WB flags cooling PH momentum

The World Bank (WB) has flagged a slowing Philippine economy as investor sentiment weakens, financial markets soften, and manufacturing and exports falter—even as joblessness steadies and inflation stays below target.

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“There are signs that economic activity may be decelerating” in the country, the WB said in its Philippines Monthly Economic Developments report for September 2025, published on Oct. 14.

The WB highlighted that investor sentiment toward domestic financial assets weakened in September, with the Philippine Stock Exchange Index (PSEi) falling 0.9 percent between August and Sept. 18—contrasting with the rising stock markets of regional peers since July.

The WB noted that while interest rate cuts by the Bangko Sentral ng Pilipinas (BSP)—which lowered its policy rate by 25 basis points (bps) to 4.75 percent last Oct. 9—and the United States (US) Federal Reserve supported early September gains, negative market developments later limited buying activity in the domestic stock market.

Among these “unfavorable market updates” were “governance issues in flood control projects, an uptrend in inflation and unemployment, and lower foreign direct investment (FDI) inflows,” the report said.

“Amid these developments, foreign investors became net sellers of local shares. This contributed to the slight weakening of the Philippine peso against the US dollar,” the report noted.

“In real effective terms, the Philippine peso depreciated in August against a basket of currencies of its major trading partners” and sustained a slight depreciation last month, it added.

The WB also noted that the Philippines' merchandise export growth fell to an eight-month low in August, with exports rising just 4.6 percent year-on-year as shipments to the US declined following the introduction of higher tariffs.