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National Economic and Development Authority Secretary Arsenio M. Balisacan is hopeful the economy grew by at least 6% in the first quarter, as rate cuts and cooling inflation drove up domestic consumption.

Mr. Balisacan told reporters it may be unrealistic to expect gross domestic product (GDP) growth to hit the upper end of the 6-8% target amid global uncertainty over the US tariff policy.

However, it may be too early to revise the growth targets, he added.

“Yeah, we are keeping for now the 6%, 6-8% growth. And we’re still quite confident that we may hit at least the low-end part (of the full-year target),” he said.

Asked if first-quarter GDP may have expanded faster than the 5.9% print in the first quarter of 2024, Mr. Balisacan replied: “If we are going to get something close to that (5.9%) for the first quarter, that to me is a respectable achievement. But I would like to see hopefully 6%.”

First-quarter GDP data will be released on May 8.

“Our target is to move the economy faster than it used to so that we can catch up with our neighbors,” Mr. Balisacan said.

Mr. Balisacan said domestic consumption, which makes up around three-quarters of GDP, will continue to drive growth.

“I would think that because of the lower interest rates and the much more favorable inflation that has happened over the last first three months of the year, this would surely have impacted favorably on domestic consumption,” he said.

In the first quarter, inflation averaged 2.2%, well within the central bank’s 2-4% target range.

The Bangko Sentral ng Pilipinas paused its easing cycle in February, but cut rates by 25 basis points at its meeting last week. This brought the target reverse repurchase rate to 5.5% from 5.75% previously.

Mr. Balisacan said second quarter economic performance may be “challenging” amid the turmoil caused by the US reciprocal tariffs.

US President Donald J. Trump on April 9 paused the new reciprocal tariffs for 90 days, although the baseline 10% tariff on almost all US imports remained in effect.

The Philippines faced a 17% reciprocal tariff, although this was the second lowest among Southeast Asian countries.

“In fact, when we did our simulation, the net benefits for us in terms of the increases in exports, overall exports, not just for the US but overall, as well as for increases in GDP, are now more favorable for us compared to the reciprocal tariffs,” he said.

Mr. Balisacan said that exports could possibly increase by 1.5% with the 10% blanket tariff during the 90-day pause.

“But then again, because exports as a contributor to our economy is quite small, the overall impact and impact is still quite high,” added.

The Development Budget Coordination Committee projects 6% and 5% growth in exports and imports, respectively, this year.

Despite the growing uncertainty in global trade, Mr. Balisacan said the Philippine economy remains relatively insulated due to its smaller role in global trade compared to its Asian neighbors.

“The economy is not as vulnerable to shocks in the global marketplace as our neighbors… because the Philippine economy’s exposure to trade is fairly small,” he said.

However, he cautioned against complacency, stressing the importance of strengthening export performance by diversifying markets and addressing investment constraints so the country could take advantage of trade diversion opportunities resulting from the sweeping US tariffs.

“We need to double, even triple, our efforts to improve the investment environment so investors see the Philippines as a viable destination,” Mr. Balisacan said. — Aubrey Rose A. Inosante with Reuters

The Bangko Sentral ng Pilipinas (BSP) on Monday launched a mobile app that will feature real-time financial data and news to improve the public’s access to information and services from the regulator.

“The BSP mobile app was developed with a vision of bringing a seamless and convenient means for our stakeholders to access BSP information and services anytime, anywhere through their mobile phones,” BSP Technology and Digital Innovation Officer Reynaldo Florencio T. Zipagan said in a speech at the launch.

“This new platform aims to enhance your experience and encourage greater interaction with the BSP. Once downloaded, the app can be accessed anytime even offline and offers personalization to match your specific needs and interests. In launching this app, we are also aligning ourselves with global best practices set by leading central banks worldwide, such as the Federal Reserve Bank of New York, the Deutsche Bundesbank, and Bank Negara Malaysia,” BSP Managing Director Charina B. De Vera-Yap said.

Users will be able to access real-time financial data, policy decisions, and economic indicators on the app, the BSP said.

The mobile app will also keep users updated on BSP news, advisories, and announcements, and features the central bank’s chatbot called BSP Online Buddy or BOB. Users can also find information on BSP offices or branches through the app’s service locator.

