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THE Philippines’s digital economy is expected to grow 15 percent to $42 billion in gross merchandise value (GMV) this year, from $36 billion in 2025, as Filipinos rapidly adopt artificial intelligence (AI) and shift more of their spending to digital payments.

The figures come from the 11th e-Conomy SEA report by Google, Temasek and Bain and Co, released on Tuesday. The report also projects that the country’s digital economy could reach as much as $157 billion by 2035.

This year’s edition, titled ‘Building the Intelligent Economy,’ found that AI adoption is becoming a growth lever for the local digital economy. The report said the long-term outlook stays optimistic despite geopolitical and macroeconomic headwinds.

It cited policy support behind that outlook, including the launch this year of the National AI Center for Research and Innovation, new National Privacy Commission (NPC) frameworks, and the Internet Transactions Act. It also pointed to changes in how Filipinos behave online.

‘Embracing AI quickly’

The report found that generative AI (GenAI) has reached mass-market scale in the Philippines, with 53 percent of the working population actively using standalone GenAI platforms.

Some 42 million Filipinos now use GenAI and generate 55 billion AI queries a year. The number of monthly AI users rises to around 65 million when embedded AI is included. One in four Filipino AI users interact with AI tools every day.

Trust in the technology is also climbing. One in two users said they trust AI more than they did a year ago, and seven in 10 said they are willing to let AI insights guide their purchase decisions.

For the first time, the report measures AI usage in tokens, which it treats as the AI equivalent of GMV.

‘Filipinos are embracing AI quickly, with 53 percent of the working population already using GenAI. But we are still early in the journey, and there is significant headroom for growth,’ said Bennett Aquino, a partner at Bain and Co. ‘The next chapter is about depth, turning what is occasional use today into everyday workflows that will truly benefit Filipino individuals and businesses.’

Room to deepen engagement

Still, the report said there is a lot of room for Filipinos to use AI more often. Around 33 percent of consumer journeys in the Philippines begin with AI, but users average only about 1.87 AI sessions a week and 13 million consumer tokens per GenAI user.

Most Filipinos prefer to talk to AI in English, which the report linked to the country’s strong English proficiency. Local-language prompts make up 21 percent of conversations.

Filipinos stand out in Southeast Asia for creative and professional uses of AI. Gemini prompts for customer support content in the Philippines are nearly three times the regional average.

Study, work, health, online shopping and entertainment are the top five uses of AI in the country, in that order. Consumer applications account for around 80 percent of AI usage.

‘What is especially exciting is the rapidly growing trust and adoption of AI among Filipinos-with over half of the working population actively using AI tools to streamline work and daily life,’ said Prep Palacios, country manager of Google Philippines.

E-commerce, online travel and online media drove the growth in GMV. E-commerce grew 15 percent year-on-year to $28 billion in 2026.

Online travel grew faster this year, up 14 percent to $3 billion from 9 percent growth the year before. Online media grew 26 percent to $6 billion, compared with 23 percent previously.

Mobility and food delivery grew 2 percent to $4 billion. The segment is projected to reach $7 billion by 2030 and $11 billion by 2035.

Digital payments posted the fastest growth in Southeast Asia, with gross transaction value up 23 percent year-on-year to US$194 billion in 2026.

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The report credited this growth to the expansion of the national digital ID, InstaPay for Business, and the merger of BancNet and the Philippine Clearing House Corp. (PCHC), which is meant to make payment interoperability smoother.

Digital lending grew 17 percent to a loan book balance of $7 billion from $6 billion in 2025, and is projected to reach $31 billion by 2035.

Digital insurance grew 16 percent to $110 million in annual premium equivalent and gross written premiums. That ties the Philippines with Vietnam for the fastest-growing digital insurance sector in the region.

‘The Philippines’s digital economy continues to show remarkable resilience and momentum as it proves its unstoppable growth once again this year,’ Palacios said. ‘As user confidence deepens and local AI use cases expand, strong policy support and collaborative ecosystem development will be key to unlocking the full potential of the Philippine digital economy.’

Aquino said the Philippines is ‘well positioned’ to move from occasional to everyday AI use, with the National AI Center for Research and Innovation rolling out this year and NPC frameworks supporting responsible adoption.

‘Doing so can cement the country’s place among SEA’s fastest-growing AI markets,’ he said.

