PHL may see largest growth downgrade in SEA By Justine Xyrah Garcia
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HE Philippines could suffer the largest growth downgrade in Southeast Asia this year as the escalating conflict in the Middle East fuels inflationary pressures and dampens consumer spending, according to the Asean+3 Macroeconomic Research Office (Amro). In its updated regional economic outlook released on Tuesday, Amro slashed its 2026 growth forecast for the Philippines to 4.1 percent from 5.3 percent previously, citing a “stronger inflation pass-through” from higher energy prices that is expected to weigh on domestic demand.
FROM SENATE FLOOR TO COURT DOOR Wearing a yellow Bureau of Jail Management and Penology (BJMP) detainee uniform typically issued to persons under BJMP custody, Senator Jinggoy Estrada arrives at the Sandiganbayan in Quezon City on Tuesday, June 2, 2026, for the arraignment of graft charges linked to the alleged P573-million flood-control project kickback scheme. Estrada, who has denied the allegations, is also facing a separate plunder case arising from the same controversy. NONOY LACZA
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The 1.2-percentage point reduction is the largest downward revision among Southeast Asian economies covered by Amro. The revised forecast is also below the region’s projected average gross domestic product (GDP) growth of 4.6 percent this year. If realized, the Philippine economy would post its weakest expansion since the pandemic, a figure that’s also lower than the weakerthan-expected 4.4 percent growth recorded in 2025. Excluding the pandemic years, the projected growth rate would be the slowest since 2011, when the country’s GDP expanded by 3.9 percent. Jinho Choi, group head and lead economist at Amro, explained that
the weakening household spending is expected to be the main drag on growth as higher fuel costs erode consumers’ purchasing power. “Private consumption—which has already slowed for four consecutive quarters through Q1 2026—is expected to weaken further due to the energy shock, while the recovery in public construction is expected to be gradual,” Choi told the BusinessMirror. Data from the Philippine Statistics Authority (PSA) showed that household consumption, the country’s main growth driver, has been on a sustained downtrend over the past year. From a growth rate of 5.3 percent in the first quarter of 2025, private
spending expanded by 5.2 percent in the second quarter, 4 percent in the third quarter and 3.8 percent in the fourth quarter before decelerating further to 3 percent in the first quarter of 2026. Public construction spending, meanwhile, began to regain footing in the first quarter of 2026 after being hit by the fallout from the government’s corruption scandal. While still contracting, the decline moderated to 4.5 percent from 9.2 percent in the previous quarter. Despite the weaker outlook this year, Amro expects growth to recover to 5.5 percent in 2027. However, this is still below its previous forecast of 5.8 percent. See “Growth,” A2
BusinessMirror A broader look at today’s business
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WEAK PESO FLAGGED AS GOVT DEBT HITS ₱18.47T www.businessmirror.com.ph
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Wednesday, June 3, 2026 Vol. 21 No. 232
P25.00 nationwide | 2 sections 20 pages | 7 DAYS A WEEK
By Reine Juvierre S. Alberto @reine_alberto
ESPITE a slight decline in April, the Philippine government’s outstanding debt hit P18.470 trillion, as the peso’s vulnerability still resulted in more obligations to pay.
