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By Aubrey Rose A. Inosante, <\/b>Reporter<\/i><\/p>\n
PHILIPPINE economic advancement might have accelerated in the second quarter; however, annual growth is anticipated to fall below 6% due to uncertainties surrounding US tariffs, Finance Secretary Ralph G. Recto stated.<\/span><\/p>\n \u201cI believe the second quarter will undoubtedly surpass the first,\u201d Mr. Recto shared with journalists during an informal press discussion on Wednesday. <\/span><\/p>\n Mr. Recto expressed that this second-quarter projection is reliant on governmental expenditure and household consumption, which constitutes over 70% of the economy. <\/span><\/p>\n In the initial quarter, gross domestic product (GDP) expanded by 5.4%, below expectations and slower than the 5.9% growth in <\/span>the same period last year.<\/span><\/p>\n For the complete year, Mr. Recto indicated GDP may increase by around 5.7% to 5.8%. <\/span><\/p>\n \u201cRealistically, it might be 5.7% or 5.8% for the year. However, there\u2019s still a chance, (but) it largely relies on many uncertainties \u2014 uncertainties related to trade policy. There\u2019s no definitive [tariff rate] yet,\u201d Mr. Recto remarked.<\/span><\/p>\n Economic officials last month adjusted the annual growth target to 5.5%-6.5% from a previous estimate of 6%-8%, \u201cindicating a more cautious and resilient outlook amid global challenges.\u201d<\/p>\n Last week, US President Donald J. Trump declared a 20% tariff on most Philippine products exported to the US, which is an increase from the previously announced 17% in April.<\/span><\/p>\n Philippine trade negotiators are currently in Washington to finalize an agreement with the US.<\/p>\n President Ferdinand R. Marcos, Jr. <\/span>would meet with Mr. Trump during his official visit to Washington from July 20 to 22.<\/p>\n In a Viber message to BusinessWorld<\/i>, Budget Secretary Amenah F. Pangandaman expressed her confidence in achieving the GDP growth target this year, supported by strong domestic demand.<\/span><\/p>\n \u201cOur growth momentum is anticipated to be mainly propelled by substantial domestic demand, particularly vigorous household spending and accelerated government investments in social services and essential infrastructure,\u201d stated Ms. Pangandaman, who also holds the position of Development Budget Coordination Committee chairperson. <\/span><\/p>\n She added that the robust labor market and declining inflation will bolster growth momentum.<\/p>\n Inflation averaged 1.8% during the first six months of the year.<\/p>\n \u201cAdditionally, lower inflation allows the Bangko Sentral ng Pilipinas (BSP) to relax monetary policy, which would assist in sustaining consumption and domestic activity, further solidifying our growth <\/span>trajectory,\u201d Ms. Pangandaman mentioned.<\/p>\n The BSP executed a second consecutive 25-basis-point (bp) reduction at its June 19 meeting, adjusting its policy rate to 5.25%.<\/span><\/p>\n BSP Governor Eli M. Remolona, Jr. also indicated they might implement two more reductions this year.<\/p>\n Simultaneously, Finance Undersecretary and Chief Economist Domini S. Velasquez remarked that it may be challenging for GDP to exceed 6% this year amidst an anticipated global downturn due to US <\/span>tariffs<\/span>. <\/span><\/p>\n She noted that the US tariffs have hindered international trade and \u201cdiminished the growth potential of all nations, including the Philippines.\u201d<\/p>\n \u201cWe believe that the Philippines has the potential for at least 6% growth. However, it is certainly challenging, especially given some of the obstacles we are currently encountering,\u201d she told reporters late Tuesday.<\/p>\n Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion stated it is becoming progressively difficult for the government to achieve 6% growth this year.<\/p>\n \u201cAchieving the 6% midpoint will depend on how effectively domestic demand can counter external risks,\u201d he conveyed in a Viber message.<\/p>\n \u201cDomestic demand is expected to stay resilient, yet cautious in the short term… Growth will primarily derive from everyday retail avenues, but a broader recovery in consumption may rely on enhanced job creation and improved purchasing power,\u201d he added.<\/p>\n REMITTANCES
\n<\/b>Meanwhile, Ms. Velasquez indicated the US tax on remittances could affect 12.8% of the Philippines\u2019 total annual remittances.<\/p>\n