The app can also be personalized so that users can have quicker access to the information or services they need.

“You can filter the currencies that matter most to you and view their exchange rates at a glance. Be updated with the latest statistical reports anytime, anywhere, through the mobile app,” the BSP said. — Aaron Michael C. Sy

The Bangko Sentral ng Pilipinas (BSP) is back on its easing track, analysts said, with rate cuts seen in the second half of the year.

“Given current projections of ‘target-consistent’ inflation and the outlook of a fragile global economy, the BSP will likely continue easing monetary conditions,” the Metrobank Research and Market Strategy Department said in a report.

It noted that the central bank will also likely maintain “a cautious approach as markets brace for the impacts of the trade war instigated by Donald J. Trump.”

The BSP on Thursday resumed its rate-cutting cycle, delivering a widely expected 25-basis-point (bp) rate cut. This brought the target reverse repurchase rate (RRP) to 5.5% from 5.75% previously.

BSP Governor Eli M. Remolona, Jr. signaled further rate reductions this year as the benchmark is still “slightly restrictive.”

However, he noted rate cuts will still likely be delivered in “baby steps” or in 25-bp increments. He said the central bank is also unlikely to lower rates at every policy meeting this year.

Mr. Remolona also told Bloomberg TV on Friday they would only consider cutting at every meeting in a “hard-landing scenario,” which was unlikely.

For its part, Metrobank expects the BSP to deliver one more 25-bp cut this year.

“After today’s 25-bp cut, we expect one more similar-sized cut this year, which will bring the target RRP to 5.25% by yearend.”

“Weak economic growth, however, could give space for the BSP to squeeze in an additional 25-bp rate reduction toward the end of the year. This is increasingly becoming our baseline scenario,” it added.

HSBC Global Research economist for ASEAN (Association of Southeast Asian Nations) Aris D. Dacanay said the central bank has “swung into dovishness.”

The BSP last week said it has shifted towards a “more accommodative” monetary policy stance.

Mr. Dacanay expects the Monetary Board to reduce rates two more times this year, through 25-bp cuts at each of its August and December meetings. This would bring the key rate to 5% by end-2025.

“This implies that the BSP will cut in alternate rate-setting meetings (i.e. no rate cuts in June and October),” he added.

There are four more Monetary Board policy meetings this year, with the next slated for June 19.

“The BSP will likely employ a very cautious approach when easing given the large degree of uncertainty in global trade policy and, interrelatedly, the risk of FX (foreign exchange) volatility,” Mr. Dacanay said.

ANZ Research likewise expects the central bank to cut rates in the third and fourth quarters at 25 bps each.

“Given the improvement in the inflation outlook and the downside risks to growth, we now expect two more rate cuts by the BSP, bringing the policy rate to 5% in 2025,” it said in a report.

Meanwhile, Nomura Global Markets Research sees an additional 75 bps worth of rate cuts this year.

“With BSP also acknowledging that growth headwinds are increasing due to global trade policy uncertainty, along with our new inflation forecasts, we now forecast another 75 bps of rate cuts, taking the terminal rate to 4.75% this year.”

Nomura also noted the possibility of another 25-bp cut “if inflation surprises lower.”

Inflation outlook

Analysts said the easing inflation outlook is one of the main reasons behind the expectation for further rate cuts.

For its part, Metrobank expects headline inflation to settle at 3% this year.

The central bank slashed its risk-adjusted inflation forecasts to 2.3% in 2025 from 3.5% previously and to 3.3% in 2026 from 3.7% previously.

The latest data from the local statistics authority showed inflation slowed to 1.8% in March, its slowest rate in nearly five years.

Mr. Remolona also told Bloomberg TV that they are considering reviewing their current inflation targets as they are “not sure whether it’s at the right level.”

The current 2-4% target band’s midpoint is at 3%, which may be “a bit high.”

The central bank is reviewing its projections and could possibly adjust its target to 2.5%, he added.

“With the inflation outlook benign, the tariffs provide an added rationale for more monetary easing,” Nomura said.

Metrobank flagged the risk of imported inflation amid global trade uncertainties.

