Tough love

Government leaders need to face up to the reality that the Philippine economy, just like most of its global counterparts, is facing an economic upheaval due to US President Donald Trump’s flip-flopping on tariffs.

Perhaps like China, our leaders should already start taking belt-tightening measures and advise the public to cut down on frivolous spending, instead of trying to portray a silver lining by claiming that because we are an ally of the US, we will be spared from tariffs and that we can easily attract investors to manufacture goods that the US can source cheaper from us.

We are banking on the semiconductor industry to provide us with a lifeline, but with President Trump flip-flopping on his tariff plans, that leaves us on uncertain and shifting ground.

A slew of economic data from the Balance of Payments, Balance of Trade, remittances, foreign direct investment inflows, tourist arrival data and even motor vehicle sales already show a worrying decline even before the effect of the tariff threat was announced by the US.

According to the BSP, the BOP registered a deficit of $2.6 billion in April as the government tapped foreign reserves to service debt, cover spending and intervene in the foreign exchange market.

The April shortfall exceeded the $1.97-billion deficit in March, pushing the four-month cumulative BOP shortfall to $5.52 billion compared to only $401 million in the comparable period last year. This year-to-date figure is the largest since 2022, when the country recorded a $7.2 billion deficit.

Contributing to the higher BOP deficit figure was the country’s trade deficit, which widened by 23.1 percent to $12.71 billion in the first quarter from $11.26 billion in the comparable first quarter of last year. While exports grew by 5.9 percent to $19.27 billion from $18.23 billion, imports were significantly higher at $31.97 billion.

Our country is so heavily reliant on imports of our basic requirements such as fuel, agricultural products including our staple rice, steel, machinery and automotives.

Personal remittances from overseas Filipino workers were up by 2.7 percent to $9.4 billion in the first three months, but have been slowing down.

According to the Philippine Statistics Authority, total foreign investments approved in the first quarter of 2025 amounted to P27.99 billion, reflecting an 82 percent decline compared with the P155.26 billion FI recorded in the same period of 2024.

We are all well aware of foreign investor complaints about high energy and labor costs as the main deterrents to investing in the country. And even if we do attract some investors, putting up manufacturing operations takes time before they start to contribute to the economy.

A bad economy, as we all know, leads to an increase in criminality. The recent reports of kidnappings in the Filipino-Chinese community and even of Korean nationals are now impacting even tourist arrivals, with one of our biggest markets—South Korea—showing a decline.

According to a report by The Star reporter Ghio Ong, about 468,337 South Korean travelers visited the Philippines from January to April, which is 18.03 percent lower than the same period last year. The drop in visitor arrivals from South Korea was attributed to a number of factors. However, safety was one major complaint, with the South Korean embassy in Manila earlier asking the government to strengthen protection for South Korean visitors amid reports of crimes targeting them.

One social media post that I had seen was from a South Korean national who had been pickpocketed in the BGC commercial area and who bravely gave chase to the women involved, even asking a security guard to help. Such viral posts negatively influence other visiting tourists.

Tourism Secretary Christina Garcia Frasco, who recently attended the SKIFT Asia Forum 2025 held in Bangkok, Thailand, had already acknowledged the decline in Chinese visitor arrivals to the Philippines in recent years due to various factors, with the DOT pivoting to attract other potential sources of tourism for the country.

The DOT Secretary is trying to target other markets such as the Middle East and India, but so far there has been no significant increase in visitors from those countries.

We successfully held our local elections and the results showed us that the younger generation may now truly be seeking change. Unfortunately, focus is shifting to a possible political vendetta showdown that we really don’t need as another distraction away from our economic problems.

What we need is for our economic managers and legislators to focus on cutting down on self-serving expenditures and outlays and corruption-prone assistance programs, and craft policies and programs that will truly encourage education, training and more investments in projects that will make our country more self-sufficient and sustainable.

A major disruptor facing economic activity in the next few months—or year—is the planned closure of the Guadalupe Bridge for repair, which would affect the major EDSA artery and worsen the already chaotic Metro Manila traffic.

The traffic problem, as repeatedly studied by the Japan International Cooperation Agency (JICA), has been estimated to cost the Philippine economy P3.5 billion daily, based on its 2017 study. Without interventions, JICA had warned, this cost was projected to increase to P5.4 billion daily by 2035. This translates to a potential annual cost of P1.27 trillion, projected to increase to P1.97 trillion annually by 2035.

And this is just one problem that faces us in the next couple of months, so please Mr. President, Cabinet Secretaries, economic managers, Senators, Congressmen and opposition, focus on the economy now and try to put politics aside because our economic survival is more important.