from $3.34 billion a year earlier.

In the January-to-September period, personal remittances rose by 3.2% to $28.97 billion from $28.07 billion a year ago.

Personal remittances include both cash coursed through banks and informal channels as well as in-kind remittances.

Analysts said OFWs sent home more money starting September, as the holiday season approaches.

“The ‘ber’ months effect kicked in early, with OFWs sending more ahead of the long holiday season,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

He added that the strong labor market and a competitive peso also supported remittance growth in September.

The peso closed at P58.196 per dollar on Sept. 30, weakening by P1.066 or 1.87% from P57.13 on Aug. 29.

In September, the country’s unemployment rate improved to 3.8% from 3.9% in August. For the first nine months, the jobless rate stood at 4.1%, a tad higher than 4% in the same period last year.

“The onset of ‘ber’ months marks the start of the holiday season for Filipinos. Thus, we may expect OFWs to send their earnings to their families here for the celebrations and gatherings,” Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said.

Mr. Erece said remittance growth could be faster from October to December, before stabilizing in January 2026.

“For the fourth quarter, expect remittances to stay resilient and peak in December. BSP’s 3% full-year growth target looks well within reach,” Mr. Ravelas likewise said.

The BSP expects cash remittances to grow by 3% to $35.5 billion this year.

Source: Business World

Poor Filipinos ‘carefully spend every peso they have’ to survive

The poor, or the bottom 30 percent of the population, spend most of their limited resources on everyday essentials such as food, house rent, and education.

This was pointed out by Dr. Rogelio Alicor Panao, associate professor at the University of the Philippines, who said that latest data on consumer spending “challenges long-held beliefs about Filipino spending habits.”

Panao, in his analysis of the Bangko Sentral ng Pilipinas’ 2021 Consumer Finance Survey, stated that among the bottom 30 percent, almost three-fifths of every peso, or 58.2 percent is swallowed by essential food.

“[This is] proof that survival still dictates daily choices,” he said.

Do the poor squander? BSP spending data upends stereotypes

Even the richest 30 percent and middle 40 percent spend half their resources on food. However, “the gradual drop” – 51 percent and 57 percent – “shows how rising incomes slowly loosen the grip on the dining table.”

“As earnings climb, families channel more to housing, utilities, and transportation, upgrading homes and gaining mobility,” he explained, stressing that the wealthiest spend the most on furnishings and maintenance, a quiet signal of comfort and stability.”

Yet education flips the script: the poorest devote 5.7 percent of their budget to schooling — over twice what the richest spend — suggesting that among the poor more particularly, education is the surest escape from poverty.

“The biggest surprise though appears to be in the pesos spent on life’s little luxuries,” Panao said, pointing out that contrary to the cliché that the poor waste spare pesos on vices, they actually spend the least on non-essential food and alcohol, just 1 and 1.4 percent respectively.

Middle and upper groups indulge more at 1.9 percent and 2.4 percent respectively.

“For policymakers, the message should be clear–make food affordable, housing livable, and education accessible. The poorest are not squanderers—they are disciplined survivors fighting to get through,” he said.

Source: Inquirer