“Potentially higher global commodity prices could seep through to the domestic market,” it added.

Mr. Trump last week announced a 90-day freeze on the steep new reciprocal tariffs on most of its trading partners but kept the baseline rate of 10%.

“There is a downside risk of the easing cycle being done faster,” Mr. Dacanay said, citing the possibility of deteriorating global growth conditions.

“The US reciprocal tariffs will likely take a toll on global growth. But the degree of the impact is highly uncertain with tariff policies changing by the week.”

Mr. Dacanay said that if the interest rate differential widens between the BSP and US Federal Reserve, this could prompt the former to ease rates.

“This will be the case if US inflation rises due to higher tariffs, while inflation in the Philippines remains low due to excess capacity of manufacturers or exporters around the world on the back of low US demand.”

Some economists now expect the US Federal Reserve to delay the resumption of its easing cycle until later this year after pausing in January.

“If foreign investors demand Philippine assets to insulate themselves from global financial market volatility, the peso might exhibit resilience, which, in turn, could give the BSP room to cut policy rates faster or more than the Fed,” Mr. Dacanay added.

The peso closed at PHP 56.97 against the dollar on Friday, strengthening from the PHP 57.35 finish on Thursday.

“Given the BSP’s narrower interest rate differential of 100 bps with the Federal Reserve, USD/PHP may be pressured in the near term but is still expected to settle at PHP 57.70 by yearend,” Metrobank said.

The BSP’s recent reserve requirement cut will also pave the way for its monetary easing.

“The continued policy easing along with the reduction in the reserve requirement ratio which took effect in March should provide a more accommodative policy environment to further boost private consumption and investment,” Metrobank said.

Effective late last March, the BSP cut the reserve requirement ratio (RRR) of universal and commercial banks and nonbank financial institutions with quasi-banking functions by 200 bps to 5% from 7%.

“Recent cuts to the RRR are still feeding through the system and helping policy transmission,” Nomura added. — Luisa Maria Jacinta C. Jocson

Analysts have lowered their gross domestic product (GDP) growth forecast for the Philippines this year, amid the US government’s flip-flopping trade policies.

In a recent report, Nomura Global Markets Research trimmed its GDP forecast to 5.9% for this year from 6% previously.

“Taking into account the impact of the US reciprocal tariffs, we now forecast a more moderate pickup in GDP growth to 5.9% year on year in 2025 from 5.6% in 2024,” Nomura analysts Euben Paracuelles and Nabila Amani said.

This would be a tad below the Development Budget Coordination Committee’s  6-8% target band for 2025.

First-quarter GDP data will be released on May 8.

Nomura said it revised its growth forecasts after US President Donald J. Trump announced the order to impose reciprocal tariffs on April 2.

Data from Nomura showed the scenarios by which countries in Asia could be affected by varying tariffs.

Under a “bad scenario” or if reciprocal tariffs proceed as planned, including the 125% tariff on China, the export value at risk for the Philippines is 0.5% of GDP.

In a “good scenario” or if only the baseline 10% tariffs are implemented, as well as China’s 125% duty, the Philippines’ export value at risk from tariffs is at 0.4% of GDP.

On April 9, Mr. Trump suspended the implementation of the higher reciprocal tariffs for 90 days. The 125% tariff on China as well as the baseline 10% rate is still in effect.

In a separate report, ANZ Research also slashed its growth forecast for the Philippines due to the potential impact from tariffs.

If reciprocal tariffs go ahead, ANZ said GDP could grow as slow as 5.2% this year, much lower than its current 5.7% forecast.

“We expect the April 2 tariffs would have a variable degree of impact across Asian economies,” it said.

ANZ said it will also likely revisit its forecasts once there is clearer guidance on the United States’ tariff orders.

“Risks to growth are still to the downside even if the final tariffs are retained at 10%. The rate will still be higher than implied by existing differences in bilateral tariffs,” it said.

“We do not think that Asian exporters can benefit from the 90-day window as US imports had already surged ahead of the April 2 tariff announcements. More importantly, Asian governments would not want to risk a further widening of trade surplus with the US in the event it hampers a constructive trade deal.”

