Data Center Boom to Yield Small Gains for Philippines, Says Moody's

MANILA, Philippines — The Philippines is expected to reap only a marginal economic boost from its data center buildout through 2030, with severe power supply and energy security constraints threatening to slow projects, according to Moody’s Ratings. In a report, the debt watcher estimated that capital spending on data center construction would contribute annual economic output equivalent to just 0.04 percent of the country’s 2025 nominal gross domestic product (GDP), while investment in supporting power generation would add only 0.01 percent during construction. Once the facilities are fully operational, their annual contribution may reach 0.12 percent of 2025 nominal GDP. Nominal GDP measures the value of goods and services produced in the economy at current prices, without adjusting for inflation. Data centers are specialized facilities that house servers, storage systems and other computing equipment used to process and store digital information. Demand for such facilities is rising alongside the adoption of cloud computing, artificial intelligence and online services. “The Philippines remains early-stage and relatively small scale. The macroeconomic effect is real but marginal at this stage,” Moody’s said. The rating agency said the Philippines faces the “most acute power availability and energy security constraints” among the seven South and Southeast Asian markets covered by the report. As a result, the delivery of planned data centers will depend heavily on new generation capacity, access to financing and the speed at which announced projects secure electricity and move into construction. Employment gains are also expected to be limited. Moody’s estimated that data centers would account for just 0.01 percent of 2025 industry employment during both construction and full operations. The rating agency assumed 20 construction jobs per megawatt of capacity over a four-year building period, compared with only 1.5 operational jobs per megawatt after completion. This reflects the capital-intensive nature of data centers, which require heavy investments but employ relatively few permanent workers. Heavy reliance on imported semiconductors, servers, cooling systems and other specialized equipment will also limit the domestic economic benefit. Moody’s assumed that 70 percent of data-hall equipment and all information technology equipment would be imported, causing much of the spending to flow abroad instead of adding to local output. Beyond construction, Moody’s said the more durable payoff would depend on whether data center investments encourage cloud adoption, digital services exports and the growth of local equipment suppliers and specialist service providers. That broader ecosystem push is reflected in the Philippines’ participation in Pax Silica, a US-led economic security initiative aimed at strengthening supply chains for semiconductors, artificial intelligence technologies, critical minerals and related infrastructure. The Philippines joined the initiative in April and plans to develop a 1,620-hectare high-technology manufacturing and innovation hub in New Clark City under the Luzon Economic Corridor. Although data centers form part of the wider Pax Silica framework, the Bases Conversion and Development Authority has said the proposed hub would be driven mainly by advanced manufacturing rather than operate as a large data center complex. BCDA estimates that the development can attract from $40 billion to $70 billion in investments and generate more than 130,000 jobs once fully developed. These remain government projections, with contract negotiations expected this year, planning scheduled for 2027 and construction targeted to begin in early 2028. Moody’s said lasting economic and credit gains would ultimately depend on reliable infrastructure, stronger local supply chains and a skilled workforce that could extend the benefits beyond the initial construction boom.