MACROECONOMY

The Philippine Gross Domestic Product (GDP) grew by 6.4% in Q1/2023 – its slowest since the economy rebounded in Q2/2021. Domestic consumption took a massive hit from rising interest rates as it started to decelerate to 6.3% YoY from 8.3% in 2022. Merchandise exports also took a hit when semiconductor exports dropped as a consequence of the chips trade conflict between the United States and China. On the other hand, service exports continued to grow in double digits, recording 19.9% YoY growth during  the quarter. Service exports in travel and transport returned to their pre-pandemic levels, reflecting economic activity moving back to normalcy. Information technology and business process management (IT-BPM) services continued to drive more than two-thirds of service exports in Q1/2023. 

SUPPLY

In the real estate sector, the IT-BPM industry has shaped the Metro Manila skyline as business outsourcing firms constitute the largest occupiers of the capital’s Grade A office stock. Landlords have catered to the industry by constructing according to their preferred specifications (e.g. larger floor layouts, 24/7 operations) and accrediting these buildings with the Philippine Economic Zone Authority (PEZA). IToriented economic zones account for more than two-thirds of all PEZA-accredited ecozones in the country. The metro also hosts more than 6 million sq m of PEZAregistered office buildings.