Philippines seen to grow over 5% this year

Worst-case tariff scenario

MANILA, Philippines —  The Philippine economy is expected to post above five percent growth this year even under a worst-case US tariff scenario, according to research and analysis firm BMI.

In a report, the Fitch Solutions unit said it is keeping its 5.4 percent economic growth forecast for the Philippines, even if the new US tariff rate to be applied was higher than expected.

“Given the relatively modest exposure to the US, we estimate that the Philippines would still be able to grow by more than five percent in 2025, even in the worst-case scenario, where there is complete pass-through and high levels of elasticity,” BMI said.

US President Donald Trump said a 19-percent tariff would be applied to Philippine exports following a trade deal with the country.

While slightly lower than the 20 percent tariff that was supposed to be imposed on Philippine exports starting Aug. 1, the levy is higher than the 17 percent duty announced in April.

When the new tariff rate comes into effect, BMI said the US effective tariff rate on the Philippines will increase close to 18 percent from around 12 percent, higher than the unit’s previous base case of 13.5 percent.

Last month, the government cut its growth target to 5.5-6.5 percent from the original target range of six to eight percent.

The revision was made amid heightened global uncertainties due to tensions in the Middle East and the US tariffs on trade partners.

While the Philippine economy grew at a slightly faster pace of 5.4 percent in the first quarter compared to the previous quarter’s 5.3 percent, it was lower than the 5.9 percent expansion in the same period in 2024.

The Philippine Statistics Authority will report on the country’s second quarter economic performance on Aug.  7.