The Philippine economy right now, explained for business owners

This year's headlines can read like four separate problems: high prices, expensive loans, slow growth and a weak peso. They are connected, and most of them start in the same place.

Since March, conflict in the Middle East has pushed up global oil prices. The Philippines relies heavily on imported fuel, much of it from the Middle East, so the shock hit us harder than most of our neighbors.

Higher fuel costs raised the price of transport, electricity and food. To stop those price increases from spreading, the BSP raised interest rates, which made borrowing more expensive. Households facing higher prices spent more carefully, and businesses facing costlier loans invested less, so growth slowed.

The peso got hit from two sides. Paying for more expensive oil means buying more dollars, and the US dollar has stayed strong as US interest rates stay high. A weaker peso then makes everything we import cost more, which feeds back into prices.

Growth also had a second problem that started before the oil shock. Government infrastructure spending slowed in late 2025 as project payments went under review, and the economy was already losing speed when oil prices jumped.

Inflation rose to 7.2% in September, up from 6.1% in August. That matches April's 7.2%, the highest in over three years, and ends four straight months of easing. This time food led the increase, especially rice, as bad weather disrupted supply, with electricity and transport costs also climbing.

The BSP's target is 2% to 4%. Inflation has been above it since March, and the average for the first nine months of the year is 5.4%.

What it means for your business: your costs are probably still rising. Lenders assume they are, and they will check whether your margins can absorb them.

The BSP raised its policy rate three times this year, in April, June and August, by 0.25 percentage points each time, taking it from 4.25% to 5.00%. Banks price their loans off this rate, so new loans and loans that reprice now cost more.

The next decision is on October 22. With September's inflation jump, some economists now see a case for another hike.

What it means for your business: a loan taken today costs more than the same loan at the start of the year. Lenders will test whether you can carry the payment at today's rates, not last year's.

The economy grew 2.3% in April to June. Setting aside the pandemic, that is the slowest since 2009. It is the latest in a run of slowdowns that began in the second half of 2025.

Investment fell and public construction dropped. Household spending still grew, but more slowly. The bright spot was exports: goods exports rose 17% from a year earlier.

What it means for your business: customers are more careful with their money. Businesses selling essentials hold up better than those selling nice-to-haves, and lenders know it.

The peso has hit record low after record low this year. At the end of February, before the conflict began, a dollar cost ₱57.66. On September 14 it closed at a record ₱62.86, so a dollar now costs about 9% more pesos than it did in February.

What it means for your business: if you import inputs, this is a cost increase on top of inflation. If you earn in dollars, through exports, outsourcing or foreign clients, it works the other way: every dollar you earn converts into more pesos. That makes dollar income one of the strongest things you can show a lender right now.

Banks and lenders read the same numbers you just did. Every loan decision now comes down to one question: in this economy, will this borrower still be able to pay?

The practical result is more careful lending, especially for loans with nothing behind them. A healthy business with good sales could once borrow on its numbers alone. Today most lenders want something solid backing the loan, usually property. A secured loan is the easiest way through.

Lenders do not all read the economy the same way, though. Each has its own appetite for different industries, loan sizes and kinds of property, and that appetite shifts as conditions change. A no from one lender is that lender's answer, not the market's. If you have already been turned down, here is what to do after a rejection.