By all indications, the Philippine economy is moving firmly onto a recovery path: Inflation has eased, consumer spending is rising, and investor confidence is rebounding after the previous administration’s China-centric policies and corruption scandals dampened foreign interest.

In its Q1 2025 Consumer Pulse Study, TransUnion found that headline inflation slipped to 1.3 percent in May—the lowest since 2019—thereby “restoring the real purchasing power of Filipino consumers,” the firm noted.

One clear sign of resurgent spending is the popularity of buy now, pay later (BNPL) plans: 65 percent of Filipinos surveyed said they have used BNPL to purchase items they want or need.

“Lower inflation is creating a more supportive environment for consumer credit growth. We expect to see stronger repayment capacity among existing borrowers and higher demand among new-to-credit consumers, particularly in the small-ticket and revolving-credit segments,” said Peter Faulhaber, president and CEO of TransUnion Philippines.

Retail sector poised for faster expansion

Retail already accounts for roughly 20 percent of the economy—including both e-commerce and brick-and-mortar outlets—and analysts expect the sector to accelerate as credit becomes more accessible.

When lenders reach previously unserved or underserved borrowers, “this will drive up the micro-economy in retail and, we hope, attract more foreign investors to expand in the Philippines,” Faulhaber added.

Government data back the optimism. According to the Philippine Statistics Authority, gross domestic product grew 5.4 percent year-on-year (YoY) in the first quarter, buoyed by wholesale and retail trade, financial services, and manufacturing. The wholesale-and-retail segment alone expanded 6.4 percent YoY.

TransUnion’s survey shows that 37 percent of Filipinos plan to increase retail purchases such as clothing, electronics, and durable goods over the next three months, while 29 percent expect to boost discretionary spending on dining out, travel, and entertainment.

Credit outlook brightens

As real incomes rise, TransUnion projects marginal improvements in early-stage delinquencies over the next two quarters. The firm urges lenders to deploy data-driven risk models so they can safely widen credit access.

“At TransUnion, we’re deeply committed to fostering a more inclusive and resilient credit ecosystem,” Faulhaber said. “By equipping lenders with advanced analytics and empowering consumers—especially those new to credit—we help ensure that more Filipinos can access the financial tools they need to thrive.”

It said merchandise trade in the region grew by 3.3 percent in value and 4.1 percent in volume in the first nine months of 2024, reversing the sharp contraction seen in 2023 on a year-on-year basis.   

However, the number of trade remedies surged to 1,043 by the end of 2024, up from 960 in 2023, highlighting ongoing worries on unfair trade practices.

“Trade-restrictive measures raise costs and limit market access, potentially weakening external demand and trade activity. Additionally, the growing number of trade remedies suggests an increase in unfair trade practices,” the report said.

APEC Policy Support Unit Director Carlos Kuriyama said APEC economies must reinforce trade openness, strengthen policy coordination, and pursue long-term reforms as global uncertainties persist.

The report said robust double-digit growth in travel in APEC has propelled commercial services trade expansion, particularly tourism, strengthening economic ties and cultural exchange.

It identified travel resurgence among the upside opportunities in the region.

“Semiconductors are the lifeblood of the digital economy, highlighting the need for open trade and robust supply chains to sustain global technological progress. However, concerns remain on whether this upsurge could be sustained well into 2025,” the report added.

It also projects the region’s gross domestic product (GDP) growth of 3.3 percent in 2025, following an estimated 3.5 percent expansion in 2024, though a further slowdown to 2.7 percent is anticipated in the coming years. Structural challenges, including demographic shifts and rising trade barriers, are expected to weigh on future economic trajectory.

Iloilo, recognized for its thriving economy, continues to shine with an impressive 10.5 percent growth rate in 2023, contributing 15.6 percent to the Western Visayas region economy with a Gross Domestic Product (GDP) of ₱215.42 billion, according to data from the Philippine Statistics Authority (PSA).

The services sector— which accounted for 56.5 percent of the provincial economy — remains a crucial pillar, followed by agriculture and fishing at 22.7 percent, and the Industry sector at 28.8 percent.

Globe’s expanded presence in the province aligns with Iloilo’s economic drivers, particularly in wholesale and retail trade, transportation, and financial services. By expanding its digital infrastructure, Globe hopes to support these key sectors with faster data transfers, improved customer experience, and more efficient operations.

Globe’s new site builds ensure that both urban and rural areas benefit from better broadband and mobile services, helping bridge connectivity gaps and drive regional prosperity. They also enable local businesses to grow their digital footprint, facilitating online transactions and ensuring seamless communication for residents and tourists alike.

“Our network expansion in Iloilo reflects our dedication to empowering communities. With improved access to digital services, local enterprises can unlock new growth opportunities, contributing to Iloilo’s continued economic progress,” said Patrick Gloria, Globe Vice President for External Affairs.

The towers are positioned to cater to the increasing demand for reliable connectivity, especially during large-scale celebrations such as the Dinagyang Festival.