INVESTORS are pivoting their focus toward governance, demanding allocation tracking and credible impact reporting, as the Philippines’ sustainable bond market ranked third-largest in Southeast Asia with $23 billion in issuance.

In its sector in-depth report, Moody’s Ratings said the Philippine sustainable debt market trailed Singapore and Thailand, accounting for 17 percent of regional volumes from 2017 through the third quarter of 2026.

‘Sustaining this role as financing needs grow will depend in part on transparent reporting and effective governance that demonstrate how proceeds contribute to these priorities over time,’ the credit rater said.

The sovereign is the largest issuer, having raised about $7.5 billion to finance climate adaptation and resilience projects, metro rail networks, electrification initiatives and public investment programs.

With the Philippines ranking first globally on the World Risk Index 2026, rising adaptation and resilience needs are creating new financing opportunities, Moody’s said.

However, expansion would depend on issuers’ ability to demonstrate strong governance, transparency and clearly defined use-of-proceeds commitments, it noted.

‘As financing needs broaden, investors are likely to place greater emphasis on governance, transparency and the credibility of use-of-proceeds commitments, emphasizing the role of robust sustainable finance frameworks that can strengthen market alignment and investor confidence,’ Moody’s said.

For issuers, robust sustainable finance frameworks will be increasingly important given the Philippines’ elevated credit exposure to environmental and social risks.

The country’s relatively low income levels also constrain its capacity to respond to environmental and social shocks, Moody’s said.

Aside from the government, nine local banks have issued sustainable bonds, with the banking sector accounting for 54 percent of cumulative thematic issuance over the past decade.

These issuances have financed projects involving renewable energy, green buildings, water infrastructure and financial inclusion.

‘As fiscal space has become more constrained amid sizable infrastructure funding needs, sustainable financing can help financial institutions access private capital and support national social and economic development objectives,’ Moody’s said.

The five largest domestic banks have mobilized P1.9 trillion in sustainable finance-related lending through 2025, led by BDO Unibank Inc. with a portfolio of P1.2 trillion, while the other four ranged from P140 billion to P376 billion.

‘As banks expand their sustainable financing activities and regulatory frameworks provide greater clarity around eligible activities, financial institutions are likely to remain an important channel for directing private capital toward infrastructure projects in the Philippines, meeting both resilience and energy-transition needs,’ according to Moody’s.

THE Philippines is taking the driver’s seat in steering Southeast Asia toward a low-carbon future, with the Climate Change Commission (CCC) spearheading regional efforts to advance the landmark Asean Green Economy Framework Agreement (Gefa).

Under Philippine leadership, the CCC chaired a virtual intersessional meeting of the Asean Task Force on Carbon Neutrality (ATF-CN) to drive discussions on the feasibility of Gefa. The proposed agreement aims to significantly solidify regional cooperation on green economic growth and sustainable industrial transition.

The ongoing Gefa feasibility study is zeroing in on high-impact areas for inter-state cooperation, including sustainable finance, trade-related climate measures, environmental goods, and strategic economic and technical collaboration.

Emphasizing the commercial and social balance needed across the bloc, CCC Vice Chairperson and Executive Director Robert E.A. Borje stressed the necessity of an inclusive framework that respects the distinct economic realities and development priorities of individual Asean Member States.

‘This study must help us identify opportunities for cooperation that deliver shared benefits while recognizing the different circumstances and capacities of Asean Member States,’ Borje said in a statement.

‘As we work toward a low-carbon economy region, we must ensure that the proposed framework is responsive to our diverse priorities and supports a transition that benefits the entire region,’ he added.

For the Philippines and fellow developing Asean member nations, the framework opens vital avenues to structure regional cooperation tailored to varying national capacities, institutional readiness, and economic agendas. Key targets for joint action include targeted capacity-building, technical assistance, and the scaling of sustainable finance mechanisms to help countries evaluate and execute their respective green economy initiatives. Importantly, the feasibility study is tasked with defining how GEFA will deliver distinct value-add without duplicating existing regional programs.

From a national strategic standpoint, regional cooperation under GEFA is poised to directly bolster the Philippines’ climate commitments under its Nationally Determined Contribution (NDC). It offers a blueprint to accelerate low-carbon development, build competitive green industries, and mobilize sustainable finance streams. By synchronizing regional policies, Asean member states can establish complementary approaches to cutting greenhouse gas emissions without sacrificing their broader economic growth and industrial targets.

