Economic indicators

Many decades ago, in one of my economics classes, we discussed how two interesting indicators, Meralco and San Miguel beer sales, can give us an idea of the economy’s health.

High demand for electricity must indicate increased economic activity. On the other hand, we noted an increase in beer sales every time the harvests of coconut and other crops were good.

Meralco sales may still be a good indicator of economic activity, at least in Mega Manila and Calabarzon. But beer sales have been down 30 percent since the time the sin tax was imposed and has not recovered.

In last week’s briefing conducted by Ferdinand Geluz, Meralco’s SVP and chief revenue officer, there were hints that the economy is moving ever so slowly in a positive direction but with increased downside risks.

Meralco moderated expectations after noting a GDP growth forecast downgrade from six to 5.5 percent in April, driven by uncertainties from the US tariff policy.

Meralco’s energy sales for the first half of 2025 were 27,991 gigawatt hours, a slight uptick of 0.5 percent versus last year’s El Niño-driven high base.

Meralco’s quarter-on-quarter sales grew 1.5 percent in Q1, but contracted by -0.3 percent in Q2 with negative numbers in May and June. Sector-by-sector growth mirrors the same trend.

Meralco residential sales growth was at 0.7 percent versus almost 13 percent last year.

Meralco commercial sales posted a marginal growth of just 0.3 percent versus almost 10 percent last year. Expansions in retail, and restaurants were countered by the impact of office vacancies due to POGO.

Meralco saw continuous growth in sales for the industrial segment last month. Semiconductors grew, driven by strong demand in storage devices, microchips and multilayer capacitors.

Meralco’s industrial sales inched up by half percent compared to 2.5 percent last year with demand for semiconductors, cement and construction materials and steel.

Steel showed strong growth in Q2 at seven percent compared to Q1’s one percent. Scrap and raw materials boosted smelting operations which in turn supported the robust infrastructure construction activities.

For background, Meralco sales for the first half are broken down as: 36 percent residential, 37 percent commercial and 26 percent industrial. They have a customer count of 8.13 million or around a 200,000-increase compared to the first half last year.

Geluz said they are thinking of revising their forecast downward from the previous four to 4.5 percent growth to around one to two percent by yearend.

My daily brief from Maybank IBG cited economic challenges and softer consumption such as commercial vacancies, weather, weaker economic outlook, tepid tourism and global risks that weigh on power demand.

How do analysts view economic performance this year and next?

A global slowdown and higher US tariffs have clouded the growth outlook for the Philippines.

Last June, the Philippine government revised its medium-term growth targets: from 5.5 percent to 6.5 percent in 2025 (down from earlier six percent to eight percent). For 2026 to 2928, it is six percent to seven percent (narrowed from six percent – eight percent).

The IMF projects growth for 2025 at 5.5 percent, down from an earlier 6.1 percent. For 2026, the IMF revised slightly upward to 5.9 percent from 5.8 percent.

The World Bank projects growth of 6.1 percent in 2025, moderating to six percent in 2026.

ADB slashed its GDP growth forecast to 5.6 percent for 2025 from six percent previously. For 2026, the ADB projects Philippine GDP to grow by 5.8 percent from 6.1 percent previously.

ASEAN+3 Macroeconomic Research Office (AMRO) cut its growth projections for the Philippines to 5.6 percent for this year and 5.5 percent for 2026. These are lower than its previous forecast of 6.3 percent for both 2025 and 2026.

But if it means anything to us, AMRO noted that the Philippines is expected to be ASEAN’s second-fastest growing economy this year and in 2026, after Vietnam. Vietnam is projected to grow by seven percent this year and 6.5 percent next year.

AMRO Group head Allen Ng said in a briefing that the Philippines’ weaker-than-expected 5.4 percent GDP expansion in the first quarter hinted that the growth momentum is slower than initially expected.

But growth will remain supported by sustained private consumption, stable labor market conditions, slower inflation and “robust” remittance outlook.

The good news to Filipino consumers is the continuing decline in inflation. Inflation slowed to 0.9 percent in July from 1.4 percent in June. This is the lowest inflation figure since October 2019’s 0.6 percent.

This is good news for our consumption-driven economy powered by OFW remittances. OFW families will have more buying power with lower inflation. This helps mitigate the impact of a stronger dollar and the new excise tax on remittances in Trump’s One Big Beautiful Act.

The fast decline in the price of rice helped bring inflation down. Food inflation at the national level recorded an annual decline of 0.5 percent (vs 0.1 percent in the previous month and 6.7 percent in July 2024).

Electricity prices have also taken a dip in 2025. The average Wholesale Electricity Spot Market (WESM) price in the first half of 2025 was approximately P4.14 per kWh, compared to about P5.58 per kWh during the same period in 2024.

The trend reflects structural shifts in supply, demand and the evolving economics of power generation as more renewables get on the grid and the capping of WESM prices.

The economic indicators provide reasons for hope as well as anxiety. But as BBM himself said, good economic indicators mean nothing to the people who are still struggling in their daily lives.

Half of all Filipino families rated themselves poor in the latest SWS survey of June 25-29, 2025. The estimated numbers of Self-Rated Poor families were 13.7 million. Multiplying that by four (average number of persons per family) equals 54.8 million poor people out of 120 million Filipinos.

That’s a lot of struggling and hungry Filipinos that a just society shouldn’t ignore.

Boo Chanco’s email address is [email protected]. Follow him on X @boochanco