Philippines lags behind region amid AI boom — Taipei Times

The Philippines, according to the Taipei Times, is facing weaker economic growth, inflation and a weakening national currency amid the artificial intelligence boom. The publication ran a Bloomberg Opinion column whose author believes the country is lagging behind some of its Southeast Asian neighbors.

A Bank of America analysis views the overall benefits of AI investment for the region positively, but warns that the gains will be distributed unevenly. Malaysia is in the strongest position, according to this assessment, as a major exporter and manufacturer of semiconductors that is also developing data centers. Indonesia and the Philippines are described in the analysis as lagging behind.

Peso and inflation

The Philippine peso has lost about 2.3% against the US dollar this quarter and remains near record lows. On Friday, the exchange rate stood at 62 pesos per dollar. Bangko Sentral ng Pilipinas Governor Eli Remolona told lawmakers that attempts to strengthen the currency to 60 pesos per dollar could lead to a rapid depletion of foreign exchange reserves.

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The central bank raised interest rates to contain inflation, which, according to the column, still exceeds the regulator's target because of the war in Iran. The Philippines is particularly vulnerable to oil prices because it imports almost all of the resource it needs.

Growth and investment

Philippine GDP growth last quarter was significantly slower than expected. The author also links the current difficulties to a scandal involving procurement for flood-control measures: public backlash, in his assessment, restrained spending on public works.

The column notes that Malaysia and Singapore integrated into global manufacturing supply chains in the 1970s and 1980s and invested in infrastructure and education. At the same time, the World Bank last month classified the Philippines as an upper-middle-income country. The country has a relatively young, mobile population with a high level of English proficiency, but the development of AI creates both opportunities and risks for its outsourcing industry.