Global jitters cloud Philippines growth prospects

MANILA, Philippines — It may be too early to let go of the six to eight percent growth target in the medium-term, but adjusting the upper end in the short-term may be possible amid uncertainties in global trade, according to the Department of Economy, Planning and Development (DEPDev).

“Will we still achieve the six to eight percent growth target for the medium-term? My sense is that it’s too early to give up (the) six to eight percent for the medium-term, meaning 2025 to 2028,” DEPDev Secretary Arsenio Balisacan told reporters on the sidelines of the Innotech Seminar.

Despite challenges from the domestic and foreign fronts, Balisacan said the country needs to be ambitious and should work harder to achieve a more rapid economic growth.

He said other countries, like Vietnam, remain optimistic and are still aiming to achieve high growth despite the headwinds.

In the short-term, Balisacan said it is possible to adjust the upper end of the growth target amid uncertainties clouding the growth outlook.

Earlier, he said an eight percent growth may no longer be a realistic assumption as uncertainties stemming from the United States tariffs on trade partners are unlikely to disappear soon.

Asked how low the adjustment may be, the DEPDev chief said this would have to be studied by the government citing implications on the budget.

While the country’s gross domestic product growth of 5.4 percent in the first quarter was slower than the 5.9 percent expansion in the same period last year, Balisacan said the performance was “still quite impressive” considering the challenges in the domestic front and external environment.

Balisacan said the sharp increase in the trade deficit was among the reasons behind the slower growth performance.

If exports and imports have grown in tandem, he said the Philippines could have posted faster economic growth in the first quarter.

As the Philippines, like other countries, is facing headwinds from the tariffs unleashed by the US, Balisacan said there is a need to double down on making the country’s exports more competitive and finding new markets.

“And that’s why I have also taken the view that we need to be more aggressive with opening up or joining regional groupings, including concluding free trade agreements with many countries. Not just one or two or three, which is what has been happening, but to many,” he said.

At the same time, Balisacan said the Philippines needs to negotiate strongly.

“We have to diversify our exports and diversify our markets so that we don’t become very vulnerable to any shocks coming from one market,” he said.

As the country faces local challenges like limited fiscal space, Balisacan said the government also needs to make firm commitments in terms of spending.

“I think that in the coming three years, we need to work closely with Congress to ensure that the budget that is passed and approved supports impactful and strategic priorities,” he said.

Balisacan said the budget should address concerns on low productivity and support more inclusive growth, faster poverty reduction and better quality of employment.

“We hope that we can work well and we are quite optimistic that we can work well with Congress so that we can have a very good budget that is impactful and responsive to the challenges that we face as an economy,” he said.