During this initial ATF-CN Intersessional Meeting, delegates thoroughly reviewed the draft Inception Report of the GEFA Feasibility Study, evaluating its scope and methodology for mapping concrete regional opportunities.

Reaffirming Manila’s leadership role, the CCC-in its capacity as chairman of the ATF-CN-reiterated its commitment to push regional carbon neutrality forward through an inclusive, evidence-based process that honors the varied economic capacities and circumstances of Asean nations.

THE Bases Conversion and Development Authority (BCDA) is set to award its P14.8-billion New Clark City water and wastewater project to the Maynilad Water Services Inc.-Korea Water Resources Corp. (K-Water) consortium after no rival proposal emerged in the Swiss challenge.

At a Shareholders’ Association of the Philippines event in Makati on Tuesday, BCDA President and Chief Executive Officer Joshua M. Bingcang told reporters the agency plans to proceed with the award as soon as possible, even before the 90-day challenge period expires.

Some companies attended the project’s pre-bid activities but did not submit competing proposals, he said, declining to identify them.

The absence of competing offers clears the way for the consortium, which earlier secured original proponent status, to proceed to the next stage of the public-private partnership process.

The formal award, however, remains subject to the completion of the required procedures.

The project, initially proposed by K-water in February, will develop bulk water supply and wastewater infrastructure for New Clark City in Tarlac.

The system is expected to have a capacity of 150 million to 200 million liters per day, with surplus water also intended to be shared.

The proposed joint venture carries a 25-year term, with an option to extend for another 25 years.

Foreign aerospace players

Meanwhile, a European maintenance, repair and overhaul (MRO) company is planning to establish a facility at Clark International Airport, Bingcang said.

BCDA withheld the company’s name, pending authorization to disclose it.

The proposed site covers about 40 hectares beside the airport’s Federal Express Corporation (FedEx) facility. The BCDA head clarified that the $40 million would cover construction of the facility, while the company itself would provide the equipment and other contents.

BCDA would build the hangar according to the company’s requirements, while the facility would be operated with a local partner that would also serve as its developer, he said.

In addition, Bingcang said he discussed the partnership and financing arrangements during a recent trip to Paris, but no agreement had been signed as of writing.

Separately, an American aerospace manufacturer is also looking to establish a production operation in Clark, Bingcang said.

He, however, did not disclose the company’s name, the proposed investment amount, expected employment or project timeline.

The project is still subject to further discussions, with United States government approval also among the factors that could affect its progress.

CEBU CITY-Initial findings of the Philippine National Police (PNP) investigation into digital devices surrendered by Thomas Markle Jr. showed media files depicting minors engaged in sexual activities, with preliminary examinations indicating the materials did not originate in the Philippines, a senior police official said.

In a media briefing on Tuesday, Nov. 3, 2026, Police Major Gen. Wilson Asueta, acting director for investigation and detective management, said the PNP Anti-Cybercrime Group (ACG) through its Regional Anti Cybercrime Unit in Central Visayas (RACU-7) had identified the files during its initial forensic examination, but further analysis is needed to establish their contents, origins and possible links to individuals under investigation.

‘Initially, those materials, the video, the recording that were examined initially, we can say that based on [the initial report], they were just not from here,’ Asueta said, referring to the Philippines.

He added that the initial examination indicated the materials involved foreign minors, including Asian and Caucasian individuals, with no Filipino victims identified so far.

The findings is part of a coordinated investigation into several boxes of digital devices, physical media and printing materials that Markle Jr. turned over to authorities last month. The materials were allegedly connected to child sexual abuse and exploitation.

Asueta said the PNP had secured a court-issued warrant to examine computer data, allowing investigators to proceed with the forensic examination of the seized or surrendered digital devices.

These include nine mobile phones, three SD cards, five hard drives and one camera, along with another non-digital device.

A joint investigation team composed of the PNP Women’s and Children’s Protection Center, Criminal Investigation and Detection Group, Anti-Cybercrime Group, Intelligence Group and Police Regional Office 7 was organized to pursue the case.

Investigators are examining the digital evidence while field personnel work to validate information gathered during the inquiry.

Asueta said the investigation remains ongoing and that authorities have yet to complete their assessment of the files.

