The Philippine business landscape, October 2026

The picture in four numbers

Four world events behind it

Oil, US interest rates, US tariffs and the AI build-out explain most of what businesses here are feeling.

The Middle East war and oil. The US–Iran conflict began on 28 February 2026. Brent crude peaked at US$126.41 a barrel on 30 April and averaged about US$114 in September. The US Energy Information Administration expects about US$105 in the last quarter of 2026, easing to US$87 by mid-2027. The Philippines feels this more than its neighbours: it imports most of its fuel, much of it from the Gulf, and about 2.4 million Filipinos work in the Middle East.

Higher US interest rates. On 16 September the US Federal Reserve raised its rate to 3.75–4.00%, its first increase since July 2023. Money moved into the dollar. The peso crossed ₱62 per dollar on 28 August and weakened past ₱62.9 by mid-September.

US tariffs. After the US Supreme Court struck down the 2025 "reciprocal" tariffs in February, a temporary 10% tariff applied until 24 July. Since then a 12.5% tariff applies to Philippine goods. The DTI estimates it covers about 30–34% of Philippine exports to the US, mainly apparel, footwear, travel goods and toys. Semiconductors and electronics are exempt. The US is reviewing the Philippines' new ban on imports made with forced labor, and talks continue.

The AI build-out. On 8 September the DICT launched the Philippine AI+ Infrastructure Masterplan 2026–2033. It estimates US$34.4 billion of investment is needed and targets 1.5 GW of data-center capacity by 2033, from about 50 MW today. Two US cloud companies are studying sites in Luzon. These are plan targets, not commitments.

What is happening at home

Growth has halved while inflation has returned above 7%, and foreign investment pledges are rising faster than actual cash inflows.

Prices and interest rates. Inflation was 7.2% in April, eased to 6.1% in August, then jumped back to 7.2% in September. The BSP raised its policy rate from 4.25% to 5.00% in three steps, in April, June and August. It expects inflation of 6.1% for 2026 and 5.4% for 2027. It meets again on 22 October, and some banks expect a rise to 5.25%.

Growth. GDP grew 2.3% in the second quarter, down from 2.8% in the first and 5.4% a year earlier. Investment fell 9.2%, its fourth straight decline, and household spending grew only 2.8%. Exports of goods rose 17%. The government has cut its 2026 target to 3.5–4.5%; the economy must grow 4.4% in the second half to reach it.

OFWs and remittances. Cash remittances reached US$17.15 billion from January to June, up 2.4%. The BSP expects US$36.6 billion for the year. The ILO reported that OFW deployments to the Middle East fell 78% after March, and more than 12,000 Filipinos have been repatriated.

Foreign investment. PEZA approved ₱216.5 billion of investments from January to August, up 104.5% and 72% of its ₱300 billion target. The top sources were the Netherlands, South Korea and Singapore, mostly in manufacturing and mostly in Luzon. Actual net foreign direct investment measured by the BSP was US$1.72 billion in January–March, down from US$2.07 billion a year earlier. An approval is a promise; FDI is money received.

Tourism. The DOT's data dashboard counts 4.42 million international visitors from January to August, up 0.8%. The United States (926,575) overtook South Korea (744,732) as the top market, and Chinese arrivals rose about 69% after visa-free entry. The DOT targets 6.4–6.8 million for 2026. Its e-Travel-only count is lower, at 4.11 million, so always say which count you use.

Policy changes to act on

Five rules and programs touch most businesses before the year ends.

What it means for you

This section is our reading of the facts above, not data.

Filipino small businesses. Costs are rising faster than sales, so protect your margins and your cash. Loans are dearer and may get dearer after 22 October. Payroll in Metro Manila went up on 26 September. If you have old BIR cases, the abatement window closes on 31 December.

Foreign investors. Peso assets are cheaper in dollars, but returns sent home are worth less. Ecozones and SIPP sectors are where the approvals are. Confirm your activity qualifies, and that the BOI guidelines are out, before counting on incentives.

Travel businesses. The United States is now the biggest source market, and Chinese arrivals are rising fast. Quote with surcharge clauses, because airfares adjust to jet fuel every 15 days. Travel by OFW families may slow.

Six things to do before 31 December

1. Update payroll to the NCR-28 rates from 26 September, and check staff paid just above the minimum.
2. Check whether you qualify for the BIR abatement if you are a micro taxpayer with old cases.
3. Review your margins at today's input costs.
4. List your dollar exposure: imports, loans and foreign clients.
5. Build a three-month cash buffer.
6. Investors: confirm your activity is in the 2026 SIPP before you rely on incentives.