In a recent blog, AMRO highlighted the country’s strong international standing, having secured six major titles at the World Travel Awards Asia and Oceania Gala 2025—including Asia’s Leading Beach, Dive, and Island Destination. Key sites such as Boracay and Clark Freeport Zone also earned individual honors, while the Department of Tourism was named Asia’s Leading Tourist Board.

However, these accolades have yet to translate into stronger international arrivals or broadly shared economic gains across the archipelago.

“While domestic tourism continues to anchor overall demand, the rebound in international visitors has been slower than expected,” the report noted.

Domestic tourism spending reached P3.2 trillion in 2024—slightly above pre-pandemic levels—and accounted for about three-fourths of total tourism expenditure. In contrast, foreign arrivals stood at 5.9 million, still 28% below 2019 levels, weighed down largely by the slow return of Chinese tourists. Among ASEAN peers, the Philippines has posted the weakest recovery in this segment.

Even prior to the pandemic, the country lagged behind regional neighbors such as Indonesia, Malaysia, Thailand, and Singapore in terms of international visitor arrivals.

Tourism activity also remains highly concentrated, with the National Capital Region and Central Visayas accounting for over 60% of foreign overnight stays, underscoring uneven regional development.

To unlock the next phase of growth, AMRO stressed the need to address both hard and soft infrastructure gaps.

On the physical side, improving transport connectivity through expanded investments in airports, seaports, and road networks will be crucial to enhance accessibility and disperse tourist flows. Upgrading essential utilities—such as water, sanitation, electricity, and waste management—is equally important, particularly for island and eco-tourism destinations facing capacity constraints.

Digital and visitor infrastructure must also be strengthened. Investments in broadband connectivity, digital booking and payment systems, as well as facilities like visitor centers and convention halls, can significantly improve service quality, safety, and overall visitor experience.

Equally critical is the development of “soft” infrastructure. Enhancing human capital, raising service standards, and strengthening institutional coordination will help ensure long-term competitiveness. The report emphasized the need for expanded training programs, destination rehabilitation, product diversification, and sustained reforms in zoning, environmental management, and safety standards.

Tourism remains a key pillar of the Philippine economy. In 2024, the sector generated P3.5 trillion in gross value added—7% above pre-pandemic levels—accounting for 13.2% of GDP and supporting 4.9 million jobs, or 13.8% of total employment.

AMRO noted that tourism-linked industries, including hotels and restaurants, deliver higher domestic value-added per unit of input than many other sectors, reinforcing tourism’s role as a vital engine for post-pandemic economic recovery.

The paper, “Governance and Value: A Disaggregated Environmental, Social, and Governance (ESG) Analysis of Corporate Financial Performance (CFP) in Philippine Publicly Listed Firms,” highlights the urgent need to broaden ESG adoption—particularly among micro, small, and medium enterprises (MSMEs)—to deepen capital market participation and attract both local and foreign investors.

Covering publicly listed firms from 2015 to 2024, the study finds that governance performance is the most significant driver of firm growth and market-based outcomes, delivering immediate gains in asset expansion and market capitalization.

In contrast, social performance contributes to profitability over a longer horizon, while environmental metrics show weaker and less consistent links to financial performance.

Authored by Michael Angelo Cortez and John Paolo Rivera, the study outlines a phased roadmap to strengthen ESG integration through coordinated action by regulators, corporates, and investors.

Short-term reforms: transparency and disclosure

The study calls for improved ESG disclosure standards to boost investor confidence. It recommends that the Department of Trade and Industry develop sector-specific ESG reporting templates, particularly for mid-sized firms.

It also urges the Securities and Exchange Commission to mandate disaggregated ESG reporting, requiring firms to separately disclose environmental, social, and governance metrics instead of aggregated scores.

“Disaggregated reporting enhances investor insight and enables more accurate benchmarking,” the authors said.

To further improve transparency, the Philippine Stock Exchange is encouraged to incentivize firms that go beyond minimum disclosure requirements under International Financial Reporting Standards (IFRS) 12, particularly on foreign ownership.

Medium-term priorities: linking ESG to capital

The study emphasizes aligning ESG with financing frameworks by integrating ESG considerations into cost of capital and credit ratings, while updating corporate governance codes.

It also proposes the creation of ESG-focused index funds, particularly in key industries such as manufacturing.

State institutions like the Government Service Insurance System and Social Security System, along with private asset managers, are urged to develop sector-specific ESG indices to channel capital toward firms with verified sustainability performance.

Long-term strategy: institutionalizing ESG

Over the long term, the study calls for embedding ESG-finance linkages into the Philippine Development Plan and broader industrial strategies.

Key recommendations include establishing ESG-integrated performance dashboards for listed firms and expanding ESG education and capacity-building initiatives.

“Long-term competitiveness hinges on human capital,” the authors said. “Universities, business schools, and industry associations must integrate ESG-finance education into curricula and executive programs to develop a new generation of ESG-driven leaders.”

Timely and open access to information and data empower ASEAN+3 member economies, policymakers, media, and the public to make better-informed decisions as the region’s economic outlook continues to be fraught with uncertainty and challenges.