The PNP has not established whether Thomas Markle Sr., whose son reportedly attributed the materials to him, appears in any of the recordings.

Asueta said the digital forensic examiner had yet to submit a complete report.

Authorities are also still verifying ownership of the devices and have not independently established whether the equipment belonged to Markle Sr.

Asked whether Markle Jr. voluntarily surrendered the materials, Asueta said the initial information indicated that the younger Markle turned them over to the regional office of the Inter-Agency Council Against Trafficking (IACAT) in Central Visayas.

Police have yet to determine what prompted the turnover, which remains part of the investigation.

Asueta also said no complaint had been filed against Markle Sr. at the time of the briefing.

The official declined to provide details about any possible involvement of other individuals, saying investigators were still conducting further verification and analysis.

The case is being pursued in coordination with United States authorities.

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Asueta said the Federal Bureau of Investigation and other US agencies were conducting their own investigation and collaborating with the PNP on investigative matters.

PRO 7 has also created a task force to investigate the case.

Asueta said the PNP would pursue charges under the laws covering online sexual abuse and exploitation of children and child sexual abuse or exploitation materials if the evidence warrants prosecution.

‘We are doing our best so that we can find evidence. If there is evidence, then we will file a case,’ he said.

He assured the public that the investigation would be conducted thoroughly, impartially and objectively.

Asueta did not confirm reports about a storage unit in Mexico allegedly containing a tape titled ‘Manila Nites,’ saying the matter had not been relayed to him by the investigators.

The PNP said its findings remain preliminary as forensic examination and field investigation continue.

Authorities have yet to issue a final determination on the ownership of the materials, the identities of the individuals involved and whether the evidence will support the filing of criminal charges.

PNP officials led by Police Gen. Jose Melencio Nartatez Jr. and Interior Secretary Juanito Victor ‘Jonvic’ Remulla was in Cebu on Tuesday and held a closed-door command conference on this investigation.

MANUFACTURERS are building up inventories in anticipation of stronger production, even as weak demand continues to pull down output and new orders, with factory activity contracting for a second straight month in October.

The Philippines Manufacturing Purchasing Managers’ Index (PMI), compiled by Standard and Poor’s (SandP) Global Market Intelligence, slipped to 49.1 in October from 49.6 in September. A reading below 50 indicates a deterioration in operating conditions.

The latest decline marked the third monthly contraction in the sector this year. SandP said manufacturers faced subdued demand at home and abroad, prompting them to cut production and purchasing activity.

Output and new orders both declined, although the fall in production eased slightly from September. The contraction in new orders, meanwhile, deepened, with companies reporting weaker demand from both domestic and foreign customers.

‘Some firms cited that weak demand and the current hot weather, linked by some panellists to El Niño, weighed on the two main contributors to the headline PMI index,’ SandP said.

The weakness in orders also prompted manufacturers to scale back purchases of materials and other inputs. Buying activity fell at its fastest pace in 11 months, even as the decline in new export orders eased and remained modest.

According to SandP Principal Economist Sin Jones, the sharper drop in purchasing activity and continued job losses showed that manufacturers remained cautious amid subdued demand.

But supply conditions offered little relief. Although the deterioration in supplier performance eased slightly in October, delivery times still lengthened for an 11th consecutive month.

Material shortages at suppliers were reported by some companies, resulting in delayed deliveries and changes to production schedules, SandP said.

Against this backdrop, manufacturers kept pre-production inventories broadly unchanged after reducing them in September. Stocks of finished goods, however, rose marginally for the first time in four months, as some firms anticipated a pickup in production.

That optimism was also reflected in business confidence, which rebounded to a near two-year high. Firms expected new projects and customers to support production growth over the next 12 months, Jones said.

But expectations have yet to translate into stronger orders or hiring. SandP reported that employment continued to decline, while manufacturers’ operating expenses and selling prices rose only modestly, largely because of higher material costs passed on to customers.

For his part, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the expected El Niño conditions through early 2027 could add pressure on manufacturers, particularly through lower agricultural output and higher food and raw material prices.

He said record exports in recent months, driven by stronger demand for artificial intelligence-related electronics and products, could provide support for some local manufacturers and the broader economy.

On the other hand, Jones also warned that the Bangko Sentral ng Pilipinas’ latest 50-basis-point rate increase, which brought the policy rate to 5.5 percent, could weigh on demand and investment by raising borrowing costs.