On the other hand, Nomura said growth this year will be driven by public investment spending due to the “government’s strong push for more progress on infrastructure projects, with an added short-run impetus from the midterm elections.”

“This should continue to crowd in private investment, while inflation remains benign, boosting household purchasing power, alongside robust labor market conditions.”

‘Downside surprises’

Meanwhile, Nomura also lowered its Philippine inflation forecast to 2.2% this year from 2.7% earlier.

These forecasts take into account “downside surprises,” Nomura said, citing the sharply slower inflation in March to 1.8%.

“The output gap remains negative, and the impact of lower rice import tariffs on food inflation, in addition to more supply-side measures from the government, should keep inflation in check,” it added.

ANZ expects inflation to settle at 2.9% this year accounting for tariff impacts. Without tariffs, inflation could average 3.4%.

“Unlike the likely inflation dynamics in the US, we think that disinflation will intensify in all economies,” it said.

“The stipulated tariffs represent a material demand shock that will lead to a loss of corporate pricing power and wage growth. Furthermore, cheaper imports from mainland China will accentuate downward pressure on prices.”

The Bangko Sentral ng Pilipinas (BSP) expects inflation to settle at 2.3% this year and 3.3% in 2026. — Luisa Maria Jacinta C. Jocson

The national government’s (NG) debt service slumped year on year in February as amortization payments declined, the Bureau of the Treasury (BTr) said.

Latest data from the BTr showed payments made by the NG for its debt plunged by 82.24% to PHP 52.15 billion in February from PHP 293.62 billion in the same month last year.

Month on month, debt service slid by 51.03% from PHP 106.51 billion in January.

Debt service refers to payments made by the NG on its domestic and foreign debt.

In February, interest payments accounted for the bulk or 92.89% of total debt service, while the rest went to amortization.

The government’s repayment of its loan principal or amortization declined by 98.49% to PHP 3.71 billion in February from PHP 245.79 billion a year ago.

This was mainly due to the 99.95% drop in amortization on domestic debt to PHP 121 million in February from PHP 243.63 billion in the same month in 2024.

External principal payments, on the other hand, increased by 65.88% to PHP 3.59 billion in February from PHP 2.16 billion in the same month last year.

On the other hand, interest payments inched up by 1.29% to PHP 48.45 billion in February from PHP 47.83 billion in the same month a year earlier.

Domestic interest payments fell by 22% to PHP 42.07 billion in February from PHP 34.35 billion a year ago. Broken down, PHP 20.74 billion went to interest payments for fixed-rate Treasury bonds, PHP 16.87 billion for retail Treasury bonds, and PHP 4.42 billion for Treasury bills.

Interest payments on external debt went down by 52.67% to PHP 6.38 billion in February from PHP 13.48 billion a year ago.

For the first two months of 2025, the government’s debt service declined by 64.94% to PHP 158.66 billion from PHP 452.51 billion in the same period last year.

Amortization payments for the January-to-February period plunged by 98.25% to PHP 5.78 billion from PHP 330.47 billion a year ago.

Principal payments on domestic debt slumped by 99.82% to PHP 438 million, while those for external debt declined by 93.83% to PHP 5.35 billion.

On the other hand, interest payments rose by 25.26% to PHP 152.88 billion as of end-February from PHP 122.05 billion in the same period a year ago.

Interest payments accounted for 96.35% of the total debt repayments in the first two months of 2025.

Interest payments on domestic debt jumped by 37.49% to PHP 114.35 billion, while external debt payments dipped 0.9% to PHP 38.53 billion.

“The debt service bill for February declined mainly due to lower obligations on Treasury bonds for the month,” Oikonomia Advisory and Research Inc. economist Reinielle Matt M. Erece said.

“One of the other factors that also contributed to the lower bill would be the peso appreciation experienced since February, which meant lower foreign payments.”

The peso closed at P57.995 against the greenback at end-February, appreciating by 37 centavos from its P58.365-per-dollar finish at end-January.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said there was a lower amount of maturing debt in February compared with a year ago.

Mr. Ricafort noted that lower interest rates also mitigated the rise in interest payments.

“Further cuts in Fed rates that could be matched locally could also help temper the increase in interest payments if there would be additional/new borrowings,” he added.