“After the pandemic, the ASEAN+3 economies continue to face multifaceted challenges from tightening financial conditions, geopolitical tensions, severe climate change and aging population,” said AMRO Director Kouqing Li. “In today’s uncertain and complex environment, communications is a critical policy tool in building trust, which underpins economic stability. Our new website will act as a trusted platform to ensure better understanding of economic developments and to communicate policy advice to safeguard the region’s macroeconomic and financial resilience and stability.”

The enhanced website marks an important step for AMRO as the organization progresses into a regional knowledge hub (RKH) and deepens its support to the ASEAN+3 Finance Process.

These efforts are part of the evolving role of AMRO—the only international organization established under the ASEAN+3 Finance Process, as the organization steps up its global influence as a trusted policy advisor and thought leader under its Strategic Direction 2030.

New website features

The new AMRO website has been designed to offer the ultimate user-friendly experience with improved navigation and functionality while allowing users to access the full knowledge product portfolio and commentaries published by AMRO.

Created with the user experience in mind, the site includes many new features to help users navigate the site quickly and easily and to find the data and information they need. The new features include, but not limited to:

• An improved navigation menu to enhance users’ experience in browsing the site.

• Advanced search function which allows users to filter search results by category, topic, economy, author, and date range.

• New landing pages for RKH, blogs, publications, and trending topics, etc.

• New job application function for job seekers.

• A dedicated login for ASEAN+3 member authorities

Visitors to the website can stay informed with the latest ASEAN+3 economic and macro-financial updates.

For more information on AMRO and to view the site, please visit www.amro-asia.org.

Amidst the challenges faced by the Philippines brought by the coronavirus pandemic that has disrupted the lives of the Filipino people. It has caused anxiety as health and safety concerns coupled with economic and income uncertainties weighed down everyone setting back a broad spectrum of businesses.

But still, it is elating to know that the Philippine economic recovery from the COVID-19 pandemic continues to gain traction. AMRO forecasts the GDP to grow strongly by 6.9 percent in 2022 and moderate to 6.5 percent in 2023. However, external uncertainties and headwinds heightened in early 2022, posing additional challenges to policy implementation and economic prospects.

AMRO’s assessments are highlighted in the 2021 Annual Consultation Report on the Philippines published today by the ASEAN+3 Macroeconomic Research Office (AMRO).^[1]

Economic developments and outlook

In 2021, the economic recovery was mainly driven by stronger investments and household consumption. The recovery is expected to broaden this year, with the private sector taking the lead in driving growth on the back of continued policy support.

Inflation picked up in the early part of the year, owing to rising oil and food prices. Given the supply disruptions from the war in Ukraine, AMRO projects the headline CPI inflation to rise to 4.4 percent in 2022 before declining to 3.8 percent in 2023.

The overall balance of payments was broadly balanced in 2021, with a current account deficit of USD 6.9 billion, or 1.8 percent of GDP, largely offset by net inflows in the financial account. However, the external account could face some pressure in 2022 as the external environment has become more unfavorable.

The banking system has remained resilient amid the pandemic, owing to policy support and prudent management. The banking sector maintained a strong capital adequacy ratio of 16.7 percent on a solo basis as of December 2021, which is well above the minimum regulatory requirement.

Risks, vulnerabilities and challenges

The recovery is clouded by risks and challenges. Given the high vaccination rate, a resurgence of COVID-19 infections should not pose a major risk unless the variant is more resistant to vaccines. Furthermore, the impairment of firms’ balance sheets continues to pose a risk to the banking sector’s financial health although the risk is mitigated by the recovering economic activity.

Global interest rates and capital flow volatilities are likely to rise further in 2022 as the Federal Reserve continues to tighten monetary policy to contain inflation, especially if the war in Ukraine were to escalate further. The Philippine economy is well-positioned to weather the adverse impact given its strong external position, although the peso exchange rate may come under some pressure.

Policy recommendations

The heightened uncertainty in the global economic and geopolitical environment amid existing risks from the pandemic in the past two years have posed additional challenges to the government. Policymakers need to strike a good balance between supporting the recovery and safeguarding against risks.

The broadly neutral fiscal policy stance in 2022 under the current National Budget is appropriate as the private sector recovery is expected to gain momentum and become more self-sustaining.

The fiscal consolidation plan should enhance fiscal sustainability without jeopardizing economic recovery. The pace of fiscal consolidation can be expedited once the private sector recovery becomes self-sustaining, by continuing to improve the efficiency of public spending programs, while enhancing revenue collection.

The Bangko Sentral ng Pilipinas (BSP) has started to unwind its accommodative monetary policy with policy rates hike in May and June 2022, as inflationary pressure intensified amid the sharp rise in global oil and food prices. Looking forward, the BSP should continue to normalize its monetary policy stance. The pace of normalization should be determined by the strength of the economic recovery and trajectory of inflation.

Both public and private efforts need to be synergized to mitigate the scarring effects from the pandemic and address the structural challenges to achieve a more resilient and sustainable long-term growth. In particular, concerted efforts should be made to digitalize the economy to enhance productivity and growth. Recent legislations, including the amendments to the Retail Trade Liberalization Act, the Public Service Act, and the Foreign Investments Act, will improve the business environment, enhance competitiveness and attract more investment.