UNDP: AI can steer human development and inclusive growth

The United Nations Development Programme (UNDP) Philippines, in partnership with the Philippine Human Development Network (HDN), successfully held the Philippine launch of the 2025 Global Human Development Report (HDR) at the Securities and Exchange Commission (SEC) Headquarters in Makati City.

With this year’s report titled “A Matter of Choice: People and Possibilities in the Age of AI,” the launch brought together government officials, industry leaders, private sector representatives, academics, and civil society representatives to discuss how artificial intelligence (AI) can be a tool for inclusive and sustainable human development.

The 2025 HDR, first unveiled globally in May in Brussels, emphasizes the growing role of AI in reshaping economies and societies. It calls for deliberate choices to ensure that AI technologies empower people, narrow inequalities, and support development goals, particularly in developing countries like the Philippines.

During the launch, Dr. Selva Ramachandran, UNDP Philippines resident representative, noted: “At its core, the HDR is a call to action for governments, businesses, communities, and individuals to make deliberate choices about how AI is designed, used, and governed. If we make the right choices today, AI could become a force and an engine for freedom, opportunity, and progress, not just for a few, but for everyone.”

Dr. Philip Arnold Tuaño of the HDN, Commissioner Javey Francisco of the SEC, and Hon. Reynaldo Cancio from the Department of Economy, Planning, and Development (DEPDev) also delivered opening remarks, underscoring the importance of inclusive innovation and robust policy frameworks.

“This year’s launch of the HDR comes at a pivotal moment. While the promise of AI grows even more visible, we are reminded that the path of progress is not inevitable. It is a matter of human choice and governance. This report highlights how AI can be harnessed to enhance human capabilities, rather than diminish,” noted Dr. Tuaño in his opening message.

Through digital transformation, the SEC is building a culture of transparency, measurable accountability, and ongoing performance enhancement. Commissioner Francisco highlighted that the SEC: “sees AI playing a growing role in our work — improving our ability to detect fraud, assess risk, and promote financial inclusion. AI can help us direct capital toward sustainable enterprises, enhance market integrity, and protect investors more effectively than ever before.”

The highlight of the event was a presentation of the HDR 2025 findings by Mohamed Shahudh, UNDP Philippines Economist, followed by a panel discussion titled “Shaping the AI Agenda for Human Empowerment and Inclusive Growth in the Philippines.”

The speakers explored the potential of AI to boost productivity, improve public services, and create new economic opportunities — while also addressing the risks of exclusion, job displacement, and uneven access to digital resources. Panelists stressed the need for forward-looking investments in education, research and development, and AI governance.

A recent IMF study cited during the event revealed that while one-third of Filipino workers are highly exposed to AI, 61% of those jobs could benefit from AI-enhanced productivity, particularly among young, urban, and college-educated workers.

The open forum that followed enabled participants to engage directly with the panelists on issues ranging from AI adoption in education and health to its implications for gender equity and development.

The 2025 HDR highlights that the Philippines, while making gains in its Human Development Index (HDI) — which rose to 0.720 in 2023 — continues to face challenges from inequality and climate vulnerability. The report argues for a pivot toward AI-augmented human development, where AI serves as a complement to human capabilities rather than a replacement.

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Source: Business World

PHL shows solid growth momentum

The Philippines’ growth momentum remains “broadly stable,” even as global trade tensions would make it hard to hit the 6-8% growth target in the next two years, an Organisation for Economic Co-operation and Development (OECD) economist said.

“The Philippines continues to show very solid growth momentum, supported by domestic demand and somewhat by public investment,” OECD economist Cyrille Schwellnus said at a briefing on Wednesday.

In its latest Economic Outlook, the OECD projected below-target growth for the Philippines for 2025 and 2026. It sees the Philippine economy growing by 5.6% this year, and picking up to 6% in 2026.

Mr. Schwellnus cited robust labor market and election-tied expenditure as main drivers of growth.

“But investment is going through a soft patch, growing well below its average over the past three years. Exports, again, are growing at a healthy pace. But we expect that to weaken on the back of escalating global trade tensions,” he said.

