It’s always good to keep an eye on the economy – shifts in inflation, growth, and currency can quietly shape how we spend, save and invest. These past couple of weeks, the Philippines saw three key financial developments. Here’s what we know:

1. Inflation slowed down.
   Last month’s inflation came in lower than expected, giving Filipino consumers a bit of breathing room from rising prices in commodities. This was primarily caused by the slow increase in the price of food and transportation.
   
2. There was a dip in our GDP Growth.
   The economy grew by 5.4% in Q1, slightly below target. This slowdown is due to businesses investing less, especially in building their inventories. While consumer demand remains strong, companies are unsure about the future. Experts are saying that this is reflective of the concerns that countries have about the impact of the U.S. policies around tariffs.
   
   
3. The peso strengthened against the dollar.
   The Philippine peso appreciated to its highest level in over a year, thanks in part to the weakening dollar. The US Dollar Index has reached its lowest value in the last three years as the uncertainty from tariff policies and tensions between US President Trump and Federal Reserve Chair Powell weigh on investor confidence.
   
   

These trends are prompting the Bangko Sentral ng Pilipinas (BSP) to consider cutting key interest rates this year – more than they originally planned. 
 
What does this mean for you?

1. Loans could get cheaper.
   If BSP continues to lower interest rates, borrowing money may become cheaper. This could lead to better deals on car loans, home financing or personal loans.
   
   
2. Your money can go further.
   Lower inflation gives your peso more purchasing power, so you could feel a little more confident in your purchasing power.
   
   
3. Travel might become more affordable.
   A stronger peso gives you more value abroad – perfect timing if you’re planning on taking a summer vacation or an out-of-country trip that you deserve.
   
   
4. Think twice about investments in foreign currencies.
   If you've got dollar investments, or you're looking to invest in multi-currency time deposits, keep in mind how these economic changes will impact these decisions. Exchange rates for foreign currencies fluctuate, so think twice before making investments in foreign currencies.
   
   

Big shifts in the economy often start with small signals. The more we understand what’s happening, the more empowered we can be to plan, spend and save money wisely. 

 
Definition of Terms: 

• GDP (Gross Domestic Product) – The total monetary value of goods and services produced in a country. It’s one way to measure how healthy and active an economy is, but keep in mind that this is a big picture view.
• Tariffs - Tariffs are taxes imposed by governments on imported goods and services. Governments can use this to protect local industries by increasing tariffs on imported goods. The opposite effect of reducing tariffs can also increase trade.
• Currency Appreciation – For example, when the value of the Philippine peso increases compared to other currencies, like the US dollar. This usually means imported goods and foreign travel becomes cheaper for Filipinos.
• Currency Depreciation – An example is when the US dollar weakens relative to other currencies. For Filipinos, this can affect the value of remittances or foreign investments.
• Federal Reserve – This is the central bank of the United States of America. It is the equivalent of the BSP. 
• US Dollar index – Economists often use “baskets” to have standard when tracking key metrics or discussing theories in economics. This Index gives an overview on the performance of the U.S. Dollar versus Euro, Yen, Pound, Canadian Dollar, Swedish Krona, and Swiss Franc.