Philippines growth seen slowing in 2nd half

As global economic conditions deteriorate

MANILA, Philippines — Philippine economic growth is expected to slow in the second half as global economic conditions weaken and reciprocal tariffs imposed by the United States take full effect, according to research and analysis firm BMI.

In a report, the Fitch Solutions unit said it is keeping its 2025 gross domestic product (GDP) growth forecast for the Philippines at 5.4 percent, even as the US has announced the imposition of a slightly lower tariff on Philippine exports.

Since Aug. 7, Philippine exports to the US have been slapped with a 19-percent tariff, slightly lower than the 20 percent levy announced in July.

The latest tariff rate, however, is higher than the 17 percent levy that the US unveiled in April.

BMI said the revised tariff rate is expected to lead to a 0.4-percentage-point reduction in output over the medium-term, a significant improvement from the 1.4-percentage-point decline it estimated in April.

Despite this, BMI said it is sticking with its growth forecast for the Philippines as global economic conditions are expected to deteriorate in the second half.

“By then, US tariffs will be fully in force and the knock-on effects on global trade will become more apparent,” BMI said.

While interest rates have eased from their peak, BMI expects erratic US trade policies to weigh on global investor sentiment and limit foreign direct investment inflows.

“As such, we see little prospect for a meaningful investment recovery in the near term,” BMI said.

At its last meeting on June 19, the Monetary Board reduced the key interest rate by 25 basis points to 5.25 percent.

BMI said household consumption is also expected to show weakness.

“Import volumes – a reliable proxy for private spending – continue to contract sharply and recent consumer surveys suggest confidence has eroded further as trade tensions escalate,” BMI said.

BMI’s growth forecast for this year is below the government’s 5.5 to 6.5 percent growth target for 2025.

As of the first half, the Philippine economy grew by an average of 5.4 percent.

For next year, BMI expects the Philippines to post faster growth of 6.2 percent and to maintain this pace of expansion in 2027.

For 2028, BMI is forecasting that the economy would expand at a faster rate of 6.4 percent.

BMI’s GDP growth forecast for 2026 to 2028 are within the government’s annual growth target of six to seven percent for those years.