In April, the US slapped higher reciprocal tariffs on most of its trading partners’ goods exports, though this has been suspended until July, except for the baseline 10% which still remains in effect. The US slapped the Philippines with a 17% reciprocal tariff, the second lowest among its neighbors.

Mr. Schwellnus said the government’s 6-8% growth target is “perfectly attainable” in the medium term.

“But in the very short term, in 2025, 2026, we see [the target] as difficult to reach,” Mr. Schwellnus said.

In the first quarter, gross domestic product (GDP) grew by a weaker-than-expected 5.4% amid heightened uncertainty arising from the Trump administration’s tariff policies.

“Now in 2025, we have additional headwinds, especially from the external side, so a slowdown of global trade, but also on the domestic side, where we see some fiscal consolidation going on over the next couple of years,” Mr. Schwellnus said.

The OECD cut its global growth outlook to 2.9% in both 2025 and 2026, noting that “substantial barriers to trade, tighter financial conditions, diminishing confidence and heightened policy uncertainty are projected to have adverse impacts on growth.”

The OECD noted the possible impact of the global economic slowdown on remittances from overseas Filipino workers.

“If there were to be a larger-than-expected slowdown in major economies, such as the US or China, that would, of course, have an effect on exports of the Philippines, and it might also impact remittance flows, which would then impact domestic consumption and investment,” Mr. Schwellnus said.

However, the OECD said the impact on remittance flows was not accounted for in its growth projection for the Philippines.

Mr. Schwellnus said the Philippines can immediately implement reforms, especially to reduce barriers to foreign direct investment.

In the same report, the OECD projected that inflation would settle at 2% this year and 3.1% in 2026 “amid balanced domestic demand and currency stability.”

“Looking ahead, we expect inflation to gradually return to 3% as food prices stabilize and monetary policy continues to ease,” he said.

BSP Governor Eli M. Remolona, Jr. earlier said cooling inflation has given them “plenty of room” to cut rates this year. Mr. Remolona said they could deliver two more rate cuts this year, in “baby steps” of 25 basis points.

SERVICES UNAFFECTED

Meanwhile, the Philippines’ services sector is unlikely to be impacted by the US tariff policies, S&P Global Ratings said, though the industry could eventually face strains in the coming years.

“In the Philippines, the story is more nuanced. The Philippines is active in the export of certain things. One is services, especially business process outsourcing. It is a big factor for the Philippine economy,” S&P Global Ratings Senior Economist Vishrut Rana said in a webinar.

The service sector will likely be sheltered from the initial impact of the trade tensions, he said.

“One element of shelter is that for services. Trade seems to be unaffected by the tariff measures for the time being. It could come under pressure over the next few years,” he added.

United States President Donald J. Trump’s reciprocal tariffs have only covered goods, not services.

Meanwhile, the credit rater also noted that the Philippines’ electronics exports are also spared for the time being.

“The Philippines is also a significant player in the electronic supply chain in Asia and the Pacific (APAC). However, for the time being, it doesn’t seem to be a focus area,” Mr. Rana said.

The US’ reciprocal tariffs will not apply to certain goods, such as semiconductors, copper, pharmaceuticals, gold, and minerals that are not available in the US, according to the White House’s April 2 tariff announcement.

Electronic products were the top commodity export of the Philippines last year, accounting for more than half or 53.4% of its total exports.

“On broader trade, there could be some pressure on the electronic space. We are watching that at the moment,” Mr. Rana said. “For now, the APAC electronic sector is performing relatively well, which is supporting the sector in the Philippines also.”

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Source: Business World

Q1 growth below expectations

Economic growth edged up in the first quarter (Q1), the Philippine Statistics Authority (PSA) reported, but was lower than expected and also fell short of the government's full-year target.

At 5.4 percent, gross domestic product (GDP) growth was slightly higher than the 5.3 percent recorded in the last three months of 2024. It was lower than the 5.9 percent seen a year earlier, however, and missed the 6.0- to 8.0-percent goal for 2025.