With Dinagyang set to captivate locals and tourists once more, Globe remains steadfast in driving Iloilo’s digital transformation, paving the way for sustained growth in the years to come.

To learn more about Globe, visit https://www.globe.com.ph/.

Luzon being the core economic zone of the Philippines that accounts for more than 70% of the country’s Gross Domestic Product (GDP) is set to receive infrastructure development funds with commitments from the United States and Japan.

This was revealed at the Indo-Pacific Business Forum in Manila attended by US Senior Advisor to the President for Energy and Investment Amos Hochstein.

Others joining the panel were Acting Special Coordinator for the Partnership for Global Infrastructure and Investment (PGI) Helaina Matza, Philippine Senior Advisor to the President for Investment and Economic Affairs Frederick Go, and Japan Ministry of Foreign Affairs Director-General for International Cooperation Bureau Ishizuki Hideo.

They made up the Luzon Corridor Steering Committee inaugural meeting, aimed at driving infrastructure investment and development in the area.

The Steering Committee aims to implement the Trilateral Leaders’ commitment in April to develop the Luzon Economic Corridor under the PGI Indo-Pacific Economic Framework (IPEF) Investment Accelerator.

The partners discussed priority sectors for engagement and reviewed potential projects and areas of interest, committing to future meetings on a quarterly basis.

The Luzon Economic Corridor is the first PGI economic corridor in the Indo-Pacific region. The Corridor will support connectivity among Subic Bay, Clark, Manila, and Batangas as well as facilitate strategic, anchor investments within each hub in high-impact infrastructure projects, including rail, port modernization, agribusiness, and clean energy and semiconductor supply chains and deployments.

Speaking to the media, Hochstein said, “We are the US government USTDA together with other multilateral development agencies are going to support the Government of the Philippines and whatever is necessary. Step one in all of these is usually to do a feasibility study to identify what is needed.”

He noted that the trilateral efforts of the US, the Philippines, and Japan will put pressure on the agencies of the government of the Philippines to accelerate its internal process to make things easier for companies to understand what the rules of the game are, to make sure that they have their financing incentives from tax to permitting and land use across all different departments of the government.

“The US is going to continue to work with our agencies to support that effort. Again, USDA has done part of what it does so well in feasibility studies around the world. We’ll continue to work with the government Philippines to see if they need the support there. As far as timeline projects it will be done as fast as possible,” Hochstein said.

The need to make everything efficient is to ensure the timely and successful implementation of the programs is empirical.

“We’re in a global competition, for resources for investment for projects for economic opportunity. The faster the government works, the easier it is for the private sector to make those investments for the whole purpose will happen,” Hochstein explained.

Speaking to THEPHILBIZNEWS on the criteria for US and Japan to focus on Luzon, Hochstein noted the Biden administration’s concept of quarters. “To do that, we look at where we can invest in 150 countries or we can invest in just a small number.”

“Here in the Philippines, we decided first of all within the Indo-Pacific. We wanted to focus on the Philippines because the Philippines is a fast-growing economy. A very capable country with a workforce that is dynamic and capable and educated,” Hochstein explained.

Hochstein also mentioned the history of the Philippines with the United States and noted that both security and economic aspects have been considered since there are already multiple American companies doing business in the country.

“So we wanted to invest in the Philippines because it’s a friend, a partner and an ally and it has all the right ingredients for growth,” he said.

In choosing Luzon for its investments, rather than Visayas or Mindanao, Hochstein said: “[We] chose Luzon not because we don’t want to invest in the rest of the Philippines, but rather Luzon has the biggest share of traffic in all of the Philippines. It has a concentration of companies, global companies that are already here, and a workforce.”

“Therefore, those jobs that will be impacted will not only be because of the direct investment, but because every investment will create secondary and tertiary jobs in the economy. So again, it’s not to say that we don’t want to see companies going to the Philippines but rather to say this is an area that can have a higher rate of success by focusing and you get that success and investments in multiple sectors,” he concluded.

Amidst the global slowdown, the Philippines has managed to make a rebound for Q3 2023.

In the data from the Philippine Statistics covering November and December, the GPCCI Market Watch edition revealed the economic overview of the third quarter year 2023 in the Philippines demonstrated growth which is attributed to the international trade, and the bilateral trade relations between the Philippines and Germany.

GDP for Q3 2023

A growth of 5.9 percent in the Gross Domestic Product (GDP) for Q3 2023 is observed and a rebound from the 4.3 percent recorded in the second quarter of 2023. Compared with other major emerging economies in Asia, the GDP growth of the Philippines for the quarter is the fastest. Subsequently, all major sectors – Agriculture at 0.9 percent; forestry and fishing at 5.5 percent; and Industry and Services at 6.8 percent posed positive growth.

Meanwhile, the household final consumption is at 5.0 percent, a deceleration from the 8.0 growth during the same quarter of last year. On the governmental expenditure, the final consumption is at 6.7 percent. The strong domestic demand despite high inflation and government spending contributed to the Q3 performance of the economy. The government expects the continued deceleration of inflation will help in attaining the low end of its GDP target of 6 percent to 7 percent for the entire year of 2023.

While the Philippine government lowered its GDP target to 6.5 to 7.5 percent from the previous 6.5 to 8.0 percent for the year 2024, the Asian Development Bank has retained its forecast of 6.2 percent. Despite cutting the GDP target for the year 2024, the government retained its GDP assumption of 6.5 to 8.0 percent for the year 2025 to 2028 and has proposed a PHP6.12 trillion national budget for the year 2025 to support economic growth.

Philippine International Trade

While challenges in logistics and supply chain remain, and the cost of raw materials and The Philippine international trade is lower this year compared with the same period of last year with Q3 exports at 19.6 Billion USD and imports at 31.5 Billion USD.

Semiconductors lead Leading in the Philippine exports in Q3 are components at 48 percent. This is followed by electronic data processing at 6 percent and other manufacturers at 5 percent. Meanwhile, minerals, fuels, lubricants, and related materials account for 16 percent of total imports. This is followed by components for semiconductors at 15 percent and transport equipment at 10 percent.

As APEC countries remain the Philippines’ major trading economic bloc for Q3 2023, exports to the United States of America accounted for the highest value at 3.20 Billion USD, followed by Japan at 2.68 Billion USD, and People’s Republic of China at 2.65 Billion. In terms of imports, the People’s Republic of China accounted for the highest value at 7.69 Billion USD. It is succeeded by Indonesia at 2.69 Billion USD and Japan at 2.49 Billion USD. In the case of Germany, it is ranked 12th as an import partner with a value of 591.62 Million USD.

Amidst global headwinds and pressures, the Department of Trade and Industry reaffirms its commitment to the Philippines’ economic development. On trade promotions, DTI Secretary Pascual highlights its strategic course of action to boost Philippine exports by mitigating production constraints, cultivating an innovative export environment, and amplifying the country’s presence in global markets. Thus, the business community remains curious as to how the government will actualize these policies catering to both import-competing and export-oriented industries.

Philippine exports to Germany are comprised mostly by components for semiconductors at 67 percent. It is followed by electronic data processing at 16 percent and machinery and transport equipment at 2 percent.
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On the other hand, transport equipment comprises 20 percent of German imports to the Philippines. Components for semiconductors follow at 19 percent, and medicinal and pharmaceutical products at 13 percent. Other commodity groups include industrial machinery equipment, and telecommunication equipment.
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Figure 4: Q3 2023 Philippine Imports from Germany by Commodity Group (Philippine Statistics Authority, 2023)

Note: Only selected major commodities are in this chart. To view the list of other commodities, you may refer to the PSA

Bilateral trade relations between the Philippines and Germany continue to foster with the recent announcement of EU Ambassador Luc Veron regarding the extension of the European Union Generalized Scheme of Preference Plus (EU GSP+) by 4 more years as the commission conducts negotiations for new regulation. The Philippines has been benefitting from the preferential trading scheme and its extension ensures that more than 6,274 local exports – including tuna facing a potential 20%-30% tariff – will continue to enjoy the program’s privileges.

Consequently, there have been reports of preliminary discussions or scoping talks for a Free Trade Agreement (FTA) between the EU and the Philippines following the visit of European Commission President Ursula von der Leyen. DTI Secretary Pascual underscores the importance of addressing market access for goods and services, investment liberalization, trade and sustainable development, government procurement, and dispute settlement for the upcoming bilateral discussions. With the EU being a pivotal trading partner of the Philippines, the business sector is eager to know more about the next steps of both governments on the attainment of an FTA.

The Fall 2023 AHK World Business Outlook (WBO) Survey Results
The AHK World Business Outlook (AHK WBO) is based on a regular DIHK survey among member companies of the German Chambers of Commerce Abroad, delegations, and representative offices (AHK). Here are some highlights from the results of the recently conducted Fall 2023 AHK World Business Outlook (WBO) Survey:

Businesses identified these three as their biggest risks for their economic development: prices of energy (38 percent), demand (37 percent) as well as lack of skilled workers (37 percent), and exchange rates (32 percent) along with policy conditions (32 percent).

The areas for significant investment are Sales and Marketing (42 percent), Services (e.g., shared service center) (37 percent), and Research and Development (25 percent). The factors considered in investment decision-making are Market Size/Market Development (56 percent), Local Economic Policy Framework (33 percent), and Diversification (29 percent).
Cumbersome Customs Procedures (39 percent) followed by Tariffs and Quotas (37 percent) and Technical Trade Barriers (conformity testing and certification) (36 percent) are challenges posed by companies when exporting goods and services.

Around 46 percent of businesses anticipate the EU-Philippines Free Trade Agreement (FTA) to be crucial for their operations. Companies are anticipating the following areas under the EU FTA to be utilized: Trade in Goods (58 percent), Trade in Services (51 percent), and Supply Chain Optimization (36 percent). Overall, 46 percent of the respondents anticipate the EU-Philippine FTA to be moderately increasing their company’s competitiveness.