PH growth at risk of staying below 6%

THE Philippines remains one of the region's more resilient economies, the Asean+3 Macroeconomic Research Office (AMRO) said on Tuesday, but growth could again fall below target this year given mounting global trade tensions.

"In our various scenarios of tariff actions, as per the Liberation Day and Pause scenarios, growth in the PH will be negatively affected and likely will fall below 6.0 percent," AMRO group head and principal economist Allen Ng said in a briefing on Tuesday.

Ng was referring to reciprocal tariffs against trading partners unveiled by US President Donald Trump last April 2, which he called "Liberation Day," and a subsequent pause — a 90-day reprieve — announced a week later as global markets tanked.

The Philippines was hit with a 17-percent duty, lower than neighboring countries that were slapped with particularly high rates such as Vietnam (46 percent), Indonesia (32 percent), Thailand (36 percent), and Cambodia (49 percent).

Officials have said that this could help boost exports, and have also claimed that the overall impact would be limited as the economy is mostly driven by domestic consumption.

Ng echoed this, saying "the Philippines economy is one of the more resilient economies in the region given its relatively lower exposures to the tariffs and continued robust domestic demand."

AMRO chief economist Hoe Ee Khor also said the Philippines would be less affected by rising tariffs compared to other Asean economies given its status as a service-oriented economy.

"The manufacturing sector is less important, but it's a much smaller share of the economy compared to the other Asean countries. So because of that, I think the tariff impact on the Philippines will be much lower," Khor said.

He said that the country's strong services sector, particularly business process and knowledge process outsourcing, would help cushion the impact.

"We think that the Philippine economy generally will emerge from this tariff war quite well," Khor said.

AMRO is keeping a baseline forecast of 6.3 percent growth for the country this year, but warned that this was finalized before key global developments earlier this month.

It also expects growth to remain unchanged in 2026.

"Given the fluidity of the situation, we will be updating our baseline in the coming months," Ng said.

The projections fall within the government's 6.0- to 8.0-percent target for 2025 to 2028. If realized this year, it would be a rebound from two straight years of below-target growth in 2024 (5.5 percent) and 2023 (5.7 percent).

Ng said that the Philippines had the potential to significantly boost long-term economic growth if it focused on productivity-enhancing reforms and adopted new technologies.

"I think it's a similar diagnosis for long-term growth for the Philippines as with the rest of the region, especially in the middle-stage economies," he said.

"The Philippines, we are categorizing it as a middle-stage economy. One of the key factors that could actually improve the Philippines' potential growth is actually productivity," he added.

He noted the rapid pace of technological advancement and urged the country to explore how the changes could be harnessed to transform the economy.

"For example, in the services sector, how can we use technology to actually upgrade services ... to create more value-added ... higher-paying jobs, and so on, and not just in services but also in agriculture and so on and so forth?," Ng said.

"I think those would be key things to improve potential growth for the Philippines."