Analysts polled by The Manila Times expected a 5.8-percent result.

The slower-than-expected expansion, along with below-target inflation, could prompt the Bangko Sentral ng Pilipinas (BSP) to continue low-ering key interest rates.

ANZ Research, which described first-quarter GDP growth as "lackluster," said the BSP's policy rate could be cut to 5.0 percent by the end of the year.

With the effects of US President Donald Trump's tariff policies still to be fully felt, it reiterated a forecast of full-year GDP growth of just 5.0 percent for the Philippines.

'A measured start'

Socioeconomic Planning Undersecretary Rosemarie Edillon called the first-quarter showing a "measured start" with "many layers."

"While this pace (5.4 percent) falls short of our initial expectations, it reflects developments from the broader global context of tempered economic activity amid persistent uncertainties," she added.

The Philippines remained resilient, Edillon pointed out, with growth second-highest among Asian neighbors that have so far released first-quarter data.

The country grew faster than Indonesia (4.9 percent) and Malaysia (4.4 percent), and likely also outpaced Thailand, which is expected to re-port 2.8-percent growth. It tied with China, and only Vietnam grew faster at 6.9 percent.

Positive results

All major economic sectors posted positive results, the PSA said, with agriculture, in particular, expanding by 2.2 percent from just 0.5 percent a year earlier. Industry and services, however, saw growth ease to 4.5 percent and 6.3 percent, respectively, from 5.2 percent and 7.0 per-cent.

Services accounted for 62.2 percent for first-quarter GDP, up from 61.6 percent a year earlier, while industry saw its share dip to 29.5 per-cent from 29.8 percent. Agriculture contributed the least at 8.3 percent.

"These figures reflect a stable, albeit cautious, expansion across sectors," Edillon said.

On the demand side, household spending growth rose to 5.3 percent from 4.7 percent and government expenditures also surged by 18.7 percent from 2.6 percent in January-March last year.

Gross capital formation also grew by a markedly higher 4.0 percent from 0.8 percent. Exports growth slowed to 6.2 percent from 8.1 per-cent, but imports accelerated to 9.9 percent from 2.2 percent.

External trade, said Edillon, was a "mixed picture" and reflected "business strategies that were employed in anticipation of greater uncertain-ty in global trade."

Domestic demand, meanwhile, was described as a "key pillar of growth"

6.0 percent still achievable

Finance Secretary Ralph Recto, meanwhile, also said that GDP growth highlighted the "continued strength and resilience of the Philippine economy, even amid rising global uncertainties."

"Our growth is strong, inflation continues to ease, private consumption is rising, and our job market remains vibrant. These are clear signals of accelerating domestic demand ahead, which is our strongest shield against external headwinds and trade wars."

He said the government remained confident of achieving 6.0-percent growth in the following quarters on the back of continued fiscal con-solidation, lower inflation and progress in trade negotiations.

Recto noted that revenue collections stayed on track during the quarter and added that April's 1.4-percent inflation — below the BSP's 2.0- to 4.0-percent target — provided more room for further interest rate cuts.

Trade Secretary Cristina Roque said the government was committed to building growth momentum via initiatives such as attracting high-quality investments and empowering the micro, small and medium enterprises that make up the bulk of Philippine businesses.

"We are actively fostering a business-friendly environment that drives innovation, generates quality jobs and enhances the local and global competitiveness of Philippine products and services," she said.

'Numbers to pick up'

Albay 2nd District Rep. Joey Salceda, an economist, said he expected GDP growth to improve in the April-June period despite lingering drag from an election spending ban.

"I expect the numbers to pick up in the second quarter, especially capital formation, as expectations of Trump's tariff regime become more stable," he said.

"Businesses also put some of their plans on hold due to uncertainty over the world trade system."

Salceda said that he would ask President Ferdinand Marcos Jr. to implement measures that would "make exportation easier and cheaper; faster processing times for licenses, permits and rules of origin documents for our trade; and easier availment of existing tax incentives."

Source: Manila Times