Mr. Ricafort noted the maturing government securities in April 2025 and from August-September 2025 “could lead to more borrowings to somewhat pay off or borrow again to replace the maturing debt.”

In the near term, Mr. Erece expects the debt service bill to stabilize.

“However, I expect higher debt servicing obligations in the long term as a result of higher borrowings this year,” he added.

The NG’s debt stock rose to a fresh high of P16.63 trillion as of end-February but the BTr said this level “remains manageable.” — Aubrey Rose A. Inosante

The Philippine government is willing to negotiate with the United States to lower the 17% tariff imposed on Philippine-made goods, according to Frederick D. Go, special assistant to the president for investment and economic affairs.

This comes after US President Donald J. Trump on Wednesday paused the steep new tariffs imposed on most of its trading partners, including the Philippines, for 90 days. However, the blanket 10% duty on nearly all US imports will remain in effect. 

In a virtual Palace briefing, Mr. Go said he will head to Washington to discuss the tariff on Philippine goods with the US Trade Representative (USTR), but there is no definite date yet.

“This is not about appealing [the tariffs], but about negotiating,” Mr. Go said.

“The best possible outcome is a free trade agreement [between the Philippines and the US] — a free trade agreement means zero tariffs on their side and zero tariffs on our side —that’s probably the best possible outcome of that meeting, but again it’s open communication, dialogue, cooperation and let’s see what we can negotiate,” he added.

Citing the National Economic and Development Authority, Mr. Go estimated the 17% tariffs on Philippine goods will have a “small” 0.1% effect  on the country’s gross domestic product (GDP) over the next two years.

“First of all, what we can clearly see in the reciprocal tariffs imposed by America on the world is that the Philippines has a slight advantage,” he added.

He noted the Philippines has the second-lowest tariffs in the Southeast Asian region, with 17%, compared with other nations that reached as high as 54%. Singapore received the lowest tariff rate at 10%.

Despite this, Mr. Go recognized that any additional tariffs would still impact certain industries in the country.

“We also have to consider that this involves only one export sector of the country, and businesses are generally quite resilient — if one market closes, they look for another market to open. So, the estimate is a 0.1% effect on our GDP,” he added.

Meanwhile, Mr. Go said the government is also eyeing support for exporters that will be affected by the new US tariffs.

“First (we will) engage with our exporters to discuss with them what the possible measures are that they can take, and that the government can assist them in this current situation,” he said.

Mr. Go also underscored the need to monitor how neighboring countries are responding to the tariffs and how Washington will react to requests from its trading partners.

While each Association of Southeast Asian Nations (ASEAN) member-country may have its own position, he noted the need for vigilance and adaptability.

“[For the Philippines], we’re in a semi-good place, but of course we cannot be complacent; we need to keep monitoring what the other countries do, and for ourselves we need to negotiate an agreement that is beneficial for our country and for the businesses and enterprises in our country,” Mr. Go said.

Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said the impact of the higher US tariffs will probably be more than merely 0.1% of Philippine GDP.

“While tariffs per se may have little impact on the Philippines, the depression in the US associated with these tariffs will have a much heavier impact. Global production will decline as countries become more and more protectionist,” Mr. Lanzona said.

“The globalization we once knew will no longer be there… Hence, it is not true that the impact will only be 0.1% of the GDP. It is probably going to be more,” he added.

IBON Foundation Executive Director Jose Enrique “Sonny” A. Africa said it may be premature to say the US tariffs will have little effect on the economy.

“The ‘0.1%’ impact on GDP cannot have any basis in fact, because the facts are still unfolding, and hides this with its dubious one-decimal place precision,” he told BusinessWorld in a Viber chat.

Mr. Africa said the Philippine government must also consider the eventual impact of a US slowdown on remittances as well as second-round effects on inflation, interest rates and supply chains. – Chloe Mari A. Hufana, Reporter

Moody’s analytics trimmed its gross domestic product (GDP) forecast for the Philippines amid “weaker growth prospects” due to the impact of the US reciprocal tariffs.

