‘Philippines among Asian countries less vulnerable to Trump 2.0’

MANILA, Philippines —   The Philippines is one of emerging Asian economies less likely to be significantly affected by US president-elect Donald Trump’s proposed tariffs on imports, according to the UK-based think tank Pantheon Macroeconomics.

In its Emerging Asia Outlook for the first half of 2025 report, Pantheon Macroeconomics chief emerging Asia economist Miguel Chanco said significant parts of the region are considered highly exposed to the threat of tariffs on all US imports, with economies such as Taiwan, Thailand and Vietnam being particularly vulnerable.

“That said, emerging Asia isn’t homogeneous, with its domestic demand-driven demographic giants -India, Indonesia and the Philippines-offering potential refuge in the event of a new trade war,” he said.

Earlier, Trade Undersecretary Ceferino Rodolfo said the Department of Trade and Industry is hopeful that a second Trump presidency will be net positive for the Philippines, citing US-Philippines trade ties and Trump’s actions during his first term, including welcoming a bilateral free trade agreement.

With or without new tariffs imposed by the US, Pantheon Macroeconomics expects headline export growth across the region will likely cool in the first half of next year with leading indicators showing little confidence for further increase in exports beyond full catch-up.

Chanco said there are also some upside risks for emerging Asia’s exporters in the first half next year, driven by the uncertainties over the likely timeline of Trump’s tariffs.

Citing latest reports, he said the US tariffs are expected to start targeting China, Canada and Mexico. Any potential impact on emerging Asia trade flows is unlikely to be seen until the second half of 2025.

“In the meantime, the mere spectre of his proposed sweeping tariffs could spur US firms to front-load imports from emerging Asia; so keep an eye on orders in the full catch-up,” he said.

In terms of the economic outlook, he said gross domestic product (GDP) growth across the region is likely to moderate in 2025 from this year.

Pantheon Macroeconomics expects GDP growth in the Philippines to slow to 5.2 percent next year and 4.8 percent in 2026 from the 5.4 percent estimate for 2024.

The growth forecasts are below the government’s revised growth target of six to 6.5 percent for this year and annual growth goal of six to eight percent for 2025 and 2026.

Philippine economic growth slowed to 5.2 percent in the third quarter from the previous quarter’s 6.4 percent growth and six percent expansion in the third quarter last year.

In the January to September period, the economy grew by an average of 5.8 percent.

“Surveys show that a slowing rebuild of household savings in the Philippines from the COVID and cost-of-living crisis damage cushioned the slump in consumption growth this year, albeit at the likely expense of delaying a real recovery in GDP growth,” Chanco said.

The think tank expects inflation in the country to slow to 3.2 percent this year and ease further to 2.4 percent in 2025, before it rises to 2.5 percent in 2026.

Inflation quickened to 2.5 percent in November from the previous month’s 2.3 percent in October. This brought average inflation in the January to November period to 3.2 percent, within the government’s two to four percent target band.

Pantheon Macroeconomics also expects the Bangko Sentral ng Pilipinas (BSP) to cut the key interest rate by 25 basis points next week to 5.75 percent from the current six percent level.

Chanco also projects the BSP to further lower the benchmark rate by 100 basis points to 4.75 percent by end-2025.

The BSP has delivered a total of 50-basis-point rate cuts in August and October this year, bringing the benchmark rate to six percent from 6.5 percent previously.