Tariff woes seen to curb Philippine growth to 5%

INQUIRER FILE PHOTOS/JEROME CRISTOBAL

MANILA, Philippines — The Philippine economy might grow at a pace that is as weak as the expansion seen in the wake of the global financial crisis 14 years ago, as the country would not be safe from “shocks” coming from the US trade war, ANZ Research said.

In a report, Sanjay Mathur, chief economist for Southeast Asia and India at ANZ, said gross domestic product (GDP) growth in the Philippines might settle at 5 percent in 2025, slower than his previous estimate of 5.7-percent expansion.

If realized, GDP growth this year would fall short of the 6-to-8-percent target of the Marcos administration.

Excluding the pandemic-led GDP contraction in 2020, ANZ’s growth estimate for 2025 would be the weakest since the 3.9-percent expansion in 2011—back when the world was still picking up the pieces from the Wall Street-epicentered global financial crisis.

For next year, ANZ is expecting the local economy to grow by 5.5 percent, lower than its previous prediction of a 6-percent expansion.

Headwinds

Mathur said the Philippines is vulnerable to slower growth in the United States, which is facing recession risks amid the ongoing tariff war.

READ: Trump uncertainty brings risk of ‘avoidable’ recession — economist

The cut in the growth estimate was “comparatively higher” for the Philippines versus its Asian peers, owing to the “lack of any improvement in private capital spending and the fact that a little over 41 percent of inward remittances are from the US,” Mathur explained.

“Our new forecasts incorporate our expectations of (1) direct and indirect impact of tariffs, (2) bilateral trade agreements between the US and individual economies, (3) revised growth estimates for mainland China and the US and (4) potential policy response,” he added.

In his “Liberation Day” announcement on April 2, US President Donald Trump unveiled a 17-percent “reciprocal” tariff on Filipino goods coming to America, among the lowest in Asia.

Local officials believed that the relatively milder tariff on the Philippines could make the country more competitive. But Trump later announced a 90-day tariff pause while retaining the 10-percent universal duty on all trading partners of the United States.