“The US dealt the Philippines a harder blow than we expected, declaring a 17% tariff, so we have trimmed our GDP growth forecast to 5.8% from 5.9% in our March baseline,” it said in a report.

“Again, we’ll have to wait and see whether the diluted 10% tariff will last long term or revert to 17%.”

Moody’s Analytics’ forecast is below the government’s 6-8% target this year.

A chart from Moody’s Analytics showed the Philippines’ 17% tariff could have a direct hit of -0.4% on GDP.

“Although US President Donald J. Trump has just declared a 90-day freeze on most of the harsh tariffs announced a week ago and applied a 10% blanket tariff in their place, the April baseline represents the economic toll they’ll have should they eventually go ahead in full.”

“Even if a 10% tariff on most trading partners becomes a permanent US policy, many Asia-Pacific economies will suffer direct and indirect bruising as intraregional trade diminishes,” it added.

The tariffs are expected to weaken the country’s goods exports to the US, as it is the largest buyer of Philippine-made goods.

The Philippines’ top destination for exports is the United States, accounting for about 17% of the total in 2024.

“Further, slowing growth in China will hit service exports, especially in tourism-related sectors. Prior to the COVID-19 (coronavirus disease 2019) pandemic, Chinese tourists were the country’s largest group of visitors,” it added.

Moody’s Analytics flagged the uncertainties from countries’ tariff negotiations with the Trump administration.

“The big unknown is how negotiations might alter the extent and duration of tariffs in all directions and whether the US will extend its 90-day pause on tariffs for 75 countries.”

Mr. Trump’s tariffs have shown the steepest increases since the 1930s, it added.

“Uncertainty is palpable, with tumbling and volatile equity markets headlining financial market turbulence.”

“The negative and pervasive impact of a sustained rise in uncertainty cannot be understated. Household and business sentiment is crumbling, and if the calamity continues, monetary policy easing that was supposed to characterize 2025 will lose some of its potency.”

Consumers are also expected to spend less amid the economic uncertainty. Businesses are also seen to hold back on investments, it added.

The slew of tariffs also “increase the odds of a global recession,” Moody’s Analytics said.

“Under those tariffs, inflation across Asia would stay subdued amid weaker trade and growth dynamics. Inflation in the US, however, would rise as tariffs increased prices of producer and consumer goods.”

Meanwhile, Moody’s Analytics said Philippine inflation will likely remain within the 2-4% target band for the rest of the year.

It also expects the central bank to deliver another 25-basis-point (bp) rate cut in the second half, following its April policy decision.

‘Too early’

Meanwhile, Fitch Solutions unit BMI said the Philippine GDP may grow by 5.2% this year if the US implements a 17% tariff on the Philippines.

“Our preliminary estimates suggest that this will reduce output by around 1.1 percentage points (from its current projection of 6.3%), putting the government’s growth target of 6-7% at risk,” BMI said, noting that it is still premature to commit to any revisions to the forecast.

“With negotiations on the cards, it is too early to identify the extent of Trump’s tariffs on the Philippine economy.”

However, BMI said it expects the Philippines to “succeed” in negotiations with the Trump administration and secure a lower tariff rate.

“Regardless of what the final tariff rate will be, we expect lawmakers will resort to increasing public spending to cushion the economic fallout caused by Washington’s protectionist policies,” it said.

“The Philippines remains a vital security partner for the US, particularly as Washington aims to counter Beijing’s growing influence in the South China Sea. This strategic relationship should afford the Philippines some leverage in negotiations.”

BMI retained its forecast that the Philippines’ fiscal deficit will widen to 5.9% of GDP this year from 5.7% last year. This is higher than the 5.3% deficit ceiling set by the Development Budget Coordination Committee.

“If anything, the likelihood of the government having to incur a larger fiscal deficit has risen significantly against the backdrop of heightened geopolitical uncertainty,” it said.

BMI said the government may have to increase its spending to counter the economic impact of the US tariffs.

“Assuming a fiscal multiplier of 0.50 derived from academic research, the government will have to increase its expenditure by around 1.4 percentage points from 21.9% of GDP to reach the government’s lower bound target of 6% on our projections,” it said. — Luisa Maria Jacinta C. Jocson with inputs from A.R.A. Inosante