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By Aubrey Rose A. Inosante, Reporter
ATTAINING ABOVE-6% gross domestic product (GDP) growth for the remaining part of the year to fulfill the government’s objective may be “difficult” due to the ambiguous global trade scenario stemming from the Trump administration’s changing tariff strategies, analysts indicated.
“Achieving a 6.2% growth rate for the rest of the year will undoubtedly be difficult, yet it is still feasible,” Ateneo School of Government Dean and Economics Professor Philip Arnold P. Tuaño mentioned in an e-mail over the weekend. “Some of the downside risks for the Philippine economy persist, including the elevated levels of US tariffs, global political and security uncertainties—particularly in Europe and the Middle East—that impact global demand for products, in addition to climate-related disruptions.”
“US President Donald J. Trump’s reciprocal tariffs, trade disputes, and other protectionist measures could continue to hinder global trade, investments, jobs, and overall world economic growth, which might indirectly slow the Philippine GDP growth,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort stated in a Viber message, while also noting that the growth objective remains attainable.
The Philippine economy grew by 5.4% in the first quarter, slightly quicker than the 5.3% growth during the previous three-month term, but slower than the 5.9% rate in the same quarter last year, as reported by the government last week.
This was significantly below the government’s 6-8% growth target range for the year.
The sluggish growth resulted from diminished gross capital formation growth due to businesses’ concerns over global trade uncertainties.
Since Mr. Trump took office in January, he has implemented several protectionist initiatives, one of which increased import tariffs on key trading partners, including the Philippines. Countries are currently in negotiations with the US regarding the heightened “reciprocal” tariffs, which have been postponed until July.
Department of Economy, Planning, and Development Undersecretary Rosemarie G. Edillon indicated that GDP must grow by a minimum of 6.2% over the next three quarters to achieve a 6% growth— the lower boundary of the government’s target—by year’s end.
Mr. Tuaño suggested that Philippine economic growth could be bolstered by increased government expenditure in the coming months as the lifting of the election ban on public works would facilitate the continuation of halted state infrastructure projects.
In the first quarter, public spending surged by 18.7% as agencies accelerated public projects ahead of the ban that commenced on March 28.
An anticipated revival in exports following the conclusion of tariff discussions between the Trump administration and its trading partners could also provide a boost by potentially leading to a resurgence in electronics demand, he noted.
Both Mr. Tuaño and Mr. Ricafort remarked that moderating inflation may help stimulate consumption to support the economy.
“While consumption growth in the first quarter of 2025 was recorded at 5.3%, specific conditions must occur to guarantee higher consumption growth in the forthcoming quarters, including a sustained drop in inflation rates, reduced interest rates, and continued remittance growth,” Mr. Tuaño commented.
“The government can enhance this by fortifying social protection and amplifying investments, particularly in rural areas to ensure food supply and local incomes,” he stated.
Mr. Ricafort added that the modest GDP growth in the initial quarter and mild inflation would enable the Bangko Sentral ng Pilipinas (BSP) to further reduce benchmark rates, which would support the economy.
The Monetary Board resumed its easing cycle last month with a 25-basis-point (bp) reduction, lowering the policy rate to 5.5%.
BSP Governor Eli M. Remolona, Jr. informed Bloomberg last week that they are willing to decrease rates by an additional 75 bps this year in light of diminishing inflation.
Budget Secretary and Development Budget Coordination Committee Chairperson Amenah F. Pangandaman stated on Friday that they remain optimistic that GDP growth could meet the 6-8% target this year.
“We still anticipate GDP to accelerate throughout the year as domestic demand strengthens, along with sustained public investments. This is even in the face of global uncertainties, as domestic growth prospects backed by enhancing private consumption, including government infrastructure spending, offer a buffer against external challenges,” Ms. Pangandaman remarked.
“We stay positive that the Philippines will achieve its growth target for 2025 of 6-8%, especially given the government’s robust commitment to fulfilling our medium-term ambitions and long-term vision. With the substantial 8.2% growth marked by government capital expenditures—demonstrating the successful execution of public infrastructure projects—we are confident in our ability to maintain our high-growth trajectory.”
‘LOWER GROWTH PATH’
Meanwhile, IBON Foundation Executive Director Jose Enrique “Sonny” A. Africa expressed a more cautious viewpoint.
“Expecting a 6.2% growth rate in the remaining quarters of the year is excessively optimistic and fails to consider the structural realities both globally and domestically,” Mr. Africa stated in a Viber message over the weekend.
“The government has frequently not met even the lower limits of its growth objectives and has only managed to fit into its target ranges of GDP growth twice over the past decade. The government continues to deny that the economy has transitioned to a lower growth trajectory from the average 6.4% growth in the 2010-2019 decade prior to the pandemic to just 5.6% in 2023-2024, viewing the 2020-2022 years of lockdown and recovery as anomalies,” he added.
Mr. Africa cautioned that growth will keep moving lower in light of global disruptions and “persistent internal structural economic weaknesses,” noting that both household and investment expenditures remain low compared to pre-pandemic levels.
“Achieving 6.2% growth in the upcoming quarters is not unattainable but will necessitate bold reforms and structural shifts, not merely optimism derived from statistical calculations. Economic strategies must be reoriented toward boosting domestic demand, such as through genuine wage and income increases, greater equity and redistribution, and expanded public services. Over the longer term, enhanced agricultural and local industrial capabilities are essential to ensure that growth achieved is not fragile, exclusionary, and unsustainable,” he remarked.
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