Outstanding debt of the national government marginally declined by 0.09 percent from P18.488 trillion as of end-March. The Treasury said the monthon-month drop was due to the repayment of domestic securities, which more than offset the impact of peso depreciation against the US dollar on foreign currencydenominated obligations. While this is a “positive sign,” the weaker peso alone added to the debt stock reflects the country’s vulnerability to exchange rate movements. Treasury data showed the weak peso against the US dollar contributed P101.72 billion in additional debt in April. “Even without new borrowing, a weaker peso can increase the peso value of foreign-currency-denominated debt, raising debt servicing costs and fiscal pressures,” John
Paolo R. Rivera, senior research fellow at the state-run think tank Philippine Institute for Development Studies, told the BusinessMirror. The broader implication, Rivera said, is that exchange rate stability is becoming increasingly important for debt management. “While the debt stock remains manageable, persistent peso weakness can make it more expensive for the government to service and repay its external obligations,” Rivera added. Broken down, the government’s debt stock consisted of 67.22 percent in domestic obligations and 32.78 percent in foreign liabilities. Domestic debt marginally dropped by 0.95 percent to P12.41 trillion as of end-April from P12.53 trillion in end-March. The decline came after the See “Peso,” A2
DLSU STUDY: TRADE REFORMS NEED THREE-PRONGED PUSH By Bless Aubrey Ogerio
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@blessogerio
HE Philippines risks losing ground to its regional neighbors unless it tackles three trade challenges at once—tariffs, logistics and market diversification—according to a policy brief by the De La Salle University (DLSU) School of Economics. The study, “Sustaining Philippine Trade Openness Amid Global Trade Policy Uncertainty,” said the country’s trade performance continues to be held back by a combination of policy and structural challenges that raise costs for businesses and limit competitiveness. Researcher Paulynne Castillo pointed to three interconnected issues: tariff policies that affect the cost of imported production
inputs, logistics bottlenecks that increase delivery times and shipping expenses, and uncertainty in global markets that can weaken demand and disrupt trade flows. According to the paper, addressing only one of these constraints is unlikely to deliver meaningful gains, as each factor influences the others. “Without decisive and coordinated action on these fronts, the gains from trade openness will remain limited, and the country risks falling behind regional peers in an increasingly uncertain global trade environment,” the study said. Recent government data reported that the trade deficit widened to $19.28 billion during the January-to-April period, larger than the $16.44-billion See “Trade,” A2
MANILA, HANOI STRATEGIC COOPERATION President Ferdinand R. Marcos Jr. and First Lady Liza Araneta-Marcos pose for a group photo with Vietnamese President To Lam and First Lady Ngo
Phuong Ly at Malacañang Palace in Manila on Monday, June 1, 2026. The visit marked the elevation of Philippines-Vietnam relations to an enhanced strategic partnership, reinforcing cooperation on maritime security, trade and investment, and regional stability, as ASEAN member-states advance regional cooperation following the 48th Asean Summit held in Cebu in May 2026. ROLEX DELA PEÑA/POOL PHOTO VIA AP
‘Lifting VAT on meds drives demand’ By Bless Aubrey Ogerio
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ROADER value-added tax (VAT) exemptions on essential medicines are expected to strengthen demand for pharmaceuticals in the country, with price relief likely to translate into higher consumption, according to BMI, a unit of Fitch Solutions. In its assessment, BMI said the latest expansion of tax exemptions for drugs used to treat serious and chronic illnesses is positioned to support both affordability and market growth, particularly in the generics segment where most essential medicines are supplied. The Bureau of Internal Revenue (BIR) expanded in April the list of VAT-exempt medicines, raising the total coverage to 2,263 items from
2,242 in the previous update in December 2025. The expansion covers treatments for conditions such as cancer and diabetes, which remain among the most financially burdensome for patients. BMI said the policy directly reduces the tax component embedded in medicine prices, which is expected to ease retail costs and encourage higher volumes of demand across pharmacies and healthcare channels. The study noted that the policy arrives amid continued pressure on household health spending. In 2025, out-of-pocket payments accounted for 42.7 percent of total health expenditure, while government spending stood at 44.6 percent, underscoring the persistent
reliance of patients on direct payments for medicines and care. Against this backdrop, BMI said affordability-focused measures such as VAT exemptions are likely to have a measurable impact on consumption patterns, especially for maintenance drugs used in long-term treatment. Still, BMI cautioned that structural constraints may limit the pace of industry growth. The Philippines remains heavily dependent on imported raw materials and finished drugs, leaving the sector exposed to external supply disruptions and cost fluctuations. The study also flagged gaps in domestic research and development capacity, along with shortages in skilled labor and limited financing, as key barriers to moving beyond
basic generic production into higher-value pharmaceutical manufacturing. Yet, the study also pointed to possible gains for domestic manufacturers, particularly firms producing generic medicines, which dominate supply in the essential drugs category. Lower end-user prices, it said, could help expand market reach and improve sales volumes for local producers. Beyond immediate demand effects, BMI said government efforts to strengthen medicine security may add stability to industry prospects. Plans to build national medicine reserves, it added, could create steadier procurement flows that See “VAT,” A2
PESO EXCHANGE RATES n US 61.7260 n JAPAN 0.3868 n UK 83.0832 n HK 7.8765 n CHINA 9.1230 n SINGAPORE 48.2913 n AUSTRALIA 44.2205 n EU 71.8305 n KOREA 0.0408 n SAUDI ARABIA 16.4484 Source: BSP (June 2, 2026)