Philippines economy may fall below 6% this year – AMRO

MANILA, Philippines — Philippine economic growth may fall below six percent this year amid risks posed by the reciprocal tariffs imposed by the United States on trading partners, according to the ASEAN+3 Macroeconomic Research Office (AMRO).

In a press conference yesterday, AMRO chief economist Hoe Ee Khor said that Philippine economic growth for this year is expected to be slightly below six percent due to the impact of the US tariffs.

AMRO group head and principal economist Allen Ng said the below six-percent growth expected for 2025 is based on the various scenarios of US tariffs such as those announced on “Liberation Day” and the 90-day pause.

This forecast is below the 6.3 percent gross domestic product growth projection for the Philippines for this year provided in AMRO’s ASEAN+3 Regional Economic Outlook (AREO) report released yesterday.

Ng said the forecast provided in the AREO was finalized before the April 2 announcement of the US reciprocal tariffs.

“Given the fluidity of the situation, we will be updating our baseline in the coming months,” he said.

The Philippine government has set a six to eight-percent growth target for this year.

National Economic and Development Authority Secretary Arsenio Balisacan earlier said that the upper end of this year’s growth target may not be a realistic assumption amid the uncertainty caused by the US tariffs.

While AMRO expects the US tariffs to have an impact on Philippine economic growth, Khor said the country would be affected much less than its neighbors.

“The strength of the Philippines is their service industry, especially the BPO (business process outsourcing) and, going forward, the KPO (knowledge process outsourcing). So we think that the Philippine economy generally will emerge from this tariff war quite well,” he said.

Ng also said the Philippines is expected to be among the “more resilient economies in the region given its relatively lower exposures to the tariffs and continued robust domestic demand.”

Last week, the US announced a 90-day pause on the reciprocal tariffs and lowered the levy to 10 percent for most countries, including the Philippines.

Prior to the pause, the reciprocal tariff to be imposed on Philippine exports to the US was set at 17 percent.

The 17-percent tariff on Philippine goods is the second lowest in Southeast Asia.

With the 90-day pause in place, the Department of Trade and Industry is gearing for talks with US counterparts to negotiate the tariff imposed on Philippine goods.

Trade Secretary Cristina Roque told reporters yesterday that it is business as usual for now, with some companies receiving export orders.

“For us, we’re really just hoping to meet before the 90 days is over so that at least we can already discuss what will be the tariff rate for the Philippines,” Roque said.

She said the government would negotiate for what is best for the Philippines.

Earlier this week, Presidential Communications Undersecretary Claire Castro said a team led by Special Assistant to the President for Investment and Economic Affairs Frederick Go is expected to meet with US trade officials next month to discuss the tariff issue.

As the ASEAN+3 region responds to near-term risks including the US tariffs, AMRO believes it should continue to work on achieving development goals to further build resilience to external shocks.

AMRO’s report showed that the Philippines, along with Indonesia and Malaysia are expected to maintain potential growth above 3.5 percent through 2040.

Ng said one of the key factors that could increase the Philippines’ potential growth is by improving its productivity.

“This can be done through productivity-enhancing infrastructure, as well as a shift towards areas that are also productivity-enhancing,” he said.

According to Ng, the Philippines could also take advantage of the changes in technology to transform the economy by upgrading the services and agricultural sectors.

“The Philippines would get another further above two percent growth if some of these reforms are implemented. So we are not looking at 3.5 percent, we are looking at closer to 5.5 percent